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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934        

For the fiscal year ended: December 31, 2009

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _____________ to
_____________

Commission File No. 333-139940

CHINA SKYRISE DIGITAL SERVICE
INC.(Exact name of registrant as specified in its
charter)

|Nevada                                           | 98-0554885                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     

4/F, M-3rd Building Hi-tech Industrial Park Nanshan
District, Shenzhen 518070Peoples Republic of China(Address of principal executive offices)

(86) 755 26012511(Registrants
telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class                      | Name of each exchange on which registered
|---------------------------------------- | -----------------------------------------
|Common stock, par value $0.001 per share | None                                     

Securities registered pursuant to Section 12(g) of the Exchange
Act: None

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
[   ]    No [X]

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

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

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files) Yes [   ]    No [  
]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]

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

|Large Accelerated Filer [   ] |                                                     | Accelerated
      Filer          
            [   ]
|----------------------------- | --------------------------------------------------- | ---------------------------------------------------
|Non-Accelerated Filer   [   ] | (Do not check if a smaller
      reporting company) | Smaller reporting company [X]                      

Indicate by check mark whether registrant is a shell company (as
defined in Rule 12b-2 of the Act) Yes [   ]    No
[X]

---

As of June 30, 2009 (the last business day of the registrants
most recently completed second fiscal quarter), the aggregate market value of
the shares of the registrants common stock held by non-affiliates (based
upon the closing price of such shares as quoted on the Electronic Bulletin Board maintained by the Financial Industry Regulatory Authority) was approximately
$2.1 million. Shares of the registrants common stock held by each  executive
officer and director and each by each person who owns 10 percent or more of the
outstanding common stock have been excluded in that  such persons may be
deemed to be affiliates of the Registrant. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.

There were a total of 21,110,550 shares of the registrants
common stock outstanding as of March 15, 2010.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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CHINA SKYRISE DIGITAL SERVICE INC.

|Annual Report on FORM 10-K                       
|-------------------------------------------------
|For the
      Fiscal Year Ended December 31, 2009

TABLE OF CONTENTS

|PART I      |                                                                                                                           | 2 
|----------- | ------------------------------------------------------------------------------------------------------------------------- | --
|            |                                                                                                                           |   
|ITEM 1.     | BUSINESS.                                                                                                                 | 2 
|ITEM 1A.    | RISK FACTORS.                                                                                                             | 12
|ITEM 1B.    | UNRESOLVED STAFF COMMENTS.                                                                                                | 23
|ITEM 2.     | PROPERTIES.                                                                                                               | 23
|ITEM 3.     | LEGAL PROCEEDINGS.                                                                                                        | 23
|ITEM 4.     | [REMOVED AND RESERVED].                                                                                                   | 23
|            |                                                                                                                           |   
|PART II     |                                                                                                                           | 23
|            |                                                                                                                           |   
|ITEM 5.     | MARKET FOR REGISTRANTS COMMON
      EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES. | 23
|ITEM 6.     | SELECTED FINANCIAL DATA.                                                                                                  | 24
|ITEM 7.     | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS.                              | 24
|ITEM 7A.    | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK.                                                         | 36
|ITEM 8.     | FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA.                                                                        | 36
|ITEM 9.     | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE.                               | 37
|ITEM 9A(T). | **CONTROLS AND PROCEDURES.**                                                                                              | 37
|ITEM 9B.    | OTHER INFORMATION.                                                                                                        | 38
|            |                                                                                                                           |   
|PART III    |                                                                                                                           | 38
|            |                                                                                                                           |   
|ITEM 10.    | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.                                                                   | 38
|ITEM 11.    | EXECUTIVE COMPENSATION.                                                                                                   | 40
|ITEM 12.    | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      AND RELATED STOCKHOLDER MATTERS.                     | 41
|ITEM 13.    | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
      AND DIRECTOR INDEPENDENCE.                                          | 42
|ITEM 14.    | PRINCIPAL ACCOUNTING FEES AND SERVICES.                                                                                   | 43
|            |                                                                                                                           |   
|PART IV     |                                                                                                                           | 43
|            |                                                                                                                           |   
|ITEM 15.    | EXHIBITS, FINANCIAL STATEMENT SCHEDULES.                                                                                  | 43

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Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. We use words such as believe, expect, anticipate, project,
target, plan, optimistic, intend, aim, will or similar expressions
which are intended to identify forward-looking statements. Such statements
include, among others, those concerning market and industry segment growth and
demand and acceptance of new and existing products; any projections of sales,
earnings, revenue, margins or other financial items; any statements of the
plans, strategies and objectives of management for future operations; any
statements regarding future economic conditions or performance; uncertainties
related to conducting business in China, as well as all assumptions,
expectations, predictions, intentions or beliefs about future events. You are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, including those identified in
Item 1A, Risk Factors included herein, as well as assumptions, which, if they
were to ever materialize or prove incorrect, could cause the results of the
Company to differ materially from those expressed or implied by such
forward-looking statements.

Readers are urged to carefully review and consider the various
disclosures made by us in this report and our other filings with the SEC. These
reports attempt to advise interested parties of the risks and factors that may
affect our business, financial condition and results of operations and
prospects. The forward-looking statements made in this report speak only as of
the date hereof and we disclaim any obligation to provide updates, revisions or
amendments to any forward-looking statements to reflect changes in our
expectations or future events.

Use of Terms

Except as otherwise indicated by the context, references in
this report to (i) we, us, our, or the Company are to combined business
of China Skyrise Digital Service Inc., a Nevada corporation, and/or its
consolidated subsidiaries, as the case may be; (ii) United Digital are to
United Digital Home H.K. Group Company Limited, a Hong Kong limited company;
(iii) Skyrise Technology are to Shenzhen Skyrise Technology Co., Ltd., a PRC
limited company; (iv) Skyrise Digital are to Shenzhen Skyrise Digital
Electronics Co., Ltd., a PRC limited company; (v) SEC are to the United States
Securities and Exchange Commission; (vi) Securities Act are to Securities Act
of 1933, as amended; (vii) Exchange Act are to the Securities Exchange Act of
1934, as amended; (viii) PRC and China are to Peoples Republic of China;
(ix) Hong Kong refers to the Hong Kong Special Administrative Region of the
Peoples Republic of China; and (x) U.S. dollar, $ and US$ are to United
States dollars.

PART I

ITEM 1.        BUSINESS.

Business Overview

We are primarily engaged, through our indirect Chinese
subsidiaries, in the development, sale, installation and maintenance of digital
residential safety and video surveillance products, and in the development and
integration of related software in China. Our customers are primarily urban and
suburban residential communities and real estate development companies in China,
but we plan to expand our customer base to the commercial sector to include
commercial entities, such as airports, hotels, banks, supermarkets and
entertainment venues.

A majority of our revenues are derived from the provision of
  digital residential safety and video surveillance packaged solutions, including
  the development, installation and after-sale service maintenance of safety and
  surveillance systems. Because the majority of our revenues are derived from
  installations, they are generally non-recurring. Our revenues are not concentrated
  within any one customer or group of related customers. Maintenance services
  in our packaged solutions are included for the first year following installation.
  Our customers may separately purchase maintenance services after the first year.

Our sales network is focused in the populated areas of
Guangdong Province, in southern China, but we plan to expand our sales network
to other populated areas. Our company headquarters is located in southern China,
in the Shenzhen Special Economic Zone and we have more than 10 branch offices
and distribution points. Our customers are spread across China, but are
primarily located in the coastal metropolitan regions including Beijing,
Shanghai, and Guangzhou/Shenzhen.

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Our corporate headquarters is located at 4/F, M-3rd Building,
Hi-tech Industrial Park, Nanshan District, Shenzhen 518070, Peoples Republic of
China, and our telephone number is (86) 755 26012511. We maintain a website at
http://www.szskyrise.com that contains
information about us, but that information is not a part of this report.

Our Corporate History and Background

We were incorporated on June 5, 2006 in the State of Nevada
under the name Getpokerrakeback.com. We commenced business by developing and
launching our web site getpokerrakeback.com on which we offered rake backs to
online poker players. Rake backs are a poker loyalty program that rewards
players for playing online poker at a specific online poker room.

On September 10, 2008, we entered into and closed a stock
purchase agreement, or the Stock Purchase Agreement, with Flourishing Wisdom
Holdings Limited, or Flourishing Wisdom, a Samoan limited company, and Steven
Goertz, our Chairman, Chief Executive Officer and controlling stockholder at
such time. Pursuant to the Stock Purchase Agreement, Flourishing Wisdom
purchased 2,500,000 shares of our common stock, representing 54% of our issued
and outstanding common stock as of the closing, from Steven Goertz for $555,000,
or $0.22 per share. As a result of the transaction, Flourishing Wisdom became
our controlling stockholder. From and after the closing of the Stock Purchase
Agreement, until September 25, 2009, we were a shell company and were no longer
engaged in the business of marketing and promoting getpokerrakeback.com, our web
site. Instead, our business plan consisted of the exploration of potential
targets for a business combination through a purchase of assets, share purchase
or exchange, merger or similar type of transaction.

Acquisition of United Digital

On September 25, 2009, we completed a reverse acquisition
transaction through a share exchange with United Digital whereby we acquired
100% of the issued and outstanding capital stock of United Digital, in exchange
for 12,379,800 shares of our common stock, par value $0.001, which shares
constituted 72.8% of our issued and outstanding capital stock on a fully-diluted
basis, as of and immediately after the consummation of the reverse acquisition.
The share exchange transaction with United Digital was treated as a reverse
acquisition, with United Digital as the acquirer and China Skyrise Digital
Service Inc. as the acquired party.

Upon the closing of the reverse acquisition on September 25,
  2009, Ms. Hai Yan Huang, our sole director and officer, resigned as our director
  and from all offices of the Company that she held. Also upon the closing of
  the reverse acquisition, our board of directors increased its size to 3 members
  and appointed Messrs. Mingchun Zhou, Weibing Wang, and Shengrong Dong to fill
  the vacancies created by Ms. Huangs resignation and such increase. In
  addition, our board of directors appointed Mr. Zhou to serve as our Chief Executive
  Officer and Dongmei Wu to serve as our Chief Financial Officer, Treasurer and
  Secretary, effective immediately at the closing of the reverse acquisition.

As a result of our acquisition of United Digital, we now own
all of the issued and outstanding capital stock of United Digital, which in turn
owns Skyrise Technology and Skyrise Digital. United Digital was a private
corporation incorporated on December 11, 2007 in Hong Kong. It was principally
established to serve as an investment holding company and its operations are
carried out in Hong Kong. On January 28, 2008, United Digital became the holding
company of Skyrise Technology, a PRC limited liability company, through the
acquisition of 100% of the equity interest in Skyrise Technology from Skyrise
Technologys shareholders, including Mr. Mingchun Zhou, our Chairman and Chief
Executive Officer. Skyrise Technology was established on May 23, 2003 and its
principal activity is the sale, installation and development of digital home
security networks, peripherals and software. On April 23, 2008, Skyrise
Technology established Skyrise Digital as its wholly owned PRC limited liability
Company. Skyrise Digitals principal activity is selling, installation and
development of computing network and intelligence system. On September 25, 2009,
we changed our name to China Skyrise Digital Service Inc. to more accurately
reflect our new business operations. For accounting purposes, the acquisition of
Skyrise Technology and Skyrise Digital was accounted for under the acquisition
method with United Digital as the holding company of both companies for legal
purposes. Accordingly, our financial statements have been prepared on a
consolidated basis for the periods presented.

Our Corporate Structure

All of our business operations are conducted through our
Chinese subsidiaries. The chart below presents our corporate structure.

3

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Our Industry and Principal Market

The security and surveillance industry in China was established
at the beginning of the 1980s and security and surveillance products were used
primarily by government agencies, financial institutions, transportation and
mega-size companies. Since then, the industry has experienced significant growth
and is growing at an annual rate of approximately 40%, according to the China
Public Security Guide published by the Chinese Security and Protection
Association, or the CSPA. In 2006, the Chinese government promulgated Ordinance
458 which requires all entertainment locations to install surveillance systems.
In addition, the booming Chinese real estate market and the increasing focus on
the security of the Chinese mining industry provide great opportunities for the
security and surveillance industry. The CSPA predicts that the industry will
grow by over 20% annually in the near future and the Chinese market for security
and surveillance products and services will reach approximately $160 billion by
2010.

The video surveillance industry is currently undergoing a
turbulent period of transformation. Aside from the technological trends shaping
the industry, such as the transition from analogue CCTV to network video
surveillance and the introduction of open standards, the global economic
downturn has also significantly impacted the industry. While the economic
downturn has significantly lowered growth expectations for the video
surveillance industry for 2009, citing a new report by IMS Research, or IMS, an
industry research group, the Digital Edition of Security Systems News, or SSN,
reported that the video surveillance segment of the security and surveillance
market in China is still positioned to show strong growth both this year and the
next, despite the global economic slowdown. According to SSN, the industry is
expected to be worth more than $3 billion by 2012, representing growth in CAGR
of 23.8% for 2007-2012. SSN reported that while growth in the Chinese video
surveillance market did slow in 2008 due to the international financial crisis
and the devastating earthquake in south-western China, IMS analysts believed
that action taken by the Chinese government to address that crisis will boost
growth this year and next. Chinas New Deal stimulus package, with a value of
$586 billion, calls for new housing, roads, railways and airports, plus
rebuilding areas devastated by the earthquake. As a result, IMS analysts felt
that 2009 and 2010 should be very strong years for the Chinese video
surveillance market. By 2012, IMS expects sales of security cameras to reach $16
million, for both new surveillance deployments and replacement purposes, with
revenues from security cameras accounting for approximately one-third of the
total security equipment market.

The Chinese market is showing a clear trend from basic box
cameras to higher-end models like speed domes and box zoom cameras, according to
IMS. DVRs account for the next largest part of the video surveillance market in
China. Local Chinese DVR manufacturers dominate this segment, and IMS estimates
that over 80% of the DVRs sold in China in 2008 were supplied by Chinese brands.
While analog is still the dominant force in video surveillance in China at the
moment, with sales of network video surveillance equipment, including network
cameras, video servers, NVRs and network video surveillance software amounting
to less than 10% of total market revenues in 2008, according to IMS, that trend
is expected to change in the coming years. According to the Technology Marketing
Corporation, or TMC, an industry group,the mainstream technology in
Chinas video surveillance market is now transforming from an analog to digital
base, tending towards networking and intelligent types. The analog market share
of Chinas video surveillance market shrank from 56.9% in 2004 to 19.7% in 2007. Meanwhile, the digital share grew to
54.4% from 35.7%, and that of network video surveillance expanded to 25.9% from
7.4% during the 2009 period. IMS forecasts a network video surveillance
equipment CAGR of 55.6% between 2007 and 2012. The safe city program launched
by the Ministry of Public Security in 2004 is believed to have boosted demand in
the video surveillance market as video surveillance system installations
accounted for 28% of the programs total investment. In addition, the Beijing
2008 Olympic Games and the coming Shanghai World Expo also helped promote the
market.

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There are many companies in China that engage in the business
of manufacturing, selling, installing and maintaining of security and
surveillance products, including residential based products. Due to the high
growth of the industry and the fact that it is still in the early stage of
development, the Chinese security and surveillance market is highly fragmented
and there is no apparent market leader.

Our Growth Strategy

We believe that Chinas highly fragmented security and surveillance
  industry and rapidly growing market provide us with significant growth opportunities.
  We intend to pursue the following strategies to achieve our goal:

- Residential Real Estate Market We plan to ride the
  continual growth in Chinas real estate industry. The industry is experiencing
  a transition from analog intercom systems to digital intercom systems, which
  falls into our strength: digital solutions. We are the current technology
  leader in digital intercom, and will continue to invest in R&D to maintain
  our leadership position. Our low-end digital solution will replace the
  high-end analog solutions currently on the market, and increase our overall
  market share in the intercom industry. We will also expand our business into
  the conversion of existing residential neighborhoods, a vast market that needs
  gradual upgrades from analog intercom to digital solutions.
- Value Added Services We plan to extend our presence on the
  vertical value chain. Our current digital hardware and network solutions
  provide a digital platform on top of which we could offer value-added
  services, such as property management, bill pay, food delivery orders, dry
  clean, and advertisement. We expect such service revenue to make up a
  significant portion of our future revenue.
- Strengthen Our R&D Capability We plan to enhance and
  expand our core products and further expand our customer base. For example,
  through our system-on-chip program, we are working on the integration of
  digital intercom system hardware and software onto a single chipset which, if
  successful, will reduce the overall cost of our systems. We could also market
  this product to companies that do not have their own research and development
  capabilities. We have initiated projects with two of Chinas 3G wireless
  communication service providers (China Mobile and China Unicom) to test launch
  standalone wireless intercom solutions. Such solutions would be sold by
  wireless service providers in packages for members of the families. We would
  provide value-added services on top of the platform we have established.
- Pursue Strategic Acquisitions to Augment Strong Internal Growth We expect that acquisitions will enable our geographic expansion,
  enhance our technological capabilities or competitive advantages, provide
  licensing and recurring revenue opportunities and propel our expansion into
  high growth enterprise class markets. We also plan to leverage our
  relationships with our business partners such as China Mobile, China Unicom,
  and China Telecom, Guangdong to seek attractive cross-selling, cross-marketing
  and licensing arrangements and other opportunities.

Our Products and Services

Through our subsidiaries, Skyrise Technology and Skyrise
Digital, we engage in the development, sale, installation and maintenance of
digital residential safety and video surveillance products, and in the
development and integration of related software in China. In 2009, we derived
most of our revenue from the supply, installation and service of digital
intercom products in urban and suburban homes.Our system
integration solution also started contributing to our sales growth.

Our Products

We manufacture the key components of safety and surveillance
products for residential use, and rely on third-party electronic assembling
companies to assemble the final products utilizing our technology. All of our
final products are fully branded and developed independently. Our main products include
standalone DVRs, embedded DVRs, mobile DVRs, digital cameras, intelligent
control system software platforms, perimeter security alarm systemsmonitors, and auxiliary apparatuses. Of these products, our monitors
accounted for more than 70% of our revenues in 2009.

5

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Our security monitors provide high-definition video,
reliability and color reducibility, including SVM LCD monitors, SVM CRT monitors
and other high-quality monitors. The SVM series are based on the latest 3D
digital graphic design technology. The structure of the product adopts the
single-oriented design which embodies the light, thin characteristics of both
the LCD and CRT products. Our other monitor products include LCD multiple screen
combination panel walls, LCD advertising players, built-in quadruple LCD/CRT
monitors, IP monitor, and progressive scanning color digital monitors.We
market our monitors in three models, Standard, High-end, Luxury and Wireless.
The specifications of each monitor is provided below:

Standard Model:

| | LCD touch screen: 4 in/5 in/5.6 in     | 
|- | -------------------------------------- | 
| | Compliant to telecom SP specifications
| | Support VoIP                          

High-end Model:

| | LCD tough screen: 10.4 in  | 
|- | -------------------------- | 
| | Build-in CMOS color camera

| | ABS material shell       | 
|- | ------------------------ | 
| | Build-in custom UI skins

Wireless Model:

| | Rechargeable lithium battery with
      one hour usage time                          | 
|- | ------------------------------------------------------------------------------------ | 
| | Build-in WiFi or 3G services                                                        
| | External microphone, compliant with home phones or as a standalone 3G
      terminal

Installation

We design software for our customers safety and surveillance
systems in accordance with our customers specifications. We generally test the
software on our own computer system before integrating it into our customers
computer system. We then assign technicians from our project service department
to the site of each project, to assist in the integration of our safety and surveillance system with our customers computer
systems. Upon integration, our technical department will test and examine the
system to ensure the proper functioning of the installed safety and surveillance
system. Each project group is usually comprised of 4-6members who are in
charge of the technical components of, and manage the progress of, each project.
We use subcontractors for non-technical, labor intensive work.

6

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The major products used in our installation projects include
intercom monitors, data servers, network connectivity, computer accessories,
decoders, video capture cards, recorders and computer cases. Approximately 80%
of the equipment that we use in our installation projects are produced by us,
and we rely on products manufactured by other companies for the balance of these
projects.

Supplier Relationships

We use manufactured electronic components in our products. The
main components of our products include monitors, frames, cases, decoders and
lenses.

Shenzhen is one of the largest and most concentrated bases for
electronic products in China. As a result, there are numerous suppliers and
vendors of the components that are needed for our products. Because of the high
level of competition among the suppliers, the prices of our principal components
are relatively stable and we are able to purchase these raw materials at
reasonable prices. We have entered into written contracts with several major
suppliers and vendors.

The following is a list of our suppliers of hardware for
certain of our products:

|Supplier                                    | Primary Items Supplied
|------------------------------------------- | ----------------------
|Shenzhen Huitong Technology Co. Ltd.        | Integrated Circuits   
|Shenzhen Olishi Machinery Co. Ltd.          | Integrated Circuits   
|Shenzhen Aopulesi Electronics Co. Ltd.      | Integrated Circuits   
|Shenzhen Jieyibotong Trading Co. Ltd.       | Integrated Circuits   
|Shenzhen Xinshengdai Technology, Ltd.       | Integrated Circuits   
|Shenzhen Aosaier Precision Product Co. Ltd. | Mold                  
|Shenzhen Huangjinyan Industrial Co. Ltd.    | OEM Product           
|Shenzhen Dakai Industrial Co. Ltd.          | Monitor               
|Shenzhen Weierjian Technology Co. Ltd.      | Integrated Circuits   
|Shenzhen Yongjia Electronics Co. Ltd.       | Integrated Circuits   

We develop most of our own software, including drivers,
embedded software, and application software. We utilize the open-source
real-time Linux OS for our home monitor endpoints, and use Linux and
Apache/Tomcat for our central server architecture. The monitor and server
software are all open-source products which we can use free of licensing fees.

Our main software suppliers are: Hangzhou Rundao Communication
Technology Ltd. and Shenzhen Huangjinyan Industry Co. Ltd.

Our Customers and Marketing Efforts

Our customers are primarily urban and suburban residential
communities and real estate development companies. Our customers include:
Shenzhen Youka Technology, Ltd., Shenzhen Jielingchang Technology, Ltd.,
Zhongshan Dahua Intelligence Technology stock Co., Ltd., Yangzhou Jinghua Cheng
Zhongcheng live purchase Ltd. and Hangzhou Hanjing Technology Ltd.

Because a large percentage of our revenues derive from the
installation of residential digital safety and video surveillance systems, which
are generally non-recurring, we do not rely on one single or a small group of
customers. We generally do not generate significant revenues from any existing
client after the installation project is completed unless that client has
additional installation sites for which our services might be required.

We market and promote our products through: participating in
various industrial shows to display our products; advertising in industrial
magazines and periodicals to introduce and promote our products; utilizing
internet forums such as the public safety network and Chinese Security Association network, to
promote our products; and relying on word-of-mouth marketing and referrals from
current customers.

7

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We believe that in order to promote our brand recognition,
strengthen the management of our distribution network and improve our sales
revenue and market share, we will also need to continue expanding our sales
channels and engage in more sophisticated marketing. With adequate funding, we
plan to acquire a number of competitors that are strong in direct sales and
channels to compliment our strengths in product design, integration, and
implementation. We believe that this strategy would result in driving our
strength in products and services to a wider client base.

We have sales offices at the following locations in coastal and
central China:

|Office   | Location                          
|-------- | ----------------------------------
|Shenzhen | Shenzhen,
      Guangdong Province
|Beijing  | Beijing                           
|Henan    | Zhengzhou, Henan
      Province   
|Shandong | Qingdao, Shandong Province        
|Anhui    | Hefei, Anhui
      Province       
|Zhejiang | Hangzhou, Zhejiang Province       
|Jiangsu  | Nanjing, Jiangsu
      Province   
|Hubei    | Wuhan, Hubei Province             
|Fujian   | Xiamen, Fujian
      Province     

Competition

There are many companies in China engaged in the business of
manufacturing safety and surveillance products and designing and installing
safety and surveillance systems. However, the safety and surveillance industry
in China is still nascent and no company has yet attained the dominating
position. In addition, it is difficult in the safety and surveillance industry
for very large companies to reap benefits from their size, because most safety
and surveillance projects require products to be specially tailored to meet
individual customer requirements.

In the safety and surveillance industry, competition is based
on price, product quality, ability to distribute products, and ability to
provide after-sales service. Our primary competition comes from Shenzhen
ShideanTechnology Industries Co., Ltd., Guangzhou AnjubaoTechnology Co., Ltd. and Fujian AurineTechnology Co., Ltd.Additional competition comes from large international companies such as
Honeywell. Some of our international competitors are larger than we are and
possess greater name recognition, assets, personnel, sales, and financial
resources. However, these competitors generally have higher prices for their
products, and most of them do not have distribution networks in China that are
as developed as ours.

We believe that the quality of our product and service
offerings, our relatively low labor costs, and our broad sales network enable us
to compete favorably in the market for the residential digital safety and video
surveillance products and services that we offer in China. We believe that the
following competitive strengths enable us to compete effectively and to
capitalize on the growth of the travel market in China and distinguish us from
our competitors:

- Innovative Products and Services: Our strong research and
  development team allows the company to rapidly react to the changing market
  situation, quickly adapt to the latest technical development, and develop new
  features which enables the company to capitalize on the latest consumer
  trends. We believe that the technology used in our digital products are
  well-ahead of technology used in products offered by our competitors by
  approximately 12 months, based on the timing of the offering of such products
  in the marketplace. This lead time helps us to offer the most advanced
  products to our clients, while charging a premium rate compared to our
  competitors. In addition, we believe that, as a result of our technical
  capabilities, businesses in the vertical digital intercom industry (i.e. chip
  suppliers, network service providers, content providers) are willing to
  cooperate and partner with us in developing advanced service solutions that
  carry higher profit margins.
- Full Series of Digital Products: The breadth of our products
  allows us to cover a varying degree of customer needs, ranging from the low to
  high end of the digital market. For example, our low-end digital safety and
  video surveillance products now match the price of, and are of superior
  quality to, high-end analog products in the marketplace. This allows us to sell our luxury
  products at a premium while carving out a space in the market for higher
  priced analog products.

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- Industry Leading Marketing and Sales Team: Our strong marketing/sales
    organization brings us quality clients. In many cases, we choose to work with
    clients who offer the most attractive pricing and payment terms. We also have
    the ability to rapidly expand our sales coverage once additional funding becomes
    available to support additional projects.
- Broad Service Network: We provide residential digital safety
    and video surveillance solutions, not just products. A broad service network
    allows us to provide superior after-sale services and charge for non-standard
    services such as network upgrades. We typically provide 12 months of free
    service, after which service contracts bring in additional service revenue,
    turning the service team from a cost center to a profit center.
- Strict Quality and Process Management: We take pride in our
    ability to rapidly respond to customer demands and offer superior products
    and service. All these results are derived from our continual effort to streamline
    processes and our strong belief in employee professional development. No one
    in the company is irreplaceable, thus allowing us to mobilize quality people
    to better serve our customers. We believe that the quality of our products
    comes, in large part, from our ability to identify, analyze and solve problems,
    as well as preventing their reoccurrence.

Research and Development

Our research and development activities focus on developing new
products and technologies. We currently have 35 employees dedicated to research
and development. We expect to provide additional value-added services and
add-ins to our current platform through continuous research and development, to
enhance our product and service offerings and to maintain our leadership
position in our core areas of focus.

We also maintain cooperative relationships with third party information
  technology development firms to develop and improve our technology.

Intellectual Property

Our success depends, in part, on our ability to maintain and
  protect our proprietary technology and to conduct our business without infringing
  on the proprietary rights of others. We rely primarily on a combination of patents,
  trademarks and trade secrets, as well as employee and third-party confidentiality
  agreements, to safeguard our intellectual property. As of December 31, 2009,
  we held 8 patents and 3 trademarks, and had no patent or trademark applications
  pending. We require our employees to enter into agreements to keep confidential
  all information relating to our customers, methods, business and trade secrets
  during and after their employment with us. Our employees are required to acknowledge
  and recognize that all inventions, trade secrets, works of authorship, developments
  and other processes made by them during their employment are our property. We
  regard our intellectual property as a factor contributing to our success. We
  rely on trademark and copyright law, trade secret protection, noncompetition
  and confidentiality agreements with our employees to protect our intellectual
  property rights.

Regulation

Because most of our operating subsidiaries are located in the
  PRC, we are regulated by the national and local laws of the PRC governing the
  conduct of business. We believe our conduct of business complies with existing
  PRC laws, rules and regulations.

General Regulation of Businesses

All surveillance products produced in China must satisfy
testing by the China Public Security Bureau, and manufacturers of such products
must receive the Security Technology Protection Product Manufacturing Permit
from the provincial agency. The products must pass the inspection process
administered by the Testing Center for Quality of Security & Police
Electronic Products, an agency of the PRCs Ministry of Public Security, and the
most authoritative quality assurance institution for security products in the
PRC. All functions of the Companys products passed the quality assurance inspection, including their data-reading, controlling,
alarming, data communication, anti-tagging, reminding, and emergency response
functions.We received the Quality Assurance Report issued by the Center
on May 9, 2008 and also received the Security Technology Protection Product
Manufacturing Permit from Guangdong province on July 23, 2008. We also hold a
separate license from Guangdong province for the design, installation and repair
of security protection systems.

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The Administrative Measures on Software Products promulgated by
the PRC Ministry of Information Industry, or MII, on October 27, 2000 regulate
the development and sale of computer software or software embedded in
information systems or equipment provided to users and computer software in
conjunction with computer information systems integration or application
services or other technical services in China. The measures prohibit the
development, production, sale, export or import of software products that
infringe third-party intellectual property rights, contain computer viruses,
endanger the safety of computer systems, contain content prohibited by the PRC
government or do not comply with applicable software standards of the PRC.All software products to be sold or operated in China must be tested by a
testing organization authorized by the MII and approved by, and registered with,
the MII or its provincial-level counterparts. The registration is valid for a
five-year period and can be renewed. The measures also require software product
manufacturers to have a business scope that includes computer software business
(including software technology development or production of software products),
have the conditions and technical strength for software production, and have a
fixed production base and the procedures and capability to guarantee product
quality. We are in compliance with the foregoing requirements.

Foreign Currency Exchange

The principal regulation governing foreign currency exchange in
China is the Foreign Currency Administration Rules (1996), as amended (2008).
Under these Rules, RMB is freely convertible for current account items, such as
trade and service-related foreign exchange transactions, but not for capital
account items, such as direct investment, loan or investment in securities
outside China unless the prior approval of, and/or registration with, the State
Administration of Foreign Exchange of the Peoples Republic of China, or SAFE,
or its local counterparts (as the case may be) is obtained.

Pursuant to the Foreign Currency Administration Rules, foreign
invested enterprises, or FIEs, in China may purchase foreign currency without
the approval of SAFE for trade and service-related foreign exchange transactions
by providing commercial documents evidencing these transactions. They may also
retain foreign exchange (subject to a cap approved by SAFE) to satisfy foreign
exchange liabilities or to pay dividends. In addition, if a foreign company
acquires a company in China, the acquired company will also become an FIE.
However, the relevant PRC government authorities may limit or eliminate the
ability of FIEs to purchase and retain foreign currencies in the future. In
addition, foreign exchange transactions for direct investment, loan and
investment in securities outside China are still subject to limitations and
require approvals from, and/or registration with, SAFE.

Regulation of Income Taxes

On March 16, 2007, the National Peoples Congress, the Chinese
legislature, passed a new Enterprise Income Tax Law, or New EIT Law, which
became effective on January 1, 2008. The New EIT Law applies a unified
enterprise income tax, or EIT, rate at 25% to both FIEs and domestic invested
enterprises. According to a grandfathering provision of the Notice on
Transitional Preferential Policies of Enterprise Income Tax published by the
State Council, enterprises that are subject to an EIT rate below 25% may
continue to enjoy such lower rate which will be gradually transitioned to the
new EIT rate within five years of the effective date of the New EIT Law, and
enterprises that are currently entitled to exemptions from, or reductions in,
applicable EIT for a fixed term may continue to enjoy such treatment until the
fixed term expires.

Under the New EIT Law, companies designated as High- and
New-Technology Enterprises may enjoy a reduced national enterprise income tax of
15%. The Administrative Measures for Assessment of High-New Tech Enterprises and
the Catalogue of High/New Tech Domains Strongly Supported by the State, or
Catalogue (2008), jointly issued by the Ministry of Science and Technology and
the Ministry of Finance and State Administration of Taxation, set forth general
guidelines regarding criteria as well as application procedures for
qualification as a High- and New-Tech Enterprise under the New EIT Law. Skyrise
Technology is designated as High- and New-Technology Enterprise designation now
and enjoys a reduced income tax rate. However, there can be no assurance that
Skyrise Technology will continue to qualify as a High- and New-Technology
Enterprise.

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Dividend Distribution

The principal regulations governing distribution of dividends
of wholly foreign-owned companies include:

- The Wholly Foreign-owned Enterprise Law (1986), as amended in October
  2000;
- Implementation Rules under the Wholly Foreign-owned Enterprise Law (1990),
  as amended in 2001;
- Company Law of the PRC (2005); and
- Enterprise Income Tax Law and its Implementation Rules (2007).

Under these regulations, wholly foreign-owned enterprises in
China may pay dividends only out of their accumulated profits, if any,
determined in accordance with PRC accounting standards and regulations. In
addition, wholly foreign-owned enterprises in China are required to set aside at
least 10% of their respective accumulated profits each year, if any, to fund
certain reserve funds, unless such reserve funds have reached 50% of their
respective registered capital. These reserves are not distributable as cash
dividends.

Under the New EIT Law, dividends, interests, rent, royalties
and gains on transfers of property payable by a FIE in the PRC to its foreign
investor who is a non-resident enterprise will be subject to a 10% withholding
tax, unless such non-resident enterprises jurisdiction of incorporation has a
tax treaty with the PRC that provides for a reduced rate of withholding tax.

Under the New EIT Law, an enterprise established outside the
PRC with its de facto management body within the PRC is considered a resident
enterprise and will be subject to the enterprise income tax at the rate of 25%
on its worldwide income. The implementing rules of the New EIT Law define de
facto management as substantial and overall management and control over the
production and operations, personnel, accounting, and properties of the
enterprise. For detailed discussion of PRC tax issues related to resident
enterprise status, see Item 1A, Risk Factors  Risks Related to Our Business 
Under the New EIT Law, we may be classified as a resident enterprise of China.
Such classification will likely result in unfavorable tax consequences to us and
our non-PRC stockholders.

Moreover, under the New EIT Law, foreign shareholders of an
entity that is classified as a PRC resident enterprise may be subject to a 10%
withholding tax upon dividends payable by such entity, unless the jurisdiction
of incorporation of the foreign shareholder of such entity has a tax treaty with
the PRC that provides for a reduced rate of withholding tax, and gains realized
on the sale or other disposition of shares, if such income is sourced from
within the PRC.

Environmental Matters

Our operations are not subject to any environmental
regulations.

Employees

As of December 31, 2009, we employed a total of 131 employees.
  The following table sets forth the number of our employees by function.

Function
    Number Of EmployeesSales and Marketing Department
    45Customer Service Department
    10IT and Technical Support Department
    35Financial Department
    6Administrative Office
    5Production
    30Total
    131


Approximately 57% of our employees hold bachelor degrees, and
most of these majored in computer science.

Our technical personnel are familiar with the safety and surveillance
  industry, thereby enabling us to develop proprietary and innovative technologies
  that respond to changing market. We consider our relations with our employees
  to be good. None of our employees is represented by a labor union.

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Our employees in China participate in a state pension plan
organized by Chinese municipal and provincial governments. We are required to
make monthly contributions to the plan for each employee at the rate of 23% of
his or her average monthly salary. In addition, we are required by Chinese law
to cover employees in China with various types of social insurance. We believe
that we are in material compliance with the relevant PRC laws.

Insurance

Insurance companies in China offer limited business insurance
products. We carry insurance against such losses and risks and in such amounts
as are customary in our business and in our geographic areas in China. While
business interruption insurance is available to a limited extent in China, we
have determined that the risks of interruption, cost of such insurance and the
difficulties associated with acquiring such insurance on commercially reasonable
terms make it impractical for us to have such insurance. In the event that our
insurance is not deemed to cover a claim, we could face liability from the
interruption of our business as summarized under Item 1A, Risk Factors  Risks
Related to Our Business  In the event that adequate insurance is not available
or our insurance is not deemed to cover a claim, we could face liability and
Risks Related to Our Industry  Our business and reputation as a provider of
high quality residential digital products and services may be adversely affected
by product defects or performance.

ITEM 1A.    RISK FACTORS.

An investment in our common stock involves a high degree of
risk. You should carefully consider the risks described below, together with all
of the other information included in this report, before making an investment
decision. If any of the following risks actually occurs, our business, financial
condition or results of operations could suffer. In that case, the trading price
of our common stock could decline, and you may lose all or part of your
investment. You should read the section entitled Special Notes Regarding
Forward-Looking Statements above for a discussion of what types of statements
are forward-looking statements, as well as the significance of such statements
in the context of this report.

RISKS RELATED TO OUR BUSINESS

Due to the nature of our business, we do not have significant
  amounts of recurring revenues from our existing customers and we are highly
  dependent on new business development.

Most of our revenues derive from the installation, service and
maintenance of residential digital safety and video surveillance systems which
are generally non-recurring. Our customers are primarily real estate
developments and property management companies, small commercial entities and
residential homes. We manufacture and install safety and security systems for
these customers and generate revenues from the sale and service of these systems
to our customers and, to a lesser extent, from maintenance of these systems for
our customers. After we have manufactured and installed a system at any
particular customer site, we have generated the majority of revenues from that
particular client. We would not expect to generate significant revenues from any
existing client in future years unless that client has additional installation
sites for which our services might be required. Therefore, in order to maintain
a level of revenues each year that is at or in excess of the level of revenues
we generated in prior years, we must identify and be retained by new clients. If
our business development, marketing and sales techniques do not result in an
equal or greater number of projects of at least comparable size and value for us
in a given year compared to the prior year, then we may be unable to increase
our revenues and earnings or even sustain current levels in the future.

Our products often are subject to government testing, inspection
  and approval.

We frequently supply products and services pursuant to
agreements with general contractors. The successful completion of our
obligations under these contracts is often subject to satisfactory testing,
inspection and approval of such products and services. Although we endeavor to
satisfy the requirements of each of these contracts to which we are a party, no
assurance can be given that the necessary approval of our products and services
will be granted on a timely basis or at all, and that we will receive any
payments due to us. In some cases, we may be dependent on others to complete
these projects which may also delay payments to us. Any failure to obtain these
approvals and payments may have a material adverse effect on our business and
future financial performance

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We face risks related to general domestic and global economic
  conditions and to the current credit crisis.

Our current operating cash flows, which combined with access to
the credit markets, provides us with significant discretionary funding capacity.
However, the current uncertainty arising out of domestic and global economic
conditions, including the recent disruption in credit markets, poses a risk to
the economies in which we operate that has impacted demand for our products and
services, and may impact our ability to manage normal relationships with our
customers, suppliers and creditors. If the current situation deteriorates
significantly, our business could be materially negatively impacted, including
such areas as reduced demand for our products and services from a slow-down in
the general economy, or supplier or customer disruptions resulting from tighter
credit markets.

In order to grow at the pace expected by management, we
will require additional capital to support our long-term growth strategies. If
we are unable to obtain additional capital in future years, we may be unable to
proceed with our plans and we may be forced to curtail our operations.

We will require additional working capital to support our
long-term growth strategies, which includes identifying suitable targets for
horizontal or vertical mergers or acquisitions, so as to enhance the overall
productivity and benefit from economies of scale. Our working capital
requirements and the cash flow provided by future operating activities, if any,
will vary greatly from quarter to quarter, depending on the volume of business
during the period and payment terms with our customers. We may not be able to
obtain adequate levels of additional financing, whether through equity
financing, debt financing or other sources. Additional financings could result
in significant dilution to our earnings per share or the issuance of securities
with rights superior to our current outstanding securities. In addition, we may
grant registration rights to investors purchasing our equity or debt securities
in the future. If we are unable to raise additional financing, we may be unable
to implement our long-term growth strategies, develop or enhance our products
and services, take advantage of future opportunities or respond to competitive
pressures on a timely basis, if at all. In addition, a lack of additional
financing could force us to substantially curtail operations.

Our business could be adversely affected by reduced levels
  of cash, whether from operations or from borrowings.

Historically, our principal sources of funds have been cash
flows from operations and borrowings from banks and other institutions. Our
operating and financial performance may generate less cash and result in our
failing to comply with our credit agreement covenants. We were in compliance
with these covenants in 2009 and expect to be in compliance with these covenants
during fiscal 2010. However, our ability to remain in compliance in the future
will depend on our future financial performance and may be affected by events
beyond our control. There can be no assurance that we will generate sufficient
earnings and cash flow to remain in compliance with the credit agreement, or
that we will be able to obtain future amendments to the credit agreement to
avoid a default. In the event of a default, there can be no assurance that we
could negotiate a new credit agreement or that we could obtain a new credit
agreement with satisfactory terms and conditions within a reasonable time
period.

We sometimes extend credit to our customers. Failure to
  collect the trade receivables or untimely collection could affect our liquidity.

We extend credit to some of our customers while generally
requiring no collateral. Generally, our customers pay in installments, with a
portion of the payment upfront, a portion of the payment upon receipt of our
products by our customers and before the installation, and a portion of the
payment after the installation of our products and upon satisfaction of our
customer. Sometimes, a small portion of the payment will not be paid until after
a certain period following the installation. We perform ongoing credit
evaluations of our customers financial condition and generally have no
difficulties in collecting our payments. However, if we encounter future
problems collecting amounts due from our clients or if we experience delays in
the collection of amounts due from our clients, our liquidity could be
negatively affected. In response to the recent economic downturn, beginning in
late 2007, we have begun to tighten the terms of our credit to customers and
have shortened customer payment schedules in order to reduce our exposure to
possible bad debt. In addition, have turned down some opportunities that we
believed carried unfavorable payment terms. We believe that we will be able to
collect current amounts due from our customers.

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If our subcontractors fail to perform their contractual
obligations, our ability to provide services and products to our customers, as
well as our ability to obtain future business, may be harmed.

Many of our contracts involve subcontracts with other companies
upon which we rely to perform a portion of the services that we must provide to
our customers. There is a risk that we may have disputes with our
subcontractors, including disputes regarding the quality and timeliness of work
performed by those subcontractors. A failure by one or more of our
subcontractors to satisfactorily perform the agreed-upon services may materially
and adversely impact our ability to perform our obligations to our customers,
could expose us to liability and could have a material adverse effect on our
ability to compete for future contracts and orders.

If we are unable to attract and retain senior management
  and qualified technical and sales personnel, our operations, financial condition
  and prospects will be materially adversely affected.

Our future success depends in part on the contributions of our
management team and key technical and sales personnel and our ability to attract
and retain qualified new personnel. In particular, our success depends on the
continuing employment of our CEO, Mr. Mingchun Zhou; our Vice President of
Marketing and Sales, Mr. Weibing Wang; and our Vice President of Research and
Development, Mr. Yanchun Jiang.There is significant competition in our
industry for qualified managerial, technical and sales personnel and we cannot
assure you that we will be able to retain our key senior managerial, technical
and sales personnel or that we will be able to attract, integrate and retain
other such personnel that we may require in the future. If we are unable to
attract and retain key personnel in the future, our business, operations,
financial condition, results of operations and prospects could be materially
adversely affected.

Management's estimates and assumptions affect reported
amounts of expenses and changes in those estimates could impact operating
results.

Goodwill and other indefinite-lived intangible assets are
tested for impairment at least annually, and the results of such testing may
adversely affect our financial results. We use a variety of valuation techniques
in determining fair value. The impairment review is highly judgmental and
involves the use of significant estimates and assumptions. These estimates and
assumptions have a significant impact on the amount of any impairment charge
recorded, and actual results may differ significantly from the estimates and
assumptions used.

We recognize deferred tax assets and liabilities for the expected
  future tax consequences of events which are included in the financial statements
  or tax returns. In assessing the whether deferred tax assets are realizable,
  management makes certain assumptions about whether the deferred tax assets will
  be realized. We expect the deferred tax assets currently recorded to be fully
  realizable, however there can be no assurance that an increased valuation allowance
  would not need to be recorded in the future.

In the event that adequate insurance is not available or
  our insurance is not deemed to cover a claim, we could face liability.

We carry insurance against such losses and risks and in such
amounts as are customary in our business and in our geographic areas in China.
While business interruption insurance is available to a limited extent in China,
we have determined that the risks of interruption, cost of such insurance and
the difficulties associated with acquiring such insurance on commercially
reasonable terms make it impractical for us to have such insurance. If we incur
increased losses related to employee acts or omissions, or system failure, or if
we are unable to obtain adequate insurance coverage at reasonable rates, or if
we are unable to receive reimbursements from insurance carriers, our financial
condition and results of operations could be materially and adversely affected.

Our quarterly operating results are likely to fluctuate,
  which may affect our stock price.

Our quarterly revenues, expenses, operating results and gross
profit margins vary from quarter to quarter. As a result, our operating results
may fall below the expectations of securities analysts and investors in some
quarters, which could result in a decrease in the market price of our common
stock. The reasons our quarterly results may fluctuate include:

- variations in profit margins attributable to product mix;
- changes in the general competitive and economic conditions;

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- delays in, or uneven timing in the delivery of, customer orders; and
- the introduction of new products by us or our competitors.

Period to period comparisons of our results should not be
relied on as indications of future performance.

Future government regulations or other standards could
  have an adverse effect on our operations.

Our operations are subject to a variety of laws, regulations
and licensing requirements of national and local authorities in the PRC. We are
required to obtain licenses or permits from the PRC central government and from
Guangdong province, where we operate, and to meet certain standards in the
conduct of our business. The loss of such licenses, or the imposition of
conditions to the granting or retention of such licenses, could have an adverse
effect on us. In the event that these laws, regulations and/or licensing
requirements change, we may be required to modify our operations or to utilize
resources to maintain compliance with such rules and regulations. In addition,
new regulations may be enacted that could have an adverse effect on us.

Our limited ability to protect our intellectual property,
  and the possibility that our technology could inadvertently infringe technology
  owned by others, may adversely affect our ability to compete.

We rely on a combination of trade secret laws, confidentiality
  procedures and licensing arrangements to protect the patents, trademarks and
  technological know-how that comprise our intellectual property. A successful
  challenge to the ownership of our technology could materially damage our business
  prospects. Our competitors may assert that our technologies or products infringe
  on their patents or proprietary rights. We may be required to obtain from others
  licenses that may not be available on commercially reasonable terms, if at all.
  Problems with intellectual property rights could increase the cost of our products
  or delay or preclude our new product development and commercialization. If infringement
  claims against us are deemed valid, we may not be able to obtain appropriate
  licenses on acceptable terms or at all. Litigation could be costly and time-consuming
  but may be necessary to protect our technology license positions or to defend
  against infringement claims.

United Digital is a Hong Kong company, while our operating
  subsidiaries are PRC companies, and most of our officers and directors reside
  outside the United States. Therefore, certain judgments obtained against our
  Company by our shareholders may not be enforceable in Hong Kong or China.

United Digital is a Hong Kong company and our operating
subsidiaries are PRC companies. Most of our officers and directors reside
outside of the United States. All or substantially all of our assets and the
assets of these persons are located outside of the United States. As a result,
it may not be possible for investors to effect service of process within the
United States upon us or such persons or to enforce against it or these persons
the United States federal securities laws, or to enforce judgments obtained in
United States courts predicated upon the civil liability provisions of the
federal securities laws of the United States, including the Securities Act and
the Exchange Act.

RISKS RELATED TO OUR INDUSTRY

Our success relies on our managements ability to
understand the residential digital safety and surveillance industry.

We target the rapidly evolving residential market for our
digital safety and surveillance products and services. As such, it is critical
that our management is able to understand industry trends and make good
strategic business decisions. If our management is unable to identify industry
trends and act in response to such trends in a way that is beneficial to us, our
business will suffer.

If we are unable to respond to the rapid changes in our
  industry and changes in our customers requirements and preferences, our
  business, financial condition and results of operations could be adversely affected.

If we are unable, for technological, legal, financial or other
reasons, to adapt in a timely manner to changing market conditions or customer
requirements, we could lose customers and market share. The residential digital
safety and surveillance products and services industry is characterized by rapid
technological change. Sudden changes in customer requirements and preferences,
the frequent introduction of new products and services embodying new
technologies and the emergence of new industry standards and practices could
render our existing products, services and systems obsolete. The

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emerging nature of products and services in the residential
digital safety and surveillance industry and their rapid evolution will require
that we continually improve the performance, features and reliability of our
products and services. Our success will depend, in part, on our ability to:

- enhance our existing products and services;
- anticipate changing customer requirements by designing, developing, and
  launching new products and services that address the increasingly
  sophisticated and varied needs of our current and prospective customers; and
- respond to technological advances and emerging industry standards and
  practices on a cost-effective and timely basis.

The development of additional products and services involves
significant technological and business risks and requires substantial
expenditures and lead time. If we fail to introduce products with new
technologies in a timely manner, or adapt our products to these new
technologies, our business, financial condition and results of operations could
be adversely affected. We cannot assure you that even if we are able to
introduce new products or adapt our products to new technologies that our
products will gain acceptance among our customers. In addition, from time to
time, we or our competitors may announce new products, product enhancements or
technological innovations that have the potential to replace or shorten the life
cycles of our existing products and that may cause customers to refrain from
purchasing our existing products, resulting in inventory obsolescence.

We may not be able to maintain or improve our competitive
position in the residential digital safety and surveillance industry, and we
expect this competition to continue to intensify.

Chinas residential digital safety and surveillance industry is
nascent and rapidly evolving. Our primary competition comes from domestic
companies such as Shenzhen ShideanTechnology Industries Co., Ltd.,
Guangzhou AnjubaoTechnology Co., Ltd. and Fujian AurineTechnology Co., Ltd.Additional competition comes from large
international companies such as Honeywell. Some of our international competitors
are larger than us and possess greater name recognition, assets, personnel,
sales and financial resources. These entities may be able to respond more
quickly to changing market conditions by developing new products and services
that meet customer requirements or are otherwise superior to our products and
services and may be able to more effectively market their products than we can
because they have significantly greater financial, technical and marketing
resources than we do. They may also be able to devote greater resources than we
can to the development, promotion and sale of their products. Increased
competition could require us to reduce our prices, result in our receiving fewer
customer orders, and result in our loss of market share. We cannot assure you
that we will be able to distinguish ourselves in a competitive market. To the
extent that we are unable to successfully compete against existing and future
competitors, our business, operating results and financial condition could be
materially adversely affected.

Our business and reputation as a provider of high quality
residential digital products and services may be adversely affected by product
defects or performance.

We believe that we offer high quality products that are
reliable and competitively priced. If our products do not perform to
specifications, we might be required to redesign or recall those products or pay
substantial damages. Such an event could result in significant expenses, disrupt
sales and affect our reputation and that of our products. In addition, product
defects could result in substantial product liability. We do not have product
liability insurance. If we face significant liability claims, our business,
financial condition, and results of operations would be adversely affected.

RISKS RELATED TO DOING BUSINESS IN CHINA

Changes in China's political or economic situation could
  harm us and our operating results.

Economic reforms adopted by the Chinese government have had a
positive effect on the economic development of the country, but the government
could change these economic reforms or any of the legal systems at any time.
This could either benefit or damage our operations and profitability. Some of
the things that could have this effect are:

- Level of government involvement in the economy;
- Control of foreign exchange;

16

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- Methods of allocating resources;
- Balance of payments position;
- International trade restrictions; and
- International conflict.

The Chinese economy differs from the economies of most
countries belonging to the Organization for Economic Cooperation and
Development, or OECD, in many ways. For example, state-owned enterprises still
constitute a large portion of the Chinese economy and weak corporate governance
and a lack of flexible currency exchange policy still prevail in China. As a
result of these differences, we may not develop in the same way or at the same
rate as might be expected if the Chinese economy was similar to those of the
OECD member countries.

Uncertainties with respect to the PRC legal system could
  limit the legal protections available to you and us.

We conduct substantially all of our business through our
operating subsidiaries in the PRC. Our operating subsidiaries are generally
subject to laws and regulations applicable to foreign investments in China and,
in particular, laws applicable to foreign-invested enterprises. The PRC legal
system is based on written statutes, and prior court decisions may be cited for
reference but have limited precedential value. Since 1979, a series of new PRC
laws and regulations have significantly enhanced the protections afforded to
various forms of foreign investments in China. However, since the PRC legal
system continues to evolve rapidly, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws,
regulations and rules involve uncertainties, which may limit legal protections
available to you and us. In addition, any litigation in China may be protracted
and result in substantial costs and diversion of resources and management
attention. In addition, all of our executive officers and all of our directors
are residents of China and not of the United States, and substantially all the
assets of these persons are located outside the United States. As a result, it
could be difficult for investors to affect service of process in the United
States or to enforce a judgment obtained in the United States against our
Chinese operations and subsidiaries.

You may have difficulty enforcing judgments against us.

We are a Nevada holding company, but most of our assets are
located outside of the United States and most of our current operations are
conducted in the PRC. In addition, most of our directors and officers are
nationals and residents of countries other than the United States. A substantial
portion of the assets of these persons is located outside the United States. As
a result, it may be difficult for you to effect service of process within the
United States upon these persons. It may also be difficult for you to enforce in
U.S. courts judgments on the civil liability provisions of the U.S. federal
securities laws against us and our officers and directors, most of whom are not
residents in the United States and the substantial majority of whose assets are
located outside of the United States. In addition, there is uncertainty as to
whether the courts of the PRC would recognize or enforce judgments of U.S.
courts. Our counsel as to PRC law, has advised us that the recognition and
enforcement of foreign judgments are provided for under the PRC Civil Procedures
Law. Courts in China may recognize and enforce foreign judgments in accordance
with the requirements of the PRC Civil Procedures Law based on treaties between
China and the country where the judgment is made or on reciprocity between
jurisdictions. China does not have any treaties or other arrangements that
provide for the reciprocal recognition and enforcement of foreign judgments with
the United States. In addition, according to the PRC Civil Procedures Law,
courts in the PRC will not enforce a foreign judgment against us or our
directors and officers if they decide that the judgment violates basic
principles of PRC law or national sovereignty, security or the public interest.
So it is uncertain whether a PRC court would enforce a judgment rendered by a
court in the United States.

The PRC government exerts substantial influence over the
  manner in which we must conduct our business activities.

The PRC government has exercised and continues to exercise
substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by
changes in its laws and regulations, including those relating to taxation,
import and export tariffs, environmental regulations, land use rights, property
and other matters. We believe that our operations in China are in material
compliance with all applicable legal and regulatory requirements. However, the
central or local governments of the jurisdictions in which we operate may impose
new, stricter regulations or interpretations of existing regulations that would
require additional expenditures and efforts on our part to ensure our compliance
with such regulations or interpretations.

17

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Accordingly, government actions in the future, including any
decision not to continue to support recent economic reforms and to return to a
more centrally planned economy or regional or local variations in the
implementation of economic policies, could have a significant effect on economic
conditions in China or particular regions thereof and could require us to divest
ourselves of any interest we then hold in Chinese properties or joint ventures.

Future inflation in China may inhibit our ability to conduct
  business in China.

In recent years, the Chinese economy has experienced periods of
rapid expansion and highly fluctuating rates of inflation. During the past ten
years, the rate of inflation in China has been as high as 20.7% and as low as
-2.2% . These factors have led to the adoption by the Chinese government, from
time to time, of various corrective measures designed to restrict the
availability of credit or regulate growth and contain inflation. High inflation
may in the future cause the Chinese government to impose controls on credit
and/or prices, or to take other action, which could inhibit economic activity in
China, and thereby harm the market for our products and our company.

Restrictions on currency exchange may limit our ability
to receive and use our revenues effectively.

The majority of our revenues will be settled in RMB and U.S.
dollars, and any future restrictions on currency exchanges may limit our ability
to use revenue generated in RMB to fund any future business activities outside
China or to make dividend or other payments in U.S. dollars. Although the
Chinese government introduced regulations in 1996 to allow greater
convertibility of the RMB for current account transactions, significant
restrictions still remain, including primarily the restriction that
foreign-invested enterprises may only buy, sell or remit foreign currencies
after providing valid commercial documents, at those banks in China authorized
to conduct foreign exchange business. In addition, conversion of RMB for capital
account items, including direct investment and loans, is subject to governmental
approval in China, and companies are required to open and maintain separate
foreign exchange accounts for capital account items. We cannot be certain that
the Chinese regulatory authorities will not impose more stringent restrictions
on the convertibility of the RMB.

Fluctuations in exchange rates could adversely affect our
  business and the value of our securities.

The value of our common stock will be indirectly affected by
the foreign exchange rate between U.S. dollars and RMB and between those
currencies and other currencies in which our sales may be denominated.
Appreciation or depreciation in the value of the RMB relative to the U.S. dollar
would affect our financial results reported in U.S. dollar terms without giving
effect to any underlying change in our business or results of operations.
Fluctuations in the exchange rate will also affect the relative value of any
dividend we issue that will be exchanged into U.S. dollars as well as earnings
from, and the value of, any U.S. dollar-denominated investments we make in the
future.

Since July 2005, the RMB has no longer been pegged to the U.S.
dollar. Although the Peoples Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange
rate, the RMB may appreciate or depreciate significantly in value against the
U.S. dollar in the medium to long term. Moreover, it is possible that in the
future PRC authorities may lift restrictions on fluctuations in the RMB exchange
rate and lessen intervention in the foreign exchange market.

Very limited hedging transactions are available in China to
reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. While we may enter into hedging transactions in
the future, the availability and effectiveness of these transactions may be
limited, and we may not be able to successfully hedge our exposure at all. In
addition, our foreign currency exchange losses may be magnified by PRC exchange
control regulations that restrict our ability to convert RMB into foreign
currencies.

Currently, some of our raw materials and major equipment are
imported. In the event that the U.S. dollars appreciate against RMB, our costs
will increase. If we cannot pass the resulting cost increases on to our
customers, our profitability and operating results will suffer. In addition, if
our sales to international customers grow, we will be increasingly subject to
the risk of foreign currency depreciation.

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Restrictions under PRC law on our PRC subsidiaries' ability
  to make dividends and other distributions could materially and adversely affect
  our ability to grow, make investments or acquisitions that could benefit our
  business, pay dividends to you, and otherwise fund and conduct our businesses.

Substantially all of our revenues are earned by our PRC
subsidiaries. However, PRC regulations restrict the ability of our PRC
subsidiaries to make dividends and other payments to their offshore parent
company. PRC legal restrictions permit payments of dividend by our PRC
subsidiaries only out of their accumulated after-tax profits, if any, determined
in accordance with PRC accounting standards and regulations. Our PRC
subsidiaries are also required under PRC laws and regulations to allocate at
least 10% of our annual after-tax profits determined in accordance with PRC GAAP
to a statutory general reserve fund until the amounts in said fund reaches 50%
of our registered capital. Allocations to these statutory reserve funds can only
be used for specific purposes and are not transferable to us in the form of
loans, advances or cash dividends. Any limitations on the ability of our PRC
subsidiaries to transfer funds to us could materially and adversely limit our
ability to grow, make investments or acquisitions that could be beneficial to
our business, pay dividends and otherwise fund and conduct our business.

Failure to comply with PRC regulations relating to the
  establishment of offshore special purpose companies by PRC residents may subject
  our PRC resident stockholders to personal liability, limit our ability to acquire
  PRC companies or to inject capital into our PRC subsidiaries, limit our PRC
  subsidiaries' ability to distribute profits to us or otherwise materially adversely
  affect us.

In October 2005, SAFE issued the Notice on Relevant Issues in
the Foreign Exchange Control over Financing and Return Investment Through
Special Purpose Companies by Residents Inside China, generally referred to as
Circular 75, which required PRC residents to register with the competent local
SAFE branch before establishing or acquiring control over an offshore special
purpose company, or SPV, for the purpose of engaging in an equity financing
outside of China on the strength of domestic PRC assets originally held by those
residents. Internal implementing guidelines issued by SAFE, which became public
in June 2007 (known as Notice 106), expanded the reach of Circular 75 by (1)
purporting to cover the establishment or acquisition of control by PRC residents
of offshore entities which merely acquire control over domestic companies or
assets, even in the absence of legal ownership; (2) adding requirements relating
to the source of the PRC residents funds used to establish or acquire the
offshore entity; (3) covering the use of existing offshore entities for offshore
financings; (4) purporting to cover situations in which an offshore SPV
establishes a new subsidiary in China or acquires an unrelated company or
unrelated assets in China; and (5) making the domestic affiliate of the SPV
responsible for the accuracy of certain documents which must be filed in
connection with any such registration, notably, the business plan which
describes the overseas financing and the use of proceeds. Amendments to
registrations made under Circular 75 are required in connection with any
increase or decrease of capital, transfer of shares, mergers and acquisitions,
equity investment or creation of any security interest in any assets located in
China to guarantee offshore obligations, and Notice 106 makes the offshore SPV
jointly responsible for these filings. In the case of an SPV which was
established, and which acquired a related domestic company or assets, before the
implementation date of Circular 75, a retroactive SAFE registration was required
to have been completed before March 31, 2006; this date was subsequently
extended indefinitely by Notice 106, which also required that the registrant
establish that all foreign exchange transactions undertaken by the SPV and its
affiliates were in compliance with applicable laws and regulations. Failure to
comply with the requirements of Circular 75, as applied by SAFE in accordance
with Notice 106, may result in fines and other penalties under PRC laws for
evasion of applicable foreign exchange restrictions. Any such failure could also
result in the SPV's affiliates being impeded or prevented from distributing
their profits and the proceeds from any reduction in capital, share transfer or
liquidation to the SPV, or from engaging in other transfers of funds into or out
of China.

We have asked our stockholders who are PRC residents as defined
in Circular 75 to register with the relevant branch of SAFE as currently
required in connection with their equity interests in us and our acquisitions of
equity interests in our PRC subsidiaries. However, we cannot provide any
assurances that they can obtain the above SAFE registrations required by
Circular 75 and Notice 106. Moreover, because of uncertainty over how Circular
75 will be interpreted and implemented, and how or whether SAFE will apply it to
us, we cannot predict how it will affect our business operations or future
strategies. For example, our present and prospective PRC subsidiaries ability
to conduct foreign exchange activities, such as the remittance of dividends and
foreign currency-denominated borrowings, may be subject to compliance with
Circular 75 and Notice 106 by our PRC resident beneficial holders.

In addition, such PRC residents may not always be able to
complete the necessary registration procedures required by Circular 75 and
Notice 106. We also have little control over either our present or prospective
direct or indirect stockholders or the outcome of such registration procedures.
A failure by our PRC resident beneficial holders or future PRC resident
stockholders to comply with Circular 75 and Notice 106, if SAFE requires it,
could subject these PRC resident beneficial holders to fines or legal sanctions,
restrict our overseas or cross-border investment activities, limit our
subsidiaries' ability to make distributions or pay dividends or affect our ownership
structure, which could adversely affect our business and prospects.

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Our business and financial performance may be materially
adversely affected if the PRC regulatory authorities determine that our
acquisition of Skyrise Technology constitutes a Round-trip Investment without
MOFCOM approval.

On August 8, 2006, six PRC regulatory agencies promulgated the
Regulation on Mergers and Acquisitions of Domestic Companies by Foreign
Investors, or the 2006 M&A Rule, which became effective on September 8,
2006. According to the 2006 M&A Rule, a Round-trip Investment is defined
as having taken place when a PRC business that is owned by PRC individual(s) is
sold to a non-PRC entity that is established or controlled, directly or
indirectly, by those same PRC individual(s). Under the 2006 M&A Rules, any
Round-trip Investment must be approved by the Ministry of Commerce, MOFCOM, and
any indirect arrangement or series of arrangements which achieves the same end
result without the approval of MOFCOM is a violation of PRC law.

On September 25, 2009, Mr. Lai, the owner of approximately
65.75% of our issued and outstanding common stock, entered into an option
agreement with Mr. Mingchun Zhou, our Chairman and Chief Executive Officer and
an original shareholder of Skyrise Technology, pursuant to which Mr. Zhou was
granted an option, exercisable during the period commencing on the 365thday following of the date of the option agreement and ending on the second
anniversary of the date thereof, to purchase all shares of our common stock
currently owned or later acquired by Mr. Lai. After Mr. Zhou exercises this
option, he will be our controlling stockholder. His acquisition of our equity
interest, or the Acquisition, is required to be registered with the competent
administration of industry and commerce authorities, or AIC, in Beijing. Mr.
Zhou will also be required to make filings with the Beijing SAFE, to register
the Company and its non-PRC subsidiaries to qualify them as SPVs, pursuant to
Circular 75 and Notice 106.

The PRC regulatory authorities may take the view that the
Acquisition and the Share Exchange Agreement are part of an overall series of
arrangements which constitute a Round-trip Investment, because at the end of
these transactions, Mr. Zhou will become a majority owner and effective
controlling party of a foreign entity that acquired ownership of our Chinese
subsidiaries. The PRC regulatory authorities may also take the view that the
registration of the Acquisition with the relevant AIC in Beijing and the filings
with the Beijing SAFE may not be evidence that the Acquisition has been properly
approved because the relevant parties did not fully disclose to the AIC, SAFE or
MOFCOM the overall restructuring arrangements, the existence of the Share
Exchange Agreement and its link with the Acquisition. If the PRC regulatory
authorities take the view that the Acquisition constitutes a Round-trip
Investment under the 2006 M&A Rules, we cannot assure you we may be able to
obtain the approval required from MOFCOM.

If the PRC regulatory authorities take the view that the
Acquisition constitutes a Round-trip Investment without MOFCOM approval, they
could invalidate our acquisition and ownership of our Chinese subsidiaries.
Additionally, the PRC regulatory authorities may take the view that the
Acquisition constitutes a transaction which requires the prior approval of the
China Securities Regulatory Commission, or CSRC, before MOFCOM approval is
obtained. We believe that if this takes place, we may be able to find a way to
re-establish control of our Chinese subsidiaries business operations through a
series of contractual arrangements rather than an outright purchase of our
Chinese subsidiaries. But we cannot assure you that such contractual
arrangements will be protected by PRC law or that the registrant can receive as
complete or effective economic benefit and overall control of our Chinese
subsidiaries business than if the Company had direct ownership of our Chinese
subsidiaries. In addition, we cannot assure you that such contractual
arrangements can be successfully effected under PRC law. If we cannot obtain
MOFCOM or CSRC approval if required by the PRC regulatory authorities to do so,
and if we cannot put in place or enforce relevant contractual arrangements as an
alternative and equivalent means of control of our Chinese subsidiaries, our
business and financial performance will be materially adversely affected.

Under the New EIT Law, we may be classified as a resident
  enterprise of China. Such classification will likely result in unfavorable
  tax consequences to us and our non-PRC shareholders.

China passed the New EIT Law and its implementing rules, both
of which became effective on January 1, 2008. Under the New EIT Law, an
enterprise established outside of China with de facto management bodies within
China is considered a resident enterprise, meaning that it can be treated in a
manner similar to a Chinese enterprise for enterprise income tax purposes. The
implementing rules of the New EIT Law define de facto management as substantial
and overall management and control over the production and operations,
personnel, accounting, and properties of the enterprise.

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On April 22, 2009, the State Administration of Taxation issued
the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment
Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to
Criteria of de facto Management Bodies, or the Notice, further interpreting the
application of the New EIT Law and its implementation non-Chinese enterprise or
group controlled offshore entities. Pursuant to the Notice, an enterprise
incorporated in an offshore jurisdiction and controlled by a Chinese enterprise
or group will be classified as a non-domestically incorporated resident
enterprise if (i) its senior management in charge of daily operations reside or
perform their duties mainly in China; (ii) its financial or personnel decisions
are made or approved by bodies or persons in China; (iii) its substantial assets
and properties, accounting books, corporate chops, board and shareholder minutes
are kept in China; and (iv) at least half of its directors with voting rights or
senior management often resident in China. A resident enterprise would be
subject to an enterprise income tax rate of 25% on its worldwide income and must
pay a withholding tax at a rate of 10% when paying dividends to its non-PRC
shareholders. However, it remains unclear as to whether the Notice is applicable
to an offshore enterprise incorporated by a Chinese natural person. Nor are
detailed measures on imposition of tax from non-domestically incorporated
resident enterprises are available. Therefore, it is unclear how tax authorities
will determine tax residency based on the facts of each case.

We may be deemed to be a resident enterprise by Chinese tax
authorities. If the PRC tax authorities determine that we are a resident
enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC
tax consequences could follow. First, we may be subject to the enterprise income
tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise
income tax reporting obligations. In our case, this would mean that income such
as interest on financing proceeds and non-China source income would be subject
to PRC enterprise income tax at a rate of 25%. Second, although under the New
EIT Law and its implementing rules dividends paid to us from our PRC
subsidiaries would qualify as tax-exempt income, we cannot guarantee that such
dividends will not be subject to a 10% withholding tax, as the PRC foreign
exchange control authorities, which enforce the withholding tax, have not yet
issued guidance with respect to the processing of outbound remittances to
entities that are treated as resident enterprises for PRC enterprise income tax
purposes. Finally, it is possible that future guidance issued with respect to
the new resident enterprise classification could result in a situation in
which a 10% withholding tax is imposed on dividends we pay to our non-PRC
shareholders and with respect to gains derived by our non-PRC shareholders from
transferring our shares. We are actively monitoring the possibility of resident
enterprise treatment for the 2008 tax year and are evaluating appropriate
organizational changes to avoid this treatment, to the extent possible.

If we were treated as a resident enterprise by PRC tax
authorities, we would be subject to taxation in both the U.S. and China, and our
PRC tax may not be creditable against our U.S. tax.

We may be exposed to liabilities under the Foreign Corrupt
  Practices Act and Chinese anti-corruption laws, and any determination that we
  violated these laws could have a material adverse effect on our business.

We are subject to the Foreign Corrupt Practice Act, or FCPA,
and other laws that prohibit improper payments or offers of payments to foreign
governments and their officials and political parties by U.S. persons and
issuers as defined by the statute, for the purpose of obtaining or retaining
business. We have operations, agreements with third parties and we make most of
our sales in China. PRC also strictly prohibits bribery of government officials.
Our activities in China create the risk of unauthorized payments or offers of
payments by the employees, consultants, sales agents or distributors of our
Company, even though they may not always be subject to our control. It is our
policy to implement safeguards to discourage these practices by our employees.
However, our existing safeguards and any future improvements may prove to be
less than effective, and the employees, consultants, sales agents or
distributors of our Company may engage in conduct for which we might be held
responsible. Violations of the FCPA or Chinese anti-corruption laws may result
in severe criminal or civil sanctions, and we may be subject to other
liabilities, which could negatively affect our business, operating results and
financial condition. In addition, the U.S. government may seek to hold our
Company liable for successor liability FCPA violations committed by companies in
which we invest or that we acquire.

RISKS RELATED TO THE MARKET FOR OUR STOCK GENERALLY

Our common stock is quoted on the OTC Bulletin Board which
  may have an unfavorable impact on our stock price and liquidity.

Our common stock is quoted on the OTC Bulletin Board. The OTC
Bulletin Board is a significantly more limited market than established trading
markets such as the New York Stock Exchange or NASDAQ. The quotation of our
shares on the OTC Bulletin Board may result in a less liquid market available
for existing and potential stockholders to trade shares of our common stock,
could depress the trading price of our common stock and could have a long-term
adverse impact on our ability to raise capital in the future. We plan to list
our common stock as soon as practicable. However, we cannot assure you that we
will be able to meet the initial listing standards of any stock exchange, or
that we will be able to maintain any such listing.

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We may be subject to penny stock regulations and restrictions
  and you may have difficulty selling shares of our common stock.

The SEC has adopted regulations which generally define
so-called penny stocks to be an equity security that has a market price less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exemptions. Our common stock is a penny stock and is subject to
Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes
additional sales practice requirements on broker-dealers that sell such
securities to persons other than established customers and accredited
investors (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchasers
written consent to the transaction prior to sale. As a result, this rule may
affect the ability of broker-dealers to sell our securities and may affect the
ability of purchasers to sell any of our securities in the secondary market,
thus possibly making it more difficult for us to raise additional capital.

For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. Disclosure is
also required to be made about sales commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.

There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest.

Provisions in our articles of incorporation and bylaws
  or Nevada law might discourage, delay or prevent a change of control of us or
  changes in our management and, therefore depress the trading price of the common
  stock.

Nevada corporate law and our articles of incorporation and
bylaws contain provisions that could discourage, delay or prevent a change in
control of our Company or changes in its management that our stockholders may
deem advantageous. These provisions:

- deny holders of our common stock cumulative voting rights in the election
  of directors, meaning that stockholders owning a majority of our outstanding
  shares of common stock will be able to elect all of our directors;
- require any stockholder wishing to properly bring a matter before a meeting
  of stockholders to comply with specified procedural and advance notice
  requirements; and
- allow any vacancy on the board of directors, however the vacancy occurs, to
  be filled by the directors.

We do not intend to pay dividends for the foreseeable future.

For the foreseeable future, we intend to retain any earnings to
finance the development and expansion of our business, and we do not anticipate
paying any cash dividends on our common stock. Accordingly, investors must be
prepared to rely on sales of their common stock after price appreciation to earn
an investment return, which may never occur. Investors seeking cash dividends
should not purchase our common stock. Any determination to pay dividends in the
future will be made at the discretion of our board of directors and will depend
on our results of operations, financial condition, contractual restrictions,
restrictions imposed by applicable law and other factors our board deems
relevant.

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ITEM 1B.     UNRESOLVED STAFF COMMENTS.

Not Applicable.

ITEM 2.       
PROPERTIES.

Our principal executive offices and base of operations are
located in Shenzhen, China. We currently lease approximately 1,890 square meters
of space from Shenzhen Shunping Industrial Co., Ltd, which lease expires on June
14, 2011. Under the lease agreement, we pay an aggregate monthly rent of RMB35
per square meter, or RMB66,150 (approximately $9,730) per month. We believe that
all leased space is in good condition and that the property is adequately
insured by the owner.

ITEM 3.        LEGAL
PROCEEDINGS.

From time to time, we may become involved in various lawsuits
  and legal proceedings which arise in the ordinary course of business. However,
  litigation is subject to inherent uncertainties and an adverse result in these
  or other matters may arise from time to time that may harm our business. We
  are currently not aware of any such legal proceedings or claims that we believe
  will have a material adverse affect on our business, financial condition or
  operating results.

ITEM 4.        [REMOVED
AND RESERVED].

PART II

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

Market Information

Our common stock is quoted under the symbol CSKD on the
Electronic Bulletin Board maintained by the Financial Industry Regulatory
Authority, but has not been traded in the Over-The-Counter market except on a
limited and sporadic basis. The CUSIP number of our common stock is 37427P101.

The prices below prices reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not represent actual
transactions.

|                             | Closing
      Bid Prices(1)
|---------------------------- | ---------------------------
|                             | High                       
|Year Ended December 31, 2009 |                            
|First Quarter                | 3.50                       
|Second Quarter               | 1.00                       
|Third Quarter                | 2.38                       
|Fourth Quarter               | 2.35                       
|                             |                            
|Year Ended December 31, 2008 |                            
|First Quarter                | N/A                        
|Second Quarter               | N/A                        
|Third Quarter                | N/A                        
|Fourth Quarter               | 3.95                       

_______________________(1) The above table sets forth the
range of high and low closing bid prices per share of our common stock as
reported by www.quotemedia.com for the periods indicated.

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Approximate Number of Holders of Our Common Stock

As of March 15, 2010, there were approximately 21,110,550
stockholders of record of our common stock. This number does not include shares
held by brokerage clearing houses, depositories or others in unregistered form.

Dividends

We have never declared or paid a cash dividend. Any future
decisions regarding dividends will be made by our board of directors. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has complete discretion on whether to
pay dividends, subject to the approval of our stockholders. Even if our board of
directors decides to pay dividends, the form, frequency and amount will depend
upon our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that the
board of directors may deem relevant.

Securities Authorized for Issuance Under Equity Compensation
Plans

See Item 12, Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters  Securities Authorized for
Issuance Under Equity Compensation Plans.

Recent Sales of Unregistered Securities

We have not sold any equity securities during the fiscal year
  ended December 31, 2009 that were not previously disclosed in a quarterly report
  on Form 10-Q or a current report on Form 8-K that was filed during the 2009
  fiscal year.

Purchases of Equity Securities

No repurchases of our common stock were made during the fourth
quarter of 2009.

ITEM 6.        SELECTED
FINANCIAL DATA.

Not Applicable.

ITEM 7.       
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

Overview

We are primarily engaged, through our direct and indirect
Chinese subsidiaries, in the development, sale, installation and maintenance of
digital residential safety and video surveillance products, and in the
development and integration of related software in China. Our customers are
primarily urban and suburban residential communities and real estate development
companies in China, but we plan to expand our customer base to the commercial
sector to include commercial entities, such as airports, hotels, banks,
supermarkets and entertainment venues.

A majority of our revenues are derived from the provision of
digital residential safety and video surveillance packaged solutions, including
the development, installation and after-sale service maintenance of safety and
surveillance systems. Because the majority of our revenues are derived from
installations, they are generally non-recurring. Our revenues are not
concentrated within any one customer or group of related customers. Maintenance
services in our packaged solutions are included for the first year following
installation. Our customers may separately purchase maintenance services after
the first year.

Our sales network is focused in the populated areas of
Guangdong Province, in southern China, but we plan to expand our sales network
to other populated areas. Our company headquarters is located in southern China,
in the Shenzhen Special Economic Zone and we have more than 10 branch offices
and distribution points. Our customers are spread across China, but are
primarily located in the coastal metropolitan regions including Beijing,
Shanghai, and Guangzhou/Shenzhen.

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2009 Financial Performance Highlights

Commencing in the second half of fiscal year 2008 and through
the 2009 fiscal year, we have faced a slowdown in Chinas real estate market. We
have taken various steps to acquire new customers and retain existing customers,
including offering lower deal pricing for our products and services. However,
our efforts to continue providing excellent products and services to our
existing customers at reduced prices during the market decline, as well as our
extensive sales and marketing efforts during the period, has resulted in higher
costs of sales in connection with such products and services.

The following are some financial highlights for the 2009 fiscal
year:

- Net Sales: Net sales increased $2.72 million, or 65.58%, to
  $6.86 million for the fiscal year ended December 31, 2009 from $4.14 million
  last year, primarily as a result of increased sales volume.
- Gross Margin: Gross margin was 31.47% for the fiscal year
  ended December 31, 2009, as compared to 55.95% last year.
- Net Income: Net income decreased $0.18 million, or 14.35%, to
  $1.05 million for the fiscal year ended December 31, 2009, from $1.23 million
  last year.
- Fully diluted earnings per share: Fully diluted earnings per
  share were $0.0541 for the fiscal year ended December 31, 2009, as compared to
  $0.0723 last year.

Total company backlog as of December 31, 2009 was $ 2.2 million.

Although the series of measures adopted by the Chinese
government to promote economic growth (described more fully below) have achieved
some results, it is currently unclear whether and to what extent the economic
stimulus measures and other actions taken or contemplated by the Chinese
government and other governments throughout the world will mitigate the effects
of the crisis on the industries that affect our business. Furthermore,
deteriorating economic conditions, including business layoffs, downsizing,
industry slowdowns and other similar factors that affect our customers could
have further negative consequences on our business operations. For the
foreseeable future, we expect a continuation of weak demand and volatility in
the market for our products and services, and significantly adverse impacts on
our gross margin due to a decrease in sales. However, due to the quality of our
products, we believe that we will be able to keep quality customers and
negotiate new contracts with customers in the coming months.Moreover, we
anticipate that the ongoing conversion from analog to digital in the PRC
residential safety and video surveillance market will provide a significant
boost to our revenues in 2010 and through the next few years.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following
  factors:

- Growth in the Chinese Economy. We operate our facilities in
  China and derive almost all of our revenues from sales to customers in China.
  Economic conditions in China, therefore, affect virtually all aspects of our
  operations, including the demand for our products, the availability and prices
  of our raw materials and our other expenses. China has experienced significant
  economic growth, achieving a compound annual growth rate of over 10% in gross
  domestic product from 1996 through 2008. China is expected to experience
  continued growth in all areas of investment and consumption, even in the face
  of a global economic recession. However, China has been affected by the global
  economic slowdown and is experiencing a slowing of its growth rate.
- PRC Economic Stimulus Plans.The PRC government has
  issued a policy entitled Central Government PolicyOn Stimulating
  Domestic Consumption To Counter The Damage Result From Export Business Of The
  Country,pursuant to which the PRC Central Government is dedicating
  approximately $580 billion to stimulate domestic consumption. Companies that
  are either directly or indirectly related to construction, and to the
  manufacture and sale of building materials, electrical household appliances
  and telecommunication equipment, are expected to benefit. An executive order
  has been announced that the PRC Central Government will improve the living
  standard in the countrys rural areas by subsidizing the purchase of any
  electric household appliance for every household in the rural area. In addition, the
  policy indicates a strong determination to improve telecommunication in all
  rural areas. We expect to indirectly benefit from the economic stimulus plan
  through an increase in orders from our customers who are real estate
  development companies.

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- Product Development and Brand Recognition. We believe that
  in order to compete effectively in our product and services market, we need to
  constantly improve the quality of our products and deliver new products. As
  such, we face the challenge of expanding our research and development
  capacity. We need to maintain a strong and sufficient research and development
  team and identify the right directions for our research and development. We
  also face the long-term challenge of developing our brand recognition. In
  addition to providing high quality products and effective project execution,
  we believe that in order to promote our brand recognition, strengthen the
  management of our distribution network and improve our sales revenue and
  market share, we will also need to continue expanding our sales channels and
  engage in more sophisticated marketing. With adequate funding, we plan to
  acquire a number of competitors that are strong in direct sales and channels
  to compliment our strengths in product design, integration, and
  implementation. We believe that this strategy would result in driving our
  strength in products and services to a wider client base.

Taxation

United States and Hong Kong

We are subject to United States tax at a tax rate of 34%. No
provision for income taxes in the United States has been made as we have no
income taxable in the United States.

United Digital was incorporated in Hong Kong and under the
current laws of Hong Kong, is subject to Profits Tax of 16.5% . No provision for
Hong Kong Profits Tax has been made as United Digital HK has no taxable income.

China

Before the implementation of the New EIT Law, FIEs established
in the PRC, unless granted preferential tax treatments by the PRC government,
were generally subject to an EIT rate of 33.0%, which included a 30.0% state
income tax and a 3.0% local income tax. On March 16, 2007, the National Peoples
Congress of China passed the New EIT Law, and on November 28, 2007, the State
Council of China passed its implementing rules, which took effect on January 1,
2008. The New EIT Law and its implementing rules impose a unified EIT of 25.0%
on all domestic-invested enterprises and FIEs, unless they qualify under certain
limited exceptions. Despite these changes, the New EIT Law gives the FIEs
established before March 16, 2007, the Old FIEs, a five-year grandfather period
during which they can continue to enjoy their existing preferential tax
treatments. During this five-year grandfather period, the Old FIEs which enjoyed
tax rates lower than 25% under the original EIT law will be subject to gradually
increased EIT rates over a 5-year period until their tax rate reaches 25%. In
addition, the Old FIEs that are eligible for other preferential tax treatments
by the PRC government under the original EIT law, are allowed to continue
enjoying their preference until these preferential treatment periods expire.

Under the old EIT law, Skyrise Technology and Skyrise Digital
  were entitled to certain tax exemptions and reductions available to software
  companies. Under these tax holidays, Skyrise Technology and Skyrise
  Digital are entitled to exemption from EIT for 3 years and reduced tax rates
  for 2 years after that, effective as of 2007.Therefore, these companies
  incurred no income tax expenses during fiscal years 2008 and 2009. We expect
  to pay a reduced tax rate of 11% during fiscal years 2010 and 2011, and will
  be required to pay the full tax rate of 25% commencing in fiscal year 2012,
  unless Skyrise Technology qualifies for reduced tax treatment as a High- and
  New-Technology Enterprise. Under the New EIT Law, companies designated as High-
  and New-Technology Enterprises may enjoy a reduced national enterprise income
  tax of 15%. Skyrise Technology is designated as High- and New-Technology Enterprise
  designation now and enjoys a reduced income tax rate. However, there can be
  no assurance that Skyrise Technology will continue to qualify as a High- and
  New-Technology Enterprise.

In addition to the changes to the current tax structure, under
the New EIT Law, an enterprise established outside of China with de facto
management bodies within China is considered a resident enterprise and will
normally be subject to an EIT of 25% on its global income. The implementing
rules define the term de facto management bodies as an establishment that
exercises, in substance, overall management and control over the production,
business, personnel, accounting, etc., of a Chinese enterprise. If the PRC tax
authorities subsequently determine that we should be classified as a resident
enterprise, then our organizations global income will be subject to PRC
income tax of 25%. For detailed discussion of PRC tax issues related to resident
enterprise status, see Item 1A, Risk Factors  Risks Related to Our Business 
Under the New EIT Law, we may be classified as a resident enterprise of China.
Such classification will likely result in unfavorable tax consequences to us and
our non-PRC stockholders.

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In addition, the New EIT Law and its implementing rules generally
  provide that a 10% withholding tax applies to China-sourced income derived by
  non-resident enterprises for PRC enterprise income tax purposes unless the jurisdiction
  of incorporation of such enterprises shareholder has a tax treaty with
  China that provides for a different withholding arrangement. Skyrise Technology
  is considered an FIE and is directly held by our subsidiary in Hong Kong. According
  to a 2006 tax treaty between the Mainland and Hong Kong, dividends payable by
  an FIE in China to the company in Hong Kong who directly holds at least 25%
  of the equity interests in the FIE will be subject to a no more than 5% withholding
  tax. We expect that such 5% withholding tax will apply to dividends paid to
  United Digital by Skyrise Technology, but this treatment will depend on our
  status as a non-resident enterprise.

Our future effective income tax rate depends on various
factors, such as tax legislation, the geographic composition of our pre-tax
income and non-tax deductible expenses incurred. Our management carefully
monitors these legal developments and will timely adjust our effective income
tax rate when necessary.

Results of Operations

Year Ended December 31, 2009 Compared to Year Ended
December 31, 2008

The following table sets forth key components of our results
  of operations for the periods indicated, both in dollars and as a percentage
  of our net sales.

|                                          |   | Year Ended              |   |  | Year Ended              |  
|----------------------------------------- | - | ----------------------- | - |  | ----------------------- | -
|                                          |   | December
      31, 2009 |   |  | December
      31, 2008 |  
|                                          |   |                         |   |  | % of                    |  
|                                          |   | Amount                  |   |  | Net Sales               |  
|Net sales                                 | $ | 6,856,198               |   |  |                         |  
|                                          |   |                         |   |  |                         |  
|Cost of sales                             |   | 4,698,295               |   |  | 68.53%                  |  
|                                          |   |                         |   |  |                         |  
|Gross profit                              |   | 2,157,903               |   |  | 31.47%                  |  
|                                          |   |                         |   |  |                         |  
|Operating expenses                        |   |                         |   |  |                         |  
|Selling & Marketing expenses              |   | (532,492                | ) |  | (7.77%                  | )
|General and
      administrative expenses |   | (792,001                | ) |  | (11.55%                 | )
|                                          |   |                         |   |  |                         |  
|Total operating expenses                  |   | (1,324,493              | ) |  | (19.32%                 | )
|                                          |   |                         |   |  |                         |  
|Income from operations                    |   | 833,410                 |   |  | 12.16%                  |  
|Interest expense                          |   | (22,638                 | ) |  | (0.33%                  | )
|Other income                              |   | 246,620                 |   |  | 3.60%                   |  
|                                          |   |                         |   |  |                         |  
|Income before income taxes                |   | 1,057,392               |   |  | 15.42%                  |  
|                                          |   |                         |   |  |                         |  
|Income taxes                              |   | (4,301                  | ) |  | (0.06%                  | )
|                                          |   |                         |   |  |                         |  
|Net income                                | $ | 1 ,053,091              |   |  | 15.36%                  |  

Net Sales. Our sales revenue increased to
$6,856,198 in the fiscal year ended December 31, 2009 from $4,140,682 last year,
representing a 66% increase year-over-year. This increase was mainly due to our
sales and marketing efforts to acquire new customers and sustain existing
customers.

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Cost of Sales. Our cost of sales increased
$2,874,131, or 158%, to $4,698,295 in the fiscal year ended December 31, 2009
from $1,824,164 in 2008. The cost of goods sold per sales ratio changed from
44.05% to 68.53%, mainly due to the decrease in general deal pricing commenced
in early 2009 due to the economic slowdown.

Gross Profit and Gross Margin. Our gross profit
decreased $158,616, or 6.85%, to $2,157,903 in the fiscal year ended December
31, 2009 from $2,316,519 in 2008. Gross profit as a percentage of net revenue
was 31.74% and 55.95% for the fiscal years ended December 31, 2009 and 2008,
respectively. The increase in the gross margin was primarily due to the decrease
in general deal pricing commenced in early 2009 due to the economic slow down.

Selling and Marketing Expenses. Our selling and
marketing expenses were $532,492, remaining almost flat in the fiscal year ended
December 31, 2009 from $546,846 in 2008.

Administrative Expenses. Our administrative
expenses were $792,001, remaining almost flat in the fiscal year ended December
31, 2009 from $778,515 in 2008.

Interest Expense. Interest expense decreased
  $16,873, or 42.7%, to $22,638 in the fiscal year ended December 31, 2009 from
  $39,511 in 2008, primarily due to reduced short term debt in 2009.

Other Income.Other income was $246,620 in
the fiscal year ended December 31, 2009, remaining almost flat from $278,227 in
2008.

Income Before Income Taxes. Our income before
income taxes decreased by $172,482, or 14.02%, to $1,057,392 in the fiscal year
ended December 31, 2009 from $1,229,874 last year. The reason for such a
decrease was mainly due to the increased cost of sales thus reduced gross
margin.

Income Taxes. Our income tax increase to $4,301
in the fiscal year ended December 31, 2009 from $312 last year. The reason for
such an increase was mainly due to the fact that in 2008, the company enjoyed 0
income tax rate for High-tech company, while in 2009 the company only enjoyed
reduce income tax rate.

Net Income. In the fiscal year ended December 31,
2009, we generated a net income of $1,053,091, a decrease of $176,471, or
14.35%, from $1,229,562 in 2008, as a result of the factors described above.

Liquidity and Capital Resources

As of December 31, 2009, we had cash and cash equivalents of
  $409,718, primarily consisting of cash on hand and demand deposits. The following
  table provides detailed information about our net cash flow for all financial
  statement periods presented in this report. To date, we have financed our operations
  primarily through cash flows from operations, augmented by short-term bank borrowings
  and equity contributions by our stockholders.

Cash Flow(all amounts in U.S. dollars)

|                                                    |   | Year
      Ended December 31, |  
|--------------------------------------------------- | - | ----------------------------- | -
|                                                    |   | 2009                          |  
|Net cash provided by (used in) operating activities | $ | (334,045                      | )
|Net cash provided by (used in) investing activities |   | ( 269,549                     | )
|Net cash provided by (used in) financing activities |   | 500,218                       |  
|Effects of Exchange Rate Change in Cash             |   | 4,822                         |  
|Net Increase in Cash and Cash Equivalents           |   | ( 98,554                      | )
|Cash and Cash Equivalent at Beginning of the Year   |   | 508,272                       |  
|Cash and Cash Equivalent at End of the Year         | $ | 409,718                       |  

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Operating activities

Net used in operating activities was $334,045 for the year
ended December 31, 2009, as compared to 1,052,298 net cash used in operating
activities for 2008. The decrease in net cash used in operating activities was
mainly due to shorter payment periods offered to customers and increased
collection efforts.

Investing activities

Net cash used in investing activities for the year ended
December 31, 2009 was $269,549, as compared to 279,224 net cash used in
investing activities in 2008. The decrease in net cash used in investing was
mainly attributable to a decrease in purchases of intangible assets to conserve
costs during the 2009 period.

Financing activities

Net cash provided by financing activities for the year ended
December 31, 2009 was $500,218, as compared to 2,099,005 net cash provided by
financing activities in 2008. The decrease in net cash provided by financing
activities was mainly due to increased payment in interest and the repayment of
a loan during the 2009 period.

As of December 31, 2009, the amount, maturity date and term of
each of our bank loans were as follows:

|Bank                  | Amount                                      | Maturity Date     | Duration 
|--------------------- | ------------------------------------------- | ----------------- | ---------
|PingAn Bank, Shenzhen | RMB3,000,000
      (approximately $440,100) | November 10, 2010 | 12 months
|Total                 | RMB3,000,000 (approximately
      $440,100) |                   |          

We believe that our cash on hand and cash flow from operations
will meet our present cash needs for the next 12 months. We may, however, in the
future, require additional cash resources due to changed business conditions,
implementation of our strategy to ramp up our marketing efforts and increase
brand awareness, or acquisitions we may decide to pursue. If our own financial
resources are insufficient to satisfy our capital requirements, we may seek to
sell additional equity or debt securities or obtain additional credit
facilities. The sale of additional equity securities could result in dilution to
our stockholders. The incurrence of indebtedness would result in increased debt
service obligations and could require us to agree to operating and financial
covenants that would restrict our operations. Financing may not be available in
amounts or on terms acceptable to us, if at all. Any failure by us to raise
additional funds on terms favorable to us, or at all, could limit our ability to
expand our business operations and could harm our overall business prospects.

Obligations under Material Contracts

We have borrowed funds from Mr. Mingchun Zhou, our Chief
Executive Officer, at intervals commencing in fiscal year 2008. Until July 10,
2009, these loans were unsecured, interest free and had no fixed repayment term.
On July 10, 2009, we entered into a repayment agreement with Mr. Zhou, pursuant
to which we acknowledged and memorialized our obligation to repay an outstanding
balance of RMB 1,937,000 (approximately, $284,158) to Mr. Zhou. According to the
agreement, the loan remains unsecured, and is interest free, but we are
obligated to repay the loan on or before July 10, 2011, the second anniversary
of execution date. We intend to repay this loan within the year.

Inflation

Inflation and changing prices have not had a material effect on
our business and we do not expect that inflation or changing prices will
materially affect our business in the foreseeable future. However, our
management will closely monitor the price change in travel industry and
continually maintain effective cost control in operations.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity or capital expenditures or capital resources that is
material to an investor in our securities.

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Seasonality

Our operating results and operating cash flows historically
have been subject to seasonal variations. Our revenues are usually higher in the
second half of the year than in the first half of the year and the first quarter
is usually the slowest quarter because fewer projects are undertaken during and
around the Chinese spring festival.

Critical Accounting Policies

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires our
management to make assumptions, estimates and judgments that affect the amounts
reported, including the notes thereto, and related disclosures of commitments
and contingencies, if any. We have identified certain accounting policies that
are significant to the preparation of our financial statements. These accounting
policies are important for an understanding of our financial condition and
results of operation. Critical accounting policies are those that are most
important to the portrayal of our financial conditions and results of operations
and require managements difficult, subjective, or complex judgment, often as a
result of the need to make estimates about the effect of matters that are
inherently uncertain and may change in subsequent periods. Certain accounting
estimates are particularly sensitive because of their significance to financial
statements and because of the possibility that future events affecting the
estimate may differ significantly from managements current judgments. We
believe the following critical accounting policies involve the most significant
estimates and judgments used in the preparation of our financial statements:

Basic of consolidation and presentationThe
consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America (US GAAP). All
material inter-company transactions and balances have been eliminated in
consolidation. For accounting purposes, the combination of the company and UDH
was accounted for as a reverse merger with UDH as the acquirer and CSD as the
acquired party and the acquisition of SST and SSD was accounted for under the
acquisition method with UDH as the immediate parent corporation of both
companies for legal purposes. Accordingly the Companys financial statements
have been prepared on a consolidated basis for the periods presented and the
consolidated balance sheets, consolidated statements of income and other
comprehensive income, stockholders equity and cash flows were presented as if
the recapitalization had occurred at the beginning of the earliest period
presented and the operations of the accounting acquired party from the date of
stock exchange transaction. CSD, UDH, SST and SSD are hereafter referred to as
(the Company).

Use of estimatesThe preparation of financial
statements in conformity with US GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.

Economic and political riskThe Companys
business operations are conducted in the PRC and are subject to special
considerations and risks not typically associated with companies in North
America and Western Europe. Chinas political, economic and legal environments
may influence the Companys business, financial condition and results of
operations, including adverse effects by changes in governmental policies in
laws and regulations, anti-inflationary measures, and rates and methods of
taxation.

Revenue recognitionSales revenue is
recognized when all of the following have occurred: (i) persuasive evidence of
an arrangement exists, (ii) delivery has occurred or services have been
rendered, (iii) the price is fixed or determinable, and (iv) the ability to
collect is reasonably assured. These criteria are generally satisfied at the
time of shipment when risk of loss and title passes to the customer. The Company
recognizes revenue when the goods are delivered and title has passed. Sales
revenue represents the invoiced value of goods, net of a value-added tax
(VAT). All of the Companys products that are sold in the PRC are subject to a
Chinese VAT at a rate of 17% of the gross sales price or at a rate approved by
the Chinese local government. This VAT may be offset by the VAT paid by the
Company on raw materials and other materials included in the cost of producing
their finished product.

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Cost of goods soldCost of goods sold
consists primarily of direct material costs, direct labor costs, direct
depreciation and related direct expenses attributable to the production of the
products. Inbound shipping and handling costs and purchasing are included in
direct material costs. Manufacturing overhead includes expenses such as indirect
labor, depreciation as it relates to the cost of production, rent, utilities,
receiving costs, and equipment maintenance and repairs.

Shipping and handingShipping and handling
costs related to costs of goods sold are included in selling and marketing
expenses and general and administrative expenses totaled $16,854 and $15,158 for
the years ended December 31, 2009 and December 31, 2008, respectively.

AdvertisingAdvertising costs are included in
selling and marketing expenses which totaled $20,525 and $11,382 for the years
ended December 31, 2009 and December 31, 2008, respectively.

Research and development costsResearch and
development costs are included in general and administrative expenses and
include the cost to develop new products and are expensed when incurred and
totaled $418,177 and $383,952 for the years ended December 31, 2009 and December
31, 2008, respectively. The costs for development of new products and
substantial enhancements to existing products are expensed as incurred until
technological feasibility has been established, at which time any additional
costs would be capitalized. The Company has determined that technological
feasibility is established at the time a working model of products is completed.
No costs have been capitalized to date.

Government grantGovernment grants represent
local authority grants to the company for software development. Grants are
recognized when the local authority approve the grant.

Foreign currency translation and other comprehensive
incomeThe reporting currency of the Company is the United States
Dollars ($). The functional currencies of the Company and its subsidiaries UDH,
SST and SSDT, are the United States Dollars ($) and Chinese Renminbi (RMB)
respectively. For those entities whose functional currency is other than the US
dollars, all assets and liabilities are translated into US dollars at the
exchange rate on the balance sheet date; stockholders equity is translated at
historical rates and items in the statements of income and of cash flows are
translated at the average rate for the year. Because cash flows are translated
based on the average translation rate, amounts related to assets and liabilities
reported in the statement of cash flows will not necessarily agree with changes
in the corresponding balances in the balance sheet. Translation adjustments
resulting from this process are included in accumulated other comprehensive
income in the consolidated statement of stockholders equity. Transaction gains
and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency are included in the
results of operations as incurred.

Accumulated other comprehensive income in the consolidated
statement of shareholders equity amounted to $33,338 and $32,682 as of December
31, 2009 and December 31, 2008, respectively. The balance sheet amounts with the
exception of equity at December 31, 2009 and December 31, 2008 were translated
at RMB 6.82 to $1.00. The average translation rates applied to the statements of
income and of cash flows for the years ended December 31, 2009 and December 31,
2008 were RMB 6.82 to $1.00 and RMB6.97 to $1.00, respectively.

Property, plant and equipmentProperty, plant
and equipment is stated at cost less accumulated depreciation and any
accumulated impairment losses. Such costs include the cost of replacing parts
that are eligible for capitalization when the cost of replacing the parts is
incurred. Similarly, when each major inspection is performed, its cost is
recognized in the carrying amount of the plant and equipment as a replacement
only if it is eligible for capitalization. The assets residual values, useful
lives and amortization methods are reviewed, and adjusted if appropriate, at
each financial year-end.

Depreciation is calculated on a straight-line basis over the
estimated useful life of the assets. Depreciation expense was $65,896 and
$64,012 for the years ended December 31, 2009 and December 31, 2008
respectively. Expenditures for maintenance and repairs are charged to expense as
incurred, whereas major improvements are capitalized as additions to property,
plant and equipment. The Company reviews its property, plant and equipment
whenever events or changes in circumstances indicate that the carrying value of certain
assets might not be recoverable. In these instances, the Company recognizes an
impairment loss when it is probable that the estimated cash flows are less than
the carrying value of the asset. To date, no such impairment losses have been
recorded.

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Long-lived assetsThe Company reviews the
carrying amount of its long-lived assets, including intangibles, for impairment,
each reporting period in accordance with ASC Topic 360 Property, Plant, and
Equipment. An asset is considered impaired when estimated future cash flows are
less than the carrying amount of the asset. In the event the carrying amount of
such asset is considered not recoverable, the asset is adjusted to its fair
value. Fair value is generally determined based on discounted future cash flow.
As of December 31, 2009 and December 31, 2008, the Company determined no
impairment charges were necessary.

Capitalized internal-use softwareThe Company
capitalizes certain costs incurred to purchase or create internal-use software
in accordance with ASC Topic 350-40, Internal Use Software. To date, such
costs have included external direct costs of materials and services incurred in
the implementation of internal-use software and are included within computer
hardware and software. Once the capitalization criteria have been met, such
costs are classified as software and are amortized on a straight-line basis over
five years once the software has been put into use. Subsequent additions,
modifications, or upgrades to internal-use software are capitalized only to the
extent that they allow the software to perform a task it previously did not
perform. Software maintenance and training costs are expensed in the period in
which they are incurred.

Intangible assetsThe Company records
identifiable intangible assets in other assets at cost less accumulated
amortization and impairment. These assets consist primarily of software
licenses. The Company amortizes them over the shorter of their stated or
statutory duration or their estimated useful lives on a straight-line basis over
five years. Amortization expense was $32,310 and $23,326 for the years ended
December 31, 2009 and December 31, 2008, respectively.

GoodwillGoodwill represents the fair value
of the assets acquired in the acquisitions over the cost of the assets acquired.
Goodwill is tested for impairment on an annual basis of the end of the companys
fiscal year, or when impairment indicators arise. The Company uses a
fair-value-based approach to test for impairment. The Company indirectly
acquired two separate companies, SST and SSD. SST is engaged in the sale,
installation and development of digital home security networks, peripherals and
software and SSD is engaged in the sale, installation and development of
computing network and intelligence systems. As a result of these acquisitions,
the Company recorded goodwill in the amount of $193,754. This goodwill
represents the fair value of the assets acquired in these acquisitions over the
cost of the assets acquired. Management tested goodwill for impairment at
December 31, 2009 and determine that there was no impairment of goodwill.

InventoryInventory consists primarily of raw
materials, components, finished goods and low value consumable goods. Raw
materials, components and low value consumable cost are stated at cost. Cost
comprises direct materials and, where applicable direct labor costs and those
overheads that have been incurred in bringing the inventory to their present
location and condition. Finished goods are stated at the lower of cost
(determined on weighted average method) or net realizable value. Management
tested goodwill for impairment loss at December 31, 2009 and determined that
there was no impairment of goodwill. The Company provides for inventory losses
based on obsolescence and levels in excess of forecasted demand. In these cases,
inventory is reduced to estimated realizable value based on historical usage and
expected demand. Inherent in the Companys estimates of market value in
determining inventory valuation are estimates related to economic trends, future
demand for the Companys products, and technical obsolescence of products. When
products have been delivered, but the product revenue associated with the
arrangement has been deferred as a result of not meeting the revenue recognition
criteria. The Company includes the costs for the delivered items in inventory
until recognition of the related revenue occurs.

Allowance for doubtful accountsThe Company
reduces gross trade accounts receivable by an allowance for doubtful accounts.
The allowance for doubtful accounts is the Companys best estimate of the amount
of probable credit losses in the Companys existing accounts receivable. The
Company reviews its allowance for doubtful accounts on a regular basis and all
past due balances are reviewed individually for collectability. Account balances are
charged off against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. Provisions for
doubtful accounts for the years ended December 31, 2009 and December 31, 2008
are $nil. Bad debts written off for years ended December 31, 2009 and December
31, 2008 are $nil.

32

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Fair value of financial instrumentsThe
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification (Paragraph
820-10-35-37) to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in accounting
principles generally accepted in the United States of America (U.S. GAAP), and
expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, Paragraph
820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three (3) broad levels. The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in
active markets for identical assets or liabilities and the lowest priority to
unobservable inputs. The three (3) levels of fair value hierarchy defined by
Paragraph 820-10-35-37 are described below:

Level 1 Quoted market prices available in active markets for
identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs other than quoted prices in active
markets included in Level 1, which are either directly or indirectly observable
as of the reporting.

Level 3 Pricing inputs that are generally observable inputs and
not corroborated by market data.

The carrying amounts of the Companys financial assets and
liabilities, such as cash and accrued expenses, approximate their fair values
because of the short maturity of these instruments.

The Company does not have any assets or liabilities measured at
fair value on a recurring or a non-recurring basis, consequently, the Company
did not have any fair value adjustments for assets and liabilities measured at
fair value at December 31, 2009 or December 31, 2008, nor gains or losses are
reported in the statement of income and other comprehensive income that are
attributable to the change in unrealized gains or losses relating to those
assets and liabilities still held at the reporting date for the fiscal year
ended December 31, 2009 or December 31, 2008.

Stock-based compensationThe Company adopts
both ASC Topic 718, Compensation - Stock Compensation and ASC Topic 505-50,
Equity-Based Payments to Non-Employees using the fair value method. Under ASC
Topic 718 and ASC Topic 505-50, stock compensation expenses is measured at the
grant date on the value of the option or restricted stock and is recognized as
expenses, less expected forfeitures, over the requisite service period, which is
generally the vesting period.

Retirement benefit costsPRC state managed
retirement benefit programs are defined contribution scheme and the payments to
the scheme are charged as expenses when employees have rendered service
entitling them to the contribution

Income taxesThe Company adopted ASC Topic
740, Income Taxes that requires recognition of deferred income tax liabilities
and assets for the expected future tax consequences of temporary differences
between income tax basis and financial reporting basis of assets and
liabilities. Provision for income taxes consist of taxes currently due plus
deferred taxes. Since the Company had no operations within the United States
there is no provision for US income taxes and there are no deferred tax amounts
as of December 31, 2009 and December 31, 2008.

The charge for taxation is based on the results for the year as
adjusted for items, which are non-assessable or disallowed. It is calculated
using tax rates that have been enacted or substantively enacted by the balance
sheet date. Deferred tax is accounted for using the balance sheet liability
method in respect of temporary differences arising from differences between the
carrying amount of assets and liabilities in the financial statements and the
corresponding tax basis used in the computation of assessable tax profit. In
principle, deferred tax liabilities are recognized for all taxable temporary
differences, and deferred tax assets are recognized to the extent that it is
probably that taxable profit will be available against which deductible
temporary differences can be utilized.

33

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Deferred tax is calculated at the tax rates that are expected
to apply to the period when the asset is realized or the liability is settled.
Deferred tax is charged or credited in the income statement, except when it
related to items credited or charged directly to equity, in which case the
deferred tax is also dealt with in equity. Deferred tax assets and liabilities
are offset when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and
liabilities on a net basis.

A tax position is recognized as a benefit only if it is more
likely than not that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the
largest amount of tax benefit that is greater than 50% likely of being realized
on examination. For tax positions not meeting the more likely than not test,
no tax benefit is recorded. The adoption had no affect on the Companys
financial statements.

Product warrantiesSubstantially all of the
Companys products are covered by a standard warranty of 2 years for products.
In the event of a failure of products covered by this warranty, the Company must
repair or replace the software or products or, if those remedies are
insufficient, and at the discretion of the Company, provide a refund. The sales
contracts encompass its warranty obligations. Occurrence of the failure of
products within warranty period is few and insignificant; therefore, the Company
provides nil% of sales income for product warranties for the years ended
December 31, 2009 and December 31, 2008. The product warranty reserve was $nil
at December 31, 2009 and December 31, 2008.

Related partiesParties are considered to be
related to the Company if the Company has the ability, directly or indirectly,
to control the party, or exercise significant influence over the party in making
financial and operating decisions, or vice versa, or where the Company and the
party are subject to common control or common significance. Related parties may
be individuals (being members of key management personnel, significant
shareholders and/or their close family members) or other entities which are
under the significant influence of related parties of the company where those
parties are individuals, and post-employment benefit plans which are for the
benefits of employees of the Company or of any entity that is a related party of
the Company.

Cash and cash equivalentsCash and cash
equivalents comprise cash at bank and on hand, demand deposits with banks and
other financial institutions, and short-term, highly liquid investments which
are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value, and have a short maturity of generally
within three months when acquired.

|                       |  | 2009    |  |  | 2008    | 
|---------------------- |  | ------- |  |  | ------- | 
|                       |  | $       |  |  | $       | 
|Cash and bank balances |  | 409,718 |  |  | 508,272 | 

Concentration of credit riskThe Companys
operations are carried out in the PRC. Accordingly, its business, financial
condition and results of operations may be influenced by the political, economic
and legal environment in the PRC, and by the general state of the PRC's economy.
The Companys operations in the PRC are subject to specific considerations and
significant risks not typically associated with companies in North America and
Western Europe. The Companys results may be adversely affected by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things. Cash includes cash on hand and demand deposits in
accounts maintained with state owned banks within the Peoples Republic of
China. Total cash (not including restricted cash balances) in these banks on
December 31, 2009 and December 31, 2008 amounted to $409,718 and $508,272,
respectively, of which no deposits are covered by insurance. The Company has not
experienced any losses in such accounts and believes it is not exposed to any
risks on its cash in bank accounts.

34

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The Company had 8 major customers whose revenue individually
represented of the Companys total revenue as follows:

|           | 2009   | 2008
|---------- | ------ | ----
|Customer A | 31.93% | -   

|Customer B | 10.98% | -     
|---------- | ------ | ------
|Customer C | 6.58%  | -     
|Customer D | 5.16%  | 8.75% 
|Customer E | 4.22%  | -     
|Customer F | 2.51%  | 8.53% 
|Customer G | 3.59%  | 8.46% 
|Customer H | 3.4%   | 6.84% 
|Customer I | -      | 6.30% 
|           | 68.17% | 38.88%

The company had 5 major customers whose accounts receivable
balance individually represented of the Companys total accounts receivable as
follows:

|           | 2009   | 2008  
|---------- | ------ | ------
|Customer A | 13.35% | 9.39% 
|Customer B | 9.90%  | 8.93% 
|Customer C | 9.13%  | 7.94% 
|Customer D | 9.11%  | -     
|Customer E | 8.76%  | 6.89% 
|Customer F | -      | 11.57%
|           | 50.25% | 44.72%

Recent Accounting PronouncementsOn June 5, 2003,
the United States Securities and Exchange Commission (SEC) adopted final rules
under Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404), as amended
by SEC Release No. 33-9072 on October 13, 2009. Under the provisions of Section
404 of the Sarbanes-Oxley Act, public companies and their independent auditors
are each required to report to the public on the effectiveness of a companys
internal controls. The smallest public companies with a public float below $75
million have been given extra time to design, implement and document these
internal controls before their auditors are required to attest to the
effectiveness of these controls. This extension of time will expire beginning
with the annual reports of companies with fiscal years ending on or after June
15, 2010. Commencing with its annual report for the fiscal year ending September
30, 2010, the Company will be required to include a report of management on its
internal control over financial reporting. The internal control report must
include a statement

In June 2009, the FASB approved the FASB Accounting Standards
Codification (the Codification) as the single source of authoritative
nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does
not change current U.S. GAAP, but is intended to simplify user access to all
authoritative U.S. GAAP by providing all the authoritative literature related to
a particular topic in one place. All existing accounting standard documents will
be superseded and all other accounting literature not included in the
Codification will be considered non-authoritative. The Codification is effective
for interim and annual periods ending after September 15, 2009.

In August 2009, the FASB issued the FASB Accounting Standards
Update No. 2009-04 Accounting for Redeemable Equity Instruments - Amendment to
Section 480-10-S99 which represents an update to section 480-10-S99,
distinguishing liabilities from equity, per EITF Topic D-98, Classification and
Measurement of Redeemable Securities . The Company does not expect the adoption
of this update to have a material impact on its consolidated financial position,
results of operations or cash flows.

In August 2009, the FASB issued the FASB Accounting Standards
Update No. 2009-05 Fair Value Measurement and Disclosures Topic 820  Measuring
Liabilities at Fair Value , which provides amendments to subtopic 820-10, Fair
Value Measurements and Disclosures  Overall, for the fair value measurement of
liabilities. This update provides clarification that in circumstances in which a
quoted price in an active market for the identical liability is not available, a
reporting entity is required to measure fair value using one or more of the
following techniques: 1. A valuation technique that uses: a. The quoted price of
the identical liability when traded as an asset b. Quoted prices for similar
liabilities or similar liabilities when traded as assets. 2. Another valuation
technique that is consistent with the principles of topic 820; two examples
would be an income approach, such as a present value technique, or a market
approach, such as a technique that is based on the amount at the measurement
date that the reporting entity would pay to transfer the identical liability or
would receive to enter into the identical liability. The amendments in this
update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input
or adjustment to other inputs relating to the existence of a restriction that
prevents the transfer of the liability. The amendments in this update also
clarify that both a quoted price in an active market for the identical liability
when traded as an asset in an active market when no adjustments to the quoted
price of the asset are required are Level 1 fair value measurements. The Company
does not expect the adoption of this update to have a material impact on its
consolidated financial position, results of operations or cash flows

35

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In September 2009, the FASB issued the FASB Accounting
Standards Update No. 2009-08 Earnings Per Share  Amendments to Section
260-10-S99, which represents technical corrections to topic 260-10-S99,
Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share
for a Period that includes a Redemption or an Induced Conversion of a Portion of
a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred Stock .
The Company does not expect the adoption of this update to have a material
impact on its consolidated financial position, results of operations or cash
flows.

In September 2009, the FASB issued the FASB Accounting
Standards Update No. 2009-09 Accounting for Investments -Equity Method and
Joint Ventures and Accounting for Equity-Based Payments to Non-Employees . This
update represents a correction to Section 323-10-S99-4, Accounting by an
Investor for Stock-Based Compensation Granted to Employees of an Equity Method
Investee . Additionally, it adds observer comment Accounting Recognition for
Certain Transactions Involving Equity Instruments Granted to Other Than
Employees to the Codification. The Company does not expect the adoption to have
a material impact on its consolidated financial position, results of operations
or cash flows.

In September 2009, the FASB issued the FASB Accounting
Standards Update No. 2009-12 Fair Value Measurements and Disclosures Topic 820
 Investment in Certain Entities That Calculate Net Assets Value Per Share (or
Its Equivalent) , which provides amendments to Subtopic 820-10, Fair Value
Measurements and Disclosures-Overall, for the fair value measurement of
investments in certain entities that calculate net asset value per share (or its
equivalent). The amendments in this update permit, as a practical expedient, a
reporting entity to measure the fair value of an investment that is within the
scope of the amendments in this update on the basis of the net asset value per
share of the investment (or its equivalent) if the net asset value of the
investment (or its equivalent) is calculated in a manner consistent with the
measurement principles of Topic 946 as of the reporting entitys measurement
date, including measurement of all or substantially all of the underlying
investments of the investee in accordance with Topic 820. The amendments in this
update also require disclosures by major category of investment about the
attributes of investments within the scope of the amendments in this update,
such as the nature of any restrictions on the investors ability to redeem its
investments a the measurement date, any unfunded commitments (for example, a
contractual commitment by the investor to invest a specified amount of
additional capital at a future date to fund investments that will be make by the
investee), and the investment strategies of the investees. The major category of
investment is required to be determined on the basis of the nature and risks of
the investment in a manner consistent with the guidance for major security types
in U.S. GAAP on investments in debt and equity securities in paragraph
320-10-50-1B. The disclosures are required for all investments within the scope
of the amendments in this update regardless of whether the fair value of the
investment is measured using the practical expedient. The Company does not
expect the adoption to have a material impact on its consolidated financial
position, results of operations or cash flows.

In October 2009, the Financial Accounting Standards Board
issued an Accounting Standards Update (ASU) regarding accounting for own-share
lending arrangements in contemplation of convertible debt issuance or other
financing. This ASU requires that at the date of issuance of the shares in a
share-lending arrangement entered into in contemplation of a convertible debt
offering or other financing, the shares issued shall be measured at fair value
and be recognized as an issuance cost, with an offset to additional paid-in
capital. Further, loaned shares are excluded from basic and diluted earnings per
share unless default of the share-lending arrangement occurs, at which time the
loaned shares would be included in the basic and diluted earnings-per-share
calculation. This ASU is effective for fiscal years beginning on or after
December 15, 2009, and interim periods within those fiscal years for
arrangements outstanding as of the beginning of those fiscal years. The Company
is currently assessing the impact of this ASU on its consolidated financial
statements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 8.        FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements required by this item begin on page
F-1 hereof.

36

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

None.

ITEM 9A(T). CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act) that are designed to ensure that
information that would be required to be disclosed in Exchange Act reports is
recorded, processed, summarized and reported within the time period specified in
the SECs rules and forms, and that such information is accumulated and
communicated to our management, including to our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.

As required by Rule 13a-15 under the Exchange Act, our
management, including our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of December 31, 2009. Based on that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that as of
December 31, 2009, and as of the date that the evaluation of the effectiveness
of our disclosure controls and procedures was completed, our disclosure controls
and procedures were effective to satisfy the objectives for which they are
intended.

Managements Annual Report on Internal Control Over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. The Exchange Act defines internal control
over financial reporting as a process designed by, or under the supervision of,
our principal executive and principal financial officers and effected by our
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America and includes those
policies and procedures that:

- Pertain to the maintenance of records that in reasonable detail accurately
  and fairly reflect the transactions and dispositions of the assets of the
  Company;
- Provide reasonable assurance that transactions are recorded as necessary to
  permit preparation of financial statements in accordance with accounting
  principles generally accepted in the United States of America, and that our
  receipts and expenditures are being made only in accordance with
  authorizations of our management and directors; and
- Provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use or disposition of our assets that could have a
  material effect on our financial statements.

All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2009. In making this assessment,
management used the framework set forth in the report entitled Internal Control
- Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission, or COSO. The COSO framework summarizes each of the
components of a companys internal control system, including (i) the control
environment, (ii) risk assessment, (iii) control activities, (iv) information
and communication, and (v) monitoring. Based on our assessment we determined
that, as of December 31, 2009, our internal control over financial reporting is
effective at the reasonable assurance level based on those criteria.

37

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

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over
financial reporting during the fourth quarter of fiscal year 2009 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 9B.    OTHER INFORMATION.

We have no information to disclose that was required to be disclosed
  in a report on Form 8-K during fourth quarter of fiscal year 2009, but was not
  reported.

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.

Directors and Executive Officers

The following sets forth the name and position of each of our
current executive officers and directors.

|NAME          |  | AGE |  | POSITION                                                
|------------- |  | --- |  | --------------------------------------------------------
|Mingchun Zhou |  | 39  |  | Chairman, Chief
      Executive Officer and President   
|Weibing Wang  |  | 40  |  | Director and Vice President of
      Marketing and Sales
|Shenrong Dong |  | 33  |  | Director                                                
|Dongmei Wu    |  | 30  |  | Chief Financial Officer,
      Treasurer and Secretary  

Mr. Mingchun Zhou. Mr. Chui has been our Chairman, Chief
Executive Officer and President since September 25, 2009 and has served as the
President of our subsidiaries Skyrise Technology and Skyrise Digital, since
their inception in May 2003 and April 2008, respectively. Prior to joining us,
Mr. Zhou was the founder and served as the Vice President, Yinjie Co. and served
as the Chief Executive Officer of Matsumoto Skyrise Co. Mr. Zhou also serves as
the president of Shenzhen Saixin Technology, Ltd.. Mr. Zhou holds a Bachelor of
Science Degree in Engineering from the East China University of Science and
Technology and an MBA from the City University of Hong Kong.

Mr. Weibing Wang. Mr. Wang has served as our Director
and Vice President of Marketing and Sales since September 25, 2009 and has
served as the Vice President of our subsidiaries Skyrise Technology and Skyrise
Digital, since their inception in May 2003 and April 2008, respectively. Mr.
Wang has 12 years industry experience, previously served as the Vice President
of Marketing of Yinjie Co., Vice President of Sobenskyrise Co. Mr. Wang holds a
Bachelor of Science Degree in Engineering from East China University of Science
and Technology.

Mr. Shengrong Dong. Mr. Dong has served as our Director
since September 25, 2009. Mr. Dong has led the key product strategy for our
company for over 6 years. Mr. Dong has 10 years of experience in product design,
focusing on circuit design and firmware design, specializing in digital voice
and video communication.

Ms. Dongmei Wu. Ms. Wu has served as our Chief Financial
Officer, Treasurer and Secretary since September 25, 2009. Ms. Wu held key
financial positions at New World Cultural Development Co. and Shentuo
International Co. before joining Skyrise Technology in 2007. She has more than 6
years experience in accounting and finance and holds a bachelors degree in
Accounting from Taiyuan Technology Institute.

Except as noted above, there are no agreements or
understandings for any of our executive officers or directors to resign at the
request of another person and no officer or director is acting on behalf of, nor
will any of them act at the direction of, any other person. Directors are
elected until their successors are duly elected and qualified.

38

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Significant Employees

In addition to the foregoing named officers and directors, the
following employees are also key to our business and operations:

|NAME          |  | AGE |  | POSITION                                                                                
|------------- |  | --- |  | ----------------------------------------------------------------------------------------
|Yanchun Jiang |  | 34  |  | Vice President,
      Research and Development of Skyrise Technology and Skyrise Digital

Mr. Yanchun Jiang. Mr. Jiang has served as the Vice
President of Research and Development for our operating subsidiaries, Skyrise
Technology and Skyrise Digital, since 2007. Mr. Jiang has 12 years of R&D
experience. Prior to 2007, Mr. Jiang held development and management positions
at Great Wall Computer, Inc, and Huawei Technologies, Co., Ltd.

Family Relationships

There is no family relationship among any of our officers or
  directors.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive
  officers has been convicted in a criminal proceeding, excluding traffic violations
  or similar misdemeanors, or has been a party to any judicial or administrative
  proceeding during the past five years that resulted in a judgment, decree or
  final order enjoining the person from future violations of, or prohibiting activities
  subject to, federal or state securities laws, or a finding of any violation
  of federal or state securities laws, except for matters that were dismissed
  without sanction or settlement. Except as set forth in our discussion below
  in Item 13, Certain Relationships and Related Transactions, and Director
  Independence, none of our directors, director nominees or executive officers
  has been involved in any transactions with us or any of our directors, executive
  officers, affiliates or associates which are required to be disclosed pursuant
  to the rules and regulations of the SEC.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five
fiscal years.

Section 16(A) Beneficial Ownership Reporting Compliance

We are not subject to Section 16(A) of the Exchange Act.

Code of Ethics

We have not adopted a code ethics. However, we intend to adopt
a code of ethics in the future. We envision that the code of ethics will apply
to all of our employees, officers and directors.

Material Changes to Director Nomination Procedures

There have been no material changes to the procedures by which
stockholders may recommend nominees to our board of directors since such
procedures were last disclosed.

Audit Committee and Audit Committee Financial Expert

We do not have an audit committee or an audit committee
financial expert serving on the audit committee. Our entire board of directors
currently is responsible for the functions that would otherwise be handled by an
audit committee. However, we intend to establish an audit committee of the board
of directors in the near future. We envision that the audit committee will be
primarily responsible for reviewing the services performed by our independent
auditors, evaluating our accounting policies and our system of internal
controls. Upon the establishment of an audit committee, the board will determine
whether any of the directors qualify as an audit committee financial expert.

39

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ITEM 11.    EXECUTIVE COMPENSATION.

Summary Compensation Table  Fiscal Years Ended December 31,
2009 and 2008

The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No other executive
officer received total annual salary and bonus compensation in excess of
$100,000.

Name and
      Principal Position
    Year
    Salary ($)
    Total ($)Mingchun Zhou, 
        CEO and President
      (1)
      2009
      22,941
      22,9412008
      13,426
      13,426Hai Yan Huang, former CEO and
      President(2)
    2009
    0
    02008
    0
    0Steven Goertz, 
        former CEO and
      President(3)
      2009
      0
      02008
      0
      0


|(1) | On September 25, 2009, we acquired United Digital in a
      reverse acquisition transaction that was structured as a share exchange
      and in connection with that transaction, Mr. Mingchun Zhou became our
      Chief Executive Officer, President and Chairman. Prior to the effective
      date of the reverse acquisition, Mr. Zhou served as President of United
      Digitals subsidiaries Skyrise Technology and Skyrise Digital. The annual,
      long term and other compensation shown in this table include the amount
      Mr. Zhou received from such subsidiaries prior to the consummation of the
      reverse acquisition.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(2) | Ms. Hai Yan Huang resigned from all offices she held with
      us and from her position as our director upon the closing of the reverse
      acquisition of United Digital on September 25, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(3) | Mr. Steven Goertz served as our President and sole
      director from our formation on June 5, 2006 until his resignation and
      appointment of Ms. Huang on September 10, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Summary of Employment Agreements and Material Terms

Prior to our reverse acquisition of United Digital, our
operating subsidiaries were private limited companies organized under the laws
of the PRC, and in accordance with PRC regulations, the salary of our executives
was determined by our shareholders. In addition, each employee is required to
enter into an employment agreement. Accordingly, all our employees, including
Mr. Mingchun Zhou, our CEO, Mr. Weibing Wang, our Vice President of Sales and
Marketing, Mr. Shenrong Dong, our Director, and Dongmei Wu, our CFO, have
executed our employment agreement. Our employment agreements with our executives
provide the amount of each executive officers salary and establish their
eligibility to receive a bonus. Mingchun Zhous employment agreement provides
for an annual salary of RMB156,000 (approximately $23,000), Mr. Wang and Mr.
Dongs employment agreements each provide for an annual salary of RMB96,000
(approximately $14,000) and Ms. Wus employment agreement provides for an annual
salary of RMB54,000 (approximately $8,000). Ms. Wus employment agreement is set
for expiration or renewal in June of 2010 and Messrs. Zhou, Wang and Dongs
employment agreements are all subject to expiration or renewal in May of 2010.

We have also entered into an employment agreement with our Vice
  President of Research and Development, Mr. Yanchun Jiang, pursuant to which
  provides for an annual salary of RMB120,000 (approximately $18,000) for his
  services as head of our Research and Development department. Mr. Jiangs
  employment agreement is set for expiration or renewal in June of 2010.

Other than the salary and necessary social benefits required by
the government, which are defined in the employment agreement, we currently do
not provide other benefits to the officers at this time. Our executive officers
are not entitled to severance payments upon the termination of their employment
agreements or following a change in control.

We have not provided retirement benefits (other than a state
  pension scheme in which all of our employees in China participate) or severance
  or change of control benefits to our named executive officers.

40

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Outstanding Equity Awards at Fiscal Year End

For the year ended December 31, 2009, no director or executive
  officer has received compensation from us pursuant to any compensatory or benefit
  plan. There is no plan or understanding, express or implied, to pay any compensation
  to any director or executive officer pursuant to any compensatory or benefit
  plan, although we anticipate that we will compensate our officers and directors
  for services to us with stock or options to purchase stock, in lieu of cash.

Compensation of Directors

No member of our board of directors received any compensation
for his services as a director during the year ended December 31, 2009.

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

Security Ownership of Certain Beneficial Owners and
Management

The following table sets forth information regarding beneficial
  ownership of our common stock as of March 15, 2010 (i) by each person who is
  known by us to beneficially own more than 5% of our common stock; (ii) by each
  of our officers and directors; and (iii) by all of our officers and directors
  as a group. Unless otherwise indicated, the person or entity listed in the table
  is the beneficial owner of, and has sole voting and investment power with respect
  to, the shares indicated. Unless otherwise specified, the address of each of
  the persons set forth below is in care of the Company, 4/F, M-3rd Building,
  Hi-tech Industrial Park, Nanshan District, Shenzhen 518070, Peoples Republic
  of China.

Name and Address of Beneficial Owner
      Office, If Any
      Title of Class
      Amount and Nature of Beneficial Ownership(1)
      Percent of Class(2)Officers
        and DirectorsMingchun Zhou
      Chairman, CEO and President
      Common stock, $0.001 par value
      0
      *Weibing Wang
      Director and VP of Marketing and Sales
      Common stock, $0.001 par value
      0
      *Shengrong Dong
      Director
      Common
        stock, $0.001 par value
      0
      *Dongmei Wu
      CFO, Treasurer and Secretary
      Common stock, $0.001 par value
      0
      *All officers and directors as a group (4 persons named above)
      
      Common stock, $0.001 par value
      0
      *5%
        Security HoldersKin Keung Lai
      
      Common
        stock, $0.001 par value
      13,879,800(3)
      65.75%Feng Yu
      
      Common
        stock, $0.001 par value
      1,593,750
      7.55%


* Less than 1%

|(1) | Beneficial Ownership is determined in accordance with the
      rules of the SEC and generally includes voting or investment power with
      respect to securities. Each of the beneficial owners listed above has
      direct ownership of and sole voting power and investment power with
      respect to the shares of our common stock.            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                           
|(2) | A total of 21,110,550 shares of our common stock are
      considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of March
      15, 2010. For each beneficial owner above, any options exercisable within
      60 days have been included in the denominator.                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                           
|(3) | The shares held by Mr. Kin Keung Lai are subject to an
      option agreement, dated September 25, 2009, which gives Mr. Mingchun Zhou,
      our Chairman and Chief Executive Officer and an original shareholder of
      Skyrise Technology, an option to acquire an all shares of our common stock
      currently owned or later acquired by Mr. Lai.

41

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Changes in Control

On September 25, 2009, Mr. Lai, the owner of approximately
65.75% of our issued and outstanding common stock, entered into an option
agreement with Mr. Mingchun Zhou, our Chairman and Chief Executive Officer and
an original shareholder of Skyrise Technology, pursuant to which Mr. Zhou was
granted an option to purchase all shares of our common stock currently owned or
later acquired by Mr. Lai. Mr. Zhou may exercise this option, in whole but not
in part, during the period commencing on the 365thday following of
the date of the option agreement and ending on the second anniversary of the
date thereof. Other than the foregoing, we do not currently have any
arrangements which if consummated may result in a change of control of our
Company.

Securities Authorized for Issuances under Equity
Compensation Plans

We do not have in effect any compensation plans under which our
equity securities are authorized for issuance and we do not have any outstanding
stock options.

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

Related Party Transactions

The following includes a summary of transactions since the
beginning of the 2009 year, or any currently proposed transaction, in which we
were or are to be a participant and the amount involved exceeded or exceeds the
lesser of $120,000 or one percent of the average of our total assets at year end
for the last two completed fiscal years, and in which any related person had or
will have a direct or indirect material interest (other than compensation
described under Executive Compensation). We believe the terms obtained or
consideration that we paid or received, as applicable, in connection with the
transactions described below were comparable to terms available or the amounts
that would be paid or received, as applicable, in arms-length transactions.

- On September 25, 2009, we entered into a side letter with the shareholders
  of United Digital, Asia Regal Holdings Limited, or Asia Regal, and Mr. Kin
  Keung Lai, and certain service providers of the Company, pursuant to which
  Asia Regal agreed to transfer to Mr. Lai 485,576 of the shares issuable to
  Asia Regal under the reverse acquisition of United Digital, and we agreed to
  issue and deliver to the service providers an aggregate of 4,105,750 shares of
  our common stock, as consideration for certain services provided for the
  benefit of the Company and/or its subsidiaries in connection with the reverse
  acquisition transaction.
- We have borrowed funds from Mr. Mingchun Zhou, our Chief Executive Officer,
  at intervals commencing in fiscal year 2008. Until July 10, 2009, these loans
  was unsecured, interest free and had no fixed repayment term. On July 10,
  2009, we entered into a repayment agreement with Mr. Zhou, pursuant to which
  the we acknowledged and memorialized our obligation to repay an outstanding
  balance of RMB 1,937,000 (approximately, $284,158) to Mr. Zhou. According to
  the agreement, the loan remains unsecured, and is interest free, but we are
  obligated to repay the loan on or before July 10, 2011, the second anniversary
  of execution date. We intend to repay this loan within the year.
- On December 10, 2007, our subsidiary Skyrise Technology entered into a
  financial advisory agreement, or the Financial Advisory Agreement, with Asia
  Junwei Finance Capital Group, Co., Ltd., or Asia Junwei. The Financial
  Advisory Agreement was supplemented on December 18, 2007. Under the Financial
  Advisory Agreement, as amended, Asia Junwei agreed to provide Skyrise
  Technology with financial advisory and consulting services in assisting
  Skyrise Technology with, among other things, establishing a corporate
  governance structure and operating mechanism and reorganizing as a U.S. public
  company. Pursuant to the Financial Advisory Agreement, Asia Junwei will serve
  as the sole financial advisor to Skyrise Technology for a period of 5 years.
  Asia Junwei agreed to pay all expenses of Skyrise Technologys reorganization
  as a U.S. public company, totaling $900,000. In consideration for these
  services, Asia Junwei is entitled to $950,000 which will be paid after raising
  more than $5,000,000 for Skyrise Technology. Asia Junwei is an affiliate of
  Flourishing Wisdom Holdings Limited, which was a 54.05% stockholder of the
  Company before the closing of the reverse acquisition of United Digital and a
  11.84% stockholder as of the date of this report.

42

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Director Independence

We currently do not have any independent directors, as the term
independent is defined by the rules of the Nasdaq Stock Market.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND
SERVICES.

Independent Auditors Fees

The following is a summary of the fees billed to the Company
  by its principal accountants for professional services rendered for the fiscal
  years ended December 31, 2009 and 2008:

|                   |   | Year Ended December 31, | 
|------------------ | - | ----------------------- | 
|                   |   | 2009                    | 
|Audit Fees         | $ | 33,500                  | 
|Audit-Related Fees | $ | 132                     | 
|Tax Fees           | $ | 492                     | 
|All Other Fees     | $ | 4,104                   | 
|TOTAL              | $ | 38,228                  | 

Audit Fees consisted of the aggregate fees billed for
professional services rendered for the audit of our annual financial statements
and the reviews of the financial statements included in our Forms 10-Q and for
any other services that were normally provided in connection with our statutory
and regulatory filings or engagements.

Audit Related Fees consisted of the aggregate fees billed for
professional services rendered for assurance and related services that were
reasonably related to the performance of the audit or review of our financial
statements and were not otherwise included in Audit Fees.

Tax Fees consisted of the aggregate fees billed for
professional services rendered for tax compliance, tax advice and tax planning.
Included in such Tax Fees were fees for preparation of our tax returns and
consultancy and advice on other tax planning matters.

All Other Fees consisted of the aggregate fees billed for
products and services provided and not otherwise included in Audit Fees, Audit
Related Fees or Tax Fees.

Pre-Approval Policies and Procedures

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit
services performed by our auditors must be approved in advance by our board of
directors to assure that such services do not impair the auditors independence
from us. In accordance with its policies and procedures, our board of directors
pre-approved the audit service performed by Madsen & Associates CPAs, Inc.
for our financial statements as of and for the year ended December 31, 2009.

PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT
SCHEDULES.

Financial Statements and Schedules

The financial statements are set forth under Item 8 of this
Annual Report on Form 10-K. Financial statement schedules have been omitted
since they are either not required, not applicable, or the information is
otherwise included.

Exhibit List

The following exhibits are filed as part of this report or incorporated
  by reference:

43

---

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         |  | Share Exchange Agreement, dated September 25, 2009, among
      the registrant, United Digital Home H.K. Group Company Limited and its
      shareholders [incorporated by reference to Exhibit 2.1 to the registrants
      Current Report on Form 8-K filed on October 1, 2009].                                                                        
|3.1         |  | Amended and Restated Articles of Incorporation of the
      registrant [incorporated by reference to Exhibit 3.1 to the registrants
      Current Report on Form 8-K filed on October 1, 2009].                                                                                                                                                           
|3.2         |  | Amended and Restated Bylaws of the registrant, adopted on
      December 3, 2008 [incorporated by reference to Exhibit 3.2 to the
      registrants Annual Report on Form 10-K filed on December 15, 2008].                                                                                                                                               
|10.1        |  | Form of Side Letter re Share Allocation and Distribution,
      dated September 25, 2009, among the registrant, Asia Regal Holdings
      Limited, Kin Keung Lai and certain individuals [incorporated by reference
      to Exhibit 10.1 to the registrants Current Report on Form 8-K filed on
      October 1, 2009].                                  
|10.2        |  | Stock Purchase Agreement, dated September 10, 2008, by
      and among the registrant, Steven Goertz and Flourishing Wisdom Holdings
      Limited [incorporated by reference to Exhibit 2.1 to the registrants
      Current Report on Form 8-K filed on September 11, 2008].                                                                            
|10.3        |  | Equity Transfer Agreement, dated January 28, 2008, among
      Mingchun Zhou, Weibing Wang, Shengrong Dong, Yagang Lu, Yagang Lu and
      United Digital Home H.K. Group Company Limited (English Translation)
      [incorporated by reference to Exhibit 10.3 to the registrants Current
      Report on Form 8-K filed on October 1, 2009].           
|10.4        |  | Investment Agreement, dated September 15, 2009, between
      Asia Regal Finance Capital Group, Co., Ltd. and United Digital Home H.K.
      Group Company Limited (English Translation) [incorporated by reference to
      Exhibit 10.4 to the registrants Current Report on Form 8-K filed on
      October 1, 2009].                                  
|10.5        |  | Equipment Supply and Installation Contract, dated
      November 17, 2008, between Shenzhen Skyrise Technology Co., Ltd. and
      Shenzhen City Hwaloilee Industrial Co. Ltd (English Translation)
      [incorporated by reference to Exhibit 10.5 to the registrants Current
      Report on Form 8-K filed on October 1, 2009].                       
|10.6        |  | Contract for Purchase and Sales of Video Intercom
      Equipment, dated April 9, 2008, between Shenzhen Skyrise Technology Co.,
      Ltd. and Shenzhen Nanhai Yitian House Developing Co., Ltd (English
      Translation) [incorporated by reference to Exhibit 10.6 to the
      registrants Current Report on Form 8-K filed on October 1, 2009].    
|10.7        |  | Sales Contract, dated January 5, 2009, between Shenzhen
      Skyrise Technology Co., Ltd. and Yangzhou Jinghua Living City Real Estate
      Co., Ltd. (English Translation) [incorporated by reference to Exhibit 10.7
      to the registrants Current Report on Form 8-K filed on October 1, 2009].                                                   
|10.8        |  | Equipment Purchasing Contract, dated August 1, 2008,
      among Shenzhen First Construction Engineering Co., Ltd, Shenzhen Skyrise
      Technology Co., Ltd. and Shenzhen Zhenye (Group) Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.8 to the
      registrants Current Report on Form 8-K filed on October 1, 2009].
|10.9        |  | Lease Agreement, dated June 3, 2008, between Shenzhen
      Shunping Industrial Co., Ltd and Shenzhen Skyrise Technology Co., Ltd.
      (English Translation) [incorporated by reference to Exhibit 10.9 to the
      registrants Current Report on Form 8-K filed on October 1, 2009].                                                                  
|10.10       |  | Shenzhen Skyrise Technology Co., Ltd. Form of
      Confidentiality Agreement (English Translation) [incorporated by reference
      to Exhibit 10.10 to the registrants Current Report on Form 8-K filed on
      October 1, 2009].                                                                                                                      
|10.11       |  | Employment Contact, dated May 27, 2009, between Shenzhen
      Skyrise Technology Co., Ltd. and Mingchun Zhou (English Translation)
      [incorporated by reference to Exhibit 10.11 to the registrants Current
      Report on Form 8-K filed on October 1, 2009].                                                                                      
|10.12       |  | Employment Contact, dated June 11, 2009, between Shenzhen
      Skyrise Technology Co., Ltd. and Dongmei Wu (English Translation)
      [incorporated by reference to Exhibit 10.12 to the registrants Current
      Report on Form 8-K filed on October 1, 2009].                                                                                        

44

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|Exhibit No. |  | Description                                                                                                                                                                                                                                                                         
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.13       |  | Employment Contact, dated May
        27, 2009, between Shenzhen Skyrise Technology Co., Ltd. and Shengrong
        Dong (English Translation) [incorporated by reference to Exhibit 10.13
        to the registrants Current Report on Form 8-K filed on October 1,
        2009].
|10.14       |  | Employment Contact,
        dated May 27, 2009, between Shenzhen Skyrise Technology Co., Ltd. and
        Weibing Wang (English Translation) [incorporated by reference to Exhibit
        10.14 to the registrants Current Report on Form 8-K filed on October
        1, 2009].  
|10.15       |  | Employment Contact, dated May
        27, 2009, between Shenzhen Skyrise Technology Co., Ltd. and Yanchun Jiang
        (English Translation) [incorporated by reference to Exhibit 10.15 to the
        registrants Current Report on Form 8-K filed on October 1, 2009].         
|21          |  | Subsidiaries
        of the registrant [incorporated by reference to Exhibit 21 to the registrants
        Current Report on Form 8-K filed on October 1, 2009].                                                                                                                   
|31.1*       |  | Certifications
        of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                
|31.2*       |  | Certifications
        of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                
|32.1*       |  | Certification
        of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                 
|32.2*       |  | Certification
        of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                 

*Filed herewith.

45

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SIGNATURES

In
accordance with section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this Report on Form 10-K to be signed on its behalf by the
undersigned, thereto duly authorized individual.

Date: March 31, 2010

| | **CHINA SKYRISE DIGITAL SERVICE INC.**
| | --------------------------------------
| |                                       
| | By:                                   
| |                                       
| |                                       

In
accordance with the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.

|Signature         |  | Title                                                    | Date          
|----------------- |  | -------------------------------------------------------- | --------------
|                  |  |                                                          |               
|/s/ Mingchun Zhou |  | Director, Chief Executive Officer
      and President    | March 31, 2010
|Mingchun Zhou     |  | (Principal Executive Officer)                            |               
|                  |  |                                                          |               
|/s/ Dongmei Wu    |  | Chief Financial Officer                                  | March 31, 2010
|Dongmei Wu        |  | (Principal Financial and
      Accounting Officer)       |               
|                  |  |                                                          |               
|/s/ Weibing Wang  |  | Director and Vice President of
      Marketing and Sales | March 31, 2010
|Weibing Wang      |  |                                                          |               
|                  |  |                                                          |               
|/s/ Shenrong Dong |  | Director                                                 | March 31, 2010
|Shenrong Dong     |  |                                                          |               

46

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CHINA SKYRISE DIGITAL SERVICE INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2009 AND 2008



|Contents                                                               |  | Page
|---------------------------------------------------------------------- |  | ----
|Report
      of Independent Registered Public Accounting Firm          |  | F-1 
|                                                                       |  |     
|Consolidated
      Balance Sheets                                      |  | F-2 
|                                                                       |  |     
|Consolidated
      Statements of Income and Other Comprehensive Income |  | F-3 
|                                                                       |  |     
|Consolidated
      Statements of Stockholders Equity                  |  | F-4 
|                                                                       |  |     
|Consolidated
      Statements of Cash Flows                            |  | F-5 
|                                                                       |  |     
|Notes
      to Consolidated Financial Statements                       |  | F-6 

47

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|Madsen & Associates CPAs, Inc.                      
|----------------------------------------------------
|                                                    
|684 East Vine Street #3, Murray, UT 84107           
|                                                    
|To the Board of Directors and Shareholders of       
|China Skyrise Digital Service, Inc. and subsidiaries
|Shenzhen, China                                     



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM



We have audited the accompanying consolidated balance sheets of
China Skyrise Digital Service, Inc. and subsidiaries (the Company) as of
December 31, 2009 and 2008 and the consolidated statements of income and
comprehensive income,
stockholders equity  and cash flows for each of the
years in the two year period ended December 31, 2009 and 2008. These
consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

We conducted our audit in accordance with standards of the
Public Company Accounting Oversight Board (PCAOB). Those standards require
that we plan and perform an audit to obtain reasonable assurance 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. An audit also includes assessing the accounting
principles used, significant estimates made by management and evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, these consolidated financial statements
referred to above present fairly, in all material aspects, the consolidated
financial position of the Company as of December 31, 2009 and 2008, and the
consolidated results of its operations and cash flows for each of the years in
the two year period ended December 31, 2009 in conformity with accounting
principles generally accepted in the United States of America.

/s/Madsen & Associates CPAs, Inc. Madsen &
Associates CPAs, Inc. March 24, 2010 Salt Lake City, Utah

F-1

---

CHINA SKYRISE DIGITAL SERVICE INC.CONSOLIDATED
BALANCE SHEETSDECEMBER 31, 2009 AND DECEMBER 31, 2008

|                                                                         |   | 2009      |  |   | 2008      | 
|------------------------------------------------------------------------ | - | --------- |  | - | --------- | 
|ASSETS                                                                   |   |           |  |   |           | 
|CURRENT ASSETS                                                           |   |           |  |   |           | 
|Cash and cash equivalents                                                | $ | 409,718   |  | $ | 508,272   | 
|Accounts receivable, net of allowance for
      doubtful accounts        |   | 3,089,672 |  |   | 2,049,356 | 
|Inventory                                                                |   | 1,373,733 |  |   | 1,336,615 | 
|Deposit and prepaid expense                                              |   | 558,068   |  |   | 313,978   | 
|Other receivables                                                        |   | 536,013   |  |   | 727,612   | 
|Tax recoverable                                                          |   | -         |  |   | 31,132    | 
|Total current assets                                                     |   | 5,967,204 |  |   | 4,966,965 | 
|Property, plant and equipment, net of accumulated
      depreciation     |   | 340,616   |  |   | 188,867   | 
|Other assets                                                             |   |           |  |   |           | 
|Intangible assets, net of accumulated
      amortization                 |   | 122,650   |  |   | 103,115   | 
|Goodwill                                                                 |   | 193,754   |  |   | 193,754   | 
|Total other assets                                                       |   | 316,404   |  |   | 296,869   | 
|TOTAL ASSETS                                                             | $ | 6,624,224 |  | $ | 5,452,701 | 
|                                                                         |   |           |  |   |           | 
|LIABILITIES AND SHAREHOLDERS EQUITY
      CURRENT                       |   |           |  |   |           | 
|LIABILITIES                                                              |   |           |  |   |           | 
|Current Liabilities                                                      |   |           |  |   |           | 
|Accounts payable                                                         | $ | 1,005,679 |  | $ | 720,400   | 
|Unearned Revenue                                                         |   | 81,009    |  |   | 58,692    | 
|Other payables and accrued expenses                                      |   | 541,767   |  |   | 1,309,071 | 
|Short term debt                                                          |   | 440,100   |  |   | 623,475   | 
|Tax payable                                                              |   | 73,160    |  |   | -         | 
|                                                                         |   | 2,141,715 |  |   | 2,711,638 | 
|                                                                         |   |           |  |   |           | 
|Commitments and contingencies                                            |   | -         |  |   | -         | 
|                                                                         |   |           |  |   |           | 
|SHAREHOLDERS EQUITY                                                     |   |           |  |   |           | 
|Common stock: 0.001 par value                                            |   |           |  |   |           | 
|Authorized: 75,000,000 common shares                                     |   |           |  |   |           | 
|Issued and outstanding: 21,110,550(2008: 12,378,800) common
      shares |   | 21,111    |  |   | 12,380    | 
|Additional paid-in capital                                               |   | 2,207,072 |  |   | 1,528,104 | 
|Statutory reserves                                                       |   | 2,791     |  |   | 2,791     | 
|Retained earnings                                                        |   | 2,218,197 |  |   | 1,165,106 | 
|Accumulated other comprehensive income                                   |   | 33,338    |  |   | 32,682    | 
|Total shareholders equity                                               |   | 4,482,509 |  |   | 2,741,063 | 
|                                                                         |   |           |  |   |           | 
|TOTAL LIABILITIES AND SHAREHOLDERS
      EQUITY                         | $ | 6,624,224 |  | $ | 5,452,701 | 

F-2

---

CHINA SKYRISE DIGITAL SERVICE INC.CONSOLIDATED
STATEMENTS OF INCOME AND  COMPREHENSIVE INCOMEFOR THE YEAR
ENDED DECEMBER 31, 2009 AND DECEMBER 31, 2008

|                                                    |   | 2009       |   |   | 2008       |  
|--------------------------------------------------- | - | ---------- | - | - | ---------- | -
|Revenues                                            | $ | 6,856,198  |   | $ | 4,140,682  |  
|                                                    |   |            |   |   |            |  
|Cost of goods sold                                  |   | 4,698,295  |   |   | 1,824,163  |  
|                                                    |   |            |   |   |            |  
|Gross profit                                        |   | 2,157,903  |   |   | 2,316,519  |  
|                                                    |   |            |   |   |            |  
|Selling and marketing
      expenses                |   | (532,492   | ) |   | (546,846   | )
|General and administrative expenses                 |   | (792,001   | ) |   | (778,515   | )
|Net income from
      operations                    |   | 833,410    |   |   | 991,158    |  
|Other Income (Expense)                              |   |            |   |   |            |  
|Other income                                        |   | 3,672      |   |   | 76,665     |  
|Government grant                                    |   | 242,948    |   |   | 201,562    |  
|Interest expense                                    |   | (22,638    | ) |   | (39,511    | )
|Total Other Income (Expense)                        |   | 223,982    |   |   | 238,716    |  
|                                                    |   |            |   |   |            |  
|Income before provision for income                  |   |            |   |   |            |  
|taxes                                               | $ | 1,057,392  |   | $ | 1,229,874  |  
|                                                    |   |            |   |   |            |  
|Provision for income taxes                          |   | (4,301     | ) |   | (312       | )
|Net income                                          |   | 1,053,091  |   |   | 1,229,562  |  
|                                                    |   |            |   |   |            |  
|Other comprehensive income                          |   | 656        |   |   | 32,682     |  
|Foreign
      currency translation gain             |   |            |   |   |            |  
|Comprehensive income                                | $ | 1,053,747  |   |   | 1,262,244  |  
|                                                    |   |            |   |   |            |  
|Earnings Per Share                                  |   |            |   |   |            |  
|Basic                                               | $ | 0.0541     |   | $ | 0.0723     |  
|Diluted                                             | $ | 0.0541     |   | $ | 0.0723     |  
|Weighted Average Number of
      Shares Outstanding |   |            |   |   |            |  
|Basic                                               | $ | 19,448,304 |   | $ | 17,004,800 |  
|Diluted                                             | $ | 19,448,304 |   | $ | 17,004,800 |  

See accompanying notes to consolidated financial statements.

F-3

---

CHINA SKYRISE DIGITAL SERVICE INC.  CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITYFOR THE YEARS ENDED DECEMBER 31,
2009 AND DECEMBER 31, 2008

|                                                                          |  | Common
      Stock |  |   |        |  |   |            |   |   |           |  |   |           |   |   |               | 
|------------------------------------------------------------------------- |  | ------------------ |  | - | ------ |  | - | ---------- | - | - | --------- |  | - | --------- | - | - | ------------- | 
|                                                                          |  |                    |  |   |        |  |   |            |   |   |           |  |   |           |   |   | Accumulated   | 
|                                                                          |  |                    |  |   |        |  |   | Additional |   |   |           |  |   |           |   |   | other         | 
|                                                                          |  |                    |  |   |        |  |   | paid-in    |   |   | Statutory |  |   | Retained  |   |   | comprehensive | 
|                                                                          |  | Shares             |  |   | Amount |  |   | capital    |   |   | reserve   |  |   | earnings  |   |   | income        | 
|Balance at January 1, 2008                                                |  | 12,379,800         |  | $ | 12,380 |  | $ | 25,000     |   | $ | -         |  | $ | (64,456   | ) | $ | -             | 
|Acquisition of subsidiaries                                               |  | -                  |  |   | -      |  |   | -          |   |   | 2,791     |  |   | -         |   |   | -             | 
|Debt contribution to capital                                              |  | -                  |  |   | -      |  |   | 30,365     |   |   | -         |  |   | -         |   |   | -             | 
|Capital contribution from UDH shareholders                                |  | -                  |  |   | -      |  |   | 1,472,739  |   |   |           |  |   | -         |   |   | -             | 
|Foreign currency translation gain                                         |  |                    |  |   | -      |  |   | -          |   |   | -         |  |   |           |   |   | 32,682        | 
|Net income for the year                                                   |  | -                  |  |   | -      |  |   | -          |   |   | -         |  |   | 1,229,562 |   |   | -             | 
|Balance at December 31, 2008                                              |  | 12,379,800         |  |   | 12,380 |  |   | 1,528,104  |   |   | 2,791     |  |   | 1,165,106 |   |   | 32,682        | 
|Common stock issued for service                                           |  | 4,105,750          |  |   | 4,106  |  |   | 36,952     |   |   | -         |  |   | -         |   |   | -             | 
|Recapitalization  reverse merger
    Acquisition of getpokerrakeback.com |  | 4,625,000          |  |   | 4,625  |  |   | (4,625     | ) |   | -         |  |   | -         |   |   | -             | 
|Capital contribution - director                                           |  | -                  |  |   | -      |  |   | 59,841     |   |   | -         |  |   |           |   |   | -             | 
|Capital contribution from UDH shareholders                                |  | -                  |  |   | -      |  |   | 586,800    |   |   | -         |  |   | -         |   |   | -             | 
|Foreign currency translation gain                                         |  | -                  |  |   | -      |  |   | -          |   |   | -         |  |   | -         |   |   | 656           | 
|Net income for the year                                                   |  | -                  |  |   | -      |  |   | -          |   |   | -         |  |   | 1,053,091 |   |   | -             | 
|Balance at December 31, 2008                                              |  | 21,110,550         |  |   | 21,111 |  |   | 2,207,072  |   |   | 2,791     |  |   | 2,218,197 |   |   | 33,338        | 

F-4

---

CHINA SKYRISE DIGITAL SERVICE INC.CONSOLIDATED
STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2009 ANDDECEMBER 31, 2008

|                                                               |   | 2009            |   |   | 2008             |  
|-------------------------------------------------------------- | - | --------------- | - | - | ---------------- | -
|Cash flows from operating activities:                          |   |                 |   |   |                  |  
|Net income for the period                                      | $ | 1,053,091       |   | $ | 1,229,562        |  
|Adjustments to reconcile net loss to net cash from operations: |   |                 |   |   |                  |  
|Depreciation                                                   |   | 65,896          |   |   | 64,012           |  
|Amortization of intangible assets                              |   | 32,310          |   |   | 23,326           |  
|Changes in operating assets and liabilities:                   |   |                 |   |   |                  |  
|increase in inventory                                          |   | (74,070         | ) |   | (1,336,615       | )
|increase in
      deposits and prepaid expenses                |   | (207,138        | ) |   | (313,978         | )
|Increase in accounts receivable                                |   | (1,040,316      | ) |   | ( 2,049,356      | )
|Decrease
      (increase) in other receivable                  |   | 191,599         |   |   | (727,612         | )
|Increase in tax payable                                        |   | 73,160          |   |   | -                |  
|Decrease
      (increase) in tax recoverable                   |   | 31,132          |   |   | (31,132          | )
|Increase in accounts payable                                   |   | 285,279         |   |   | 720,400          |  
|Increase in
      unearned revenue                             |   | 22,317          |   |   | 58,692           |  
|Increase in other payable and accruals                         |   | (767,305        | ) |   | 1,310,403        |  
|Net cash generated from (provided by) operating activities     |   | (334,045        | ) |   | (1,052,298       | )
|Cash flows from investing activities                           |   |                 |   |   |                  |  
|Purchases of property,
      plant and equipment               |   | ( 217,685       | ) |   | (254,011         | )
|Purchases
      of goodwill                                    |   | -               |   |   | (193,754         | )
|Net payment from
      acquisition of subsidiary               |   | -               |   |   | 295,395          |  
|Purchases
      of intangible assets                           |   | ( 51,864        | ) |   | ( 126,854        | )
|Net cash provided by investing activities                      |   | (
      269,549 | ) |   | (
      279,224  | )
|Cash flows from financing activities                           |   |                 |   |   |                  |  
|Proceeds from short term
      debt                            |   | 440,100         |   |   | 1,114,920        |  
|Repayment
      of short term debt                             |   | (623,475        | ) |   | (491,445         | )
|Statutory reserve                                              |   | -               |   |   | 2 ,791           |  
|Capital
      contributed by stockholders                      |   | 683,593         |   |   | 1,472,739        |  
|Net cash (provided by) generated from financing activities     |   | 500,218         |   |   | 2
      ,099,005 |  
|Effects of exchange rate changes on cash                       |   | 4,822           |   |   | (259,211         | )
|(Decrease) increase in cash and cash equivalents               |   | (98,554         | ) |   | 508,272          |  
|Cash and cash equivalents, beginning of
      period           |   | 508,272         |   |   | -                |  
|Cash and cash equivalents, end of period                       | $ | 409,718         |   | $ | 508,272          |  
|Supplementary disclosures of cash flow
      information:      |   |                 |   |   |                  |  
|Cash paid for interest                                         | $ | 22,638          |   | $ | 39,511           |  
|Cash paid
      for income taxes                               | $ | 4,301           |   | $ | 312              |  
|Non cash
    transaction: debt contribution to capital         | $ | -               |   | $ | 30,365           |  
|Common
      stock issued for services                         | $ | 4,106           |   | $ | -                |  

F-5

---

CHINA SKYRISE DIGITAL SERVICE INC.NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

1.    CORPORATE INFORMATION

China Skyrise Digital Service Inc. (the Company) (CSD)
(formerly known as Getpokerrakeback.com) was incorporated on June 5, 2006 in the
State of Nevada. The Company commenced business by developing and launching its
website getpokerrakeback.com on which it offered rake backs, a poker loyalty
program that rewards online poker players for playing online poker at a specific
online poker room.

On September 25, 2009, the Company completed a reverse
acquisition transaction through a share exchange with United Digital Home H.K.
Group Company Limited (UDH) whereby the Company acquired 100% of the issued
and outstanding capital stock of UDH, in exchange for 12,379,800 shares of the
Companys common stock, which shares constituted 72.8% of the Companys issued
and outstanding capital stock on a fully-diluted basis, as of and immediately
after the consummation of the reverse acquisition. As a result of the
acquisition of UDH, the Company now owns all of the issued and outstanding
capital stock of UDH, which in turn owns Shenzhen Skyrise Technology Co., Ltd
(SST) and Shenzhen Skyrise Digital Electronics Co., Ltd. (SSD). For
accounting purposes, the share exchange transaction with UDH was treated as a
reverse acquisition and recapitalization of CSD, with UDH as the acquirer and
China Skyrise Digital Service Inc. as the acquired party. Upon completion of the
exchange, UDH, SST and SSD became wholly owned subsidiaries of CSD.

UDH is a private corporation incorporated on December 11, 2007
in Hong Kong. It was principally established to serve as an investment holding
company and its operations are carried out in Hong Kong. On January 28, 2008,
UDH acquired 100% of the equity interest in SST, a corporation incorporated
under the laws of the Peoples Republic of China (PRC), from SSTs
shareholders, including Mr. Mingchun Zhou, the Companys Chairman and Chief
Executive Officer. SST was established on May 23, 2003 and its principal
activity is the sale, installation and development of digital home security
networks, peripherals and software. On April 23, 2008, SST established SSD, a
corporation incorporated under the laws of the PRC. SSDs principal activity is
sale, installation and development of computing network and intelligence
systems.

As a result of the reverse acquisition of UDH, the Company
entered into a new business. Through its Chinese subsidiaries, the Company is
now engaged in the sale, installation and development of computing network,
intelligence system, digital home security networks, peripherals and software.
On September 25, 2009, the Company changed its name to China Skyrise Digital
Service Inc. to more accurately reflect its new business operations.

CSD, UDH, SST and SSD are hereafter referred to as ( the
Company).

2.    SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

2.1  
 FISCAL YEAR

On September 25, 2009, The Company changed its fiscal
year end from August 31 to December 31.

2.2   
REPORTING ENTITIES

The accompanying consolidated financial statements
include the following entities:

F-6

---

Name of subsidiaries
    Place of incorporation
    Registered capital
    Paid - in capital
    Date of incorporation
    Percentage of interest
    Principal activityUnited Digital Home H.K. Group Company
      Limited
    Hong Kong
    HK$10,000
    HK$10,000
    December 11, 2007
    100% (2008:
      100%)directly
    Investment holdingShenzhen Skyrise Technology Co .,
      Limited
    People's Republic of
      China
    RMB8,000,000
    RMB8,000,000
    May 27, 2003
    100% (2008:
      100%)directly
    Digital home security
      systemShenzhen Skyrise Digital
      Electronic Co ., Limited
    People's Republic of
      China
    RMB2,000,0000 (2008:
      RMB1,000,000)
    RMB2,000,000 (2008:
      RMB200,000)
    April 23, 2008
    100% (2008:
      100%)directly
    Computing network and
      intelligence system


2.3   
BASIS OF CONSOLIDATION AND PRESENTATION

The consolidated financial
statements are prepared in accordance with generally accepted accounting
principles in the United States of America (US GAAP). All material
inter-company transactions and balances have been eliminated in consolidation.

For accounting purposes, the combination of the company and UDH
was accounted for as a reverse merger with UDH as the acquirer and CSD as the
acquired party and the acquisition of SST and SSD was accounted for under the
acquisition method with UDH as the immediate parent corporation of both
companies for legal purposes. Accordingly the Companys financial statements
have been prepared on a consolidated basis for the periods presented and the
consolidated balance sheets, consolidated statements of income and other
comprehensive income, stockholders equity and cash flows were presented as if
the recapitalization had occurred at the beginning of the earliest period
presented and the operations of the accounting acquired party from the date of
stock exchange transaction.

CSD, UDH, SST and SSD are hereafter referred to as (the
Company).

2.4   
USE OF ESTIMATES

The preparation of financial statements in conformity
with US GAAP requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results may differ
from those estimates.

2.5  
 ECONOMIC AND POLITICAL RISK

The Companys business operations are
conducted in the PRC and are subject to special considerations and risks not
typically associated with companies in North America and Western Europe. Chinas
political, economic and legal environments may influence the Companys business,
financial condition and results of operations, including adverse effects by
changes in governmental policies in laws and regulations, anti-inflationary
measures, and rates and methods of taxation.

2.6   
REVENUE RECOGNITION

Sales revenue is recognized when all of the
following have occurred: (i) persuasive evidence of an arrangement exists, (ii)
delivery has occurred or services have been rendered, (iii) the price is fixed
or determinable, and (iv) the ability to collect is reasonably assured. These
criteria are generally satisfied at the time of shipment when risk of loss and
title passes to the customer.

The Company recognizes revenue when the goods are delivered and
title has passed. Sales revenue represents the invoiced value of goods, net of a
value-added tax (VAT). All of the Companys products that are sold in the PRC
are subject to a Chinese VAT at a rate of 17% of the gross sales price or at a
rate approved by the Chinese local government. This VAT may be offset by the VAT paid by the Company on raw materials
and other materials included in the cost of producing their finished product.

F-7

---

2.7   
COST OF GOODS SOLD

Cost of goods sold consists primarily of direct
material costs, direct labor costs, direct depreciation and related direct
expenses attributable to the production of the products. Inbound shipping and
handling costs and purchasing are included in direct material costs.
Manufacturing overhead includes expenses such as indirect labor, depreciation as
it relates to the cost of production, rent, utilities, receiving costs, and
equipment maintenance and repairs.

2.8  
 SHIPPING AND HANDLING

Shipping and handling costs related to costs
of goods sold are included in selling and marketing expenses, and general and
administrative expenses totaled $16,854 and $15,158 for the years ended December
31, 2009 and December 31, 2008, respectively.

2.9   
ADVERTISING

Advertising costs are included in selling and marketing
expenses which totaled $20,525 and $11,382 for the years ended December 31, 2009
and December 31, 2008, respectively.

2.10  
RESEARCH AND DEVELOPMENT COSTS

Research and development costs are
included in general and administrative expenses and include the cost to develop
new products and are expensed when incurred and totaled $418,177 and $383,952
for the years ended December 31, 2009 and December 31, 2008, respectively. The
costs for development of new products and substantial enhancements to existing
products are expensed as incurred until technological feasibility has been
established, at which time any additional costs would be capitalized. The
Company has determined that technological feasibility is established at the time
a working model of products is completed. No costs have been capitalized to
date.

2.11  
GOVERNMENT GRANT

Government grants represent local authority grants to
the company for software development. Grants are recognized when the local
authority approve the grant.

2.12 
 FOREIGN CURRENCY TRANSLATION AND OTHER COMPREHENSIVE INCOME

The
reporting currency of the Company is the United States Dollars ($). The
functional currencies of the Company and its subsidiaries UDH, SST and SSDT, are
the United States Dollars ($) and Chinese Renminbi (RMB) respectively.

For those entities whose functional currency is other than the
US dollars, all assets and liabilities are translated into US dollars at the
exchange rate on the balance sheet date; stockholders equity is translated at
historical rates and items in the statements of income and of cash flows are
translated at the average rate for the year. Because cash flows are translated
based on the average translation rate, amounts related to assets and liabilities
reported in the statement of cash flows will not necessarily agree with changes
in the corresponding balances in the balance sheet. Translation adjustments
resulting from this process are included in accumulated other comprehensive
income in the consolidated statement of stockholders equity. Transaction gains
and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency are included in the
results of operations as incurred.

Accumulated other comprehensive income in the consolidated
statement of shareholders equity amounted to $33,338 and $32,682 as of December
31, 2009 and December 31, 2008, respectively. The balance sheet amounts with the
exception of equity at December 31, 2009 and December 31, 2008 were translated
at RMB 6.82 to $1.00. The average translation rates applied to the statements of
income and of cash flows for the years ended December 31, 2009 and December 31,
2008 were RMB 6.82 to $1.00 and RMB6.97 to $1.00, respectively.

2.13  
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at
cost less accumulated depreciation and any accumulated impairment losses. Such
costs include the cost of replacing parts that are eligible for capitalization
when the cost of replacing the parts is incurred. Similarly, when each major
inspection is performed, its cost is recognized in the carrying amount of the
plant and equipment as a replacement only if it is eligible for capitalization.
The assets residual values, useful lives and amortization methods are reviewed,
and adjusted if appropriate, at each financial year-end.

Depreciation is calculated on a straight-line basis over the
estimated useful life of the assets.

F-8

---

Assets Classifications
    Estimated useful lifeFurniture, fixtures and office equipment
    5 yearsPlant and machinery
    5 yearsMotor vehicles
    10 years


| |                                          |  | 2009     |   |  | 2008    |  
| | ---------------------------------------- |  | -------- | - |  | ------- | -
| |                                          |  | $        |   |  | $       |  
| |                                          |  |          |   |  |         |  
| | Furniture, fixtures and office equipment |  | 207,128  |   |  | 203,000 |  
| | Plant and machinery                      |  | 226,273  |   |  | 12,715  |  
| | Motor vehicles                           |  | 38,296   |   |  | 38,296  |  
| |                                          |  | 471,697  |   |  | 254,011 |  
| |                                          |  |          |   |  |         |  
| | Less: Accumulated depreciation           |  | (131,081 | ) |  | (65,144 | )
| | Net carrying amount                      |  | 340,616  |   |  | 188,867 |  

Depreciation expense was $65,896 and $64,012 for the years
ended December 31, 2009 and December 31, 2008 respectively. Expenditures for
maintenance and repairs are charged to expense as incurred, whereas major
improvements are capitalized as additions to property, plant and equipment. The
Company reviews its property, plant and equipment whenever events or changes in
circumstances indicate that the carrying value of certain assets might not be
recoverable. In these instances, the Company recognizes an impairment loss when
it is probable that the estimated cash flows are less than the carrying value of
the asset. To date, no such impairment losses have been recorded.

2.14   LONG LIVED ASSETS

The Company reviews the
carrying amount of its long-lived assets, including intangibles, for impairment,
each reporting period in accordance with ASC Topic 360 Property, Plant, and
Equipment. An asset is considered impaired when estimated future cash flows are
less than the carrying amount of the asset. In the event the carrying amount of
such asset is considered not recoverable, the asset is adjusted to its fair
value. Fair value is generally determined based on discounted future cash flow.
As of December 31, 2009 and December 31, 2008, the Company determined no
impairment charges were necessary.

2.15  
CAPITALIZED INTERNAL USE SOFTWARE

The Company capitalizes certain costs
incurred to purchase or create internal-use software in accordance with ASC
Topic 350-40, Internal Use Software. To date, such costs have included
external direct costs of materials and services incurred in the implementation
of internal-use software and are included within computer hardware and software.
Once the capitalization criteria have been met, such costs are classified as
software and are amortized on a straight-line basis over five years once the
software has been put into use. Subsequent additions, modifications, or upgrades
to internal-use software are capitalized only to the extent that they allow the
software to perform a task it previously did not perform. Software maintenance
and training costs are expensed in the period in which they are incurred.

2.16 
 INTANGIBLE ASSETS

The Company records identifiable intangible
assets in other assets at cost less accumulated amortization and impairment.
These assets consist primarily of software licenses. The Company amortizes them
over the shorter of their stated or statutory duration or their estimated useful
lives on a straight-line basis over five years.

F-9

---

| |                                |  | 2009    |   |  | 2008    |  
| | ------------------------------ |  | ------- | - |  | ------- | -
| |                                |  | $       |   |  | $       |  
| | Patent                         |  | 7,058   |   |  | 2,276   |  
| | Software system                |  | 171,660 |   |  | 124,578 |  
| |                                |  | 178,718 |   |  | 126,854 |  
| | Less: Accumulated amortization |  | (56,068 | ) |  | (23,739 | )
| | Net carrying amount            |  | 122,650 |   |  | 103,115 |  

Amortization expense was $32,310 and $23,326 for the years
ended December 31, 2009 and December 31, 2008, respectively.

2.17  
GOODWILL

Goodwill represents the fair value of the assets acquired in
the acquisitions over the cost of the assets acquired. Goodwill is tested for
impairment on an annual basis of the end of the companys fiscal year, or when
impairment indicators arise. The Company uses a fair-value-based approach to
test for impairment. The Company indirectly acquired two separate companies, SST
and SSD. SST is engaged in the sale, installation and development of digital
home security networks, peripherals and software and SSD is engaged in the sale,
installation and development of computing network and intelligence systems. As a
result of these acquisitions, the Company recorded goodwill in the amount of
$193,754. This goodwill represents the fair value of the assets acquired in
these acquisitions over the cost of the assets acquired. Management tested
goodwill for impairment at December 31, 2009 and determine that there was no
impairment of goodwill.

2.18  
INVENTORY

Inventory consists primarily of raw materials, components,
finished goods and low value consumable goods. Raw materials, components and low
value consumable cost are stated at cost. Cost comprises direct materials and,
where applicable direct labor costs and those overheads that have been incurred
in bringing the inventory to their present location and condition. Finished
goods are stated at the lower of cost (determined on weighted average method) or
net realizable value. Management tested goodwill for impairment loss at December
31,2009 and determined that there was no impairment of goodwill.

| |                            |  | 2009      |  |  | 2008      | 
| | -------------------------- |  | --------- |  |  | --------- | 
| |                            |  | $         |  |  | $         | 
| | Raw materials              |  | 472,280   |  |  | 515,273   | 
| | Consumable stores          |  | 126,647   |  |  | 126,647   | 
| | Components                 |  | 156,399   |  |  | 221,575   | 
| | Finished goods-in-transits |  | 166,336   |  |  | 120,992   | 
| | Finished goods             |  | 452,071   |  |  | 352,128   | 
| |                            |  | 1,373,733 |  |  | 1,336,615 | 

The Company provides for inventory losses based on obsolescence
and levels in excess of forecasted demand. In these cases, inventory is reduced
to estimated realizable value based on historical usage and expected demand.
Inherent in the Companys estimates of market value in determining inventory
valuation are estimates related to economic trends, future demand for the
Companys products, and technical obsolescence of products. When products have
been delivered, but the product revenue associated with the arrangement has been
deferred as a result of not meeting the revenue recognition criteria. The
Company includes the costs for the delivered items in inventory until
recognition of the related revenue occurs.

2.19  
ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company reduces gross trade accounts
receivable by an allowance for doubtful accounts. The allowance for doubtful
accounts is the Companys best estimate of the amount of probable credit losses
in the Companys existing accounts receivable. The Company reviews its allowance
for doubtful accounts on a regular basis and all past due balances are reviewed
individually for collectability. Account balances are charged off against the
allowance after all means of collection have been exhausted and the potential
for recovery is considered remote. Provisions for doubtful accounts for the years ended December 31, 2009 and December 31, 2008 are $nil.
Bad debts written off for years ended December 31, 2009 and December 31, 2008
are $nil. Aging of accounts receivable of the company is as follows:

F-10

---

| |                   |  |           |  |  |           | 
| | ----------------- |  | --------- |  |  | --------- | 
| |                   |  | 2009      |  |  | 2008      | 
| |                   |  | $         |  |  | $         | 
| |                   |  |           |  |  |           | 
| | within 1 year     |  | 2,988,032 |  |  | 2,048,779 | 
| | within 1- 2 years |  | 101,063   |  |  | 147       | 
| | over 2 years      |  | 577       |  |  | 430       | 
| |                   |  | 3,089,672 |  |  | 2,049,356 | 

2.20  
DEPOSITS AND PREPAID EXPENSES

| |                  |  | 2009    |  |  | 2008    | 
| | ---------------- |  | ------- |  |  | ------- | 
| |                  |  | $       |  |  | $       | 
| |                  |  |         |  |  |         | 
| | Trade deposits   |  | 508,660 |  |  | 288,331 | 
| | Prepaid expenses |  | 49,408  |  |  | 25,647  | 
| |                  |  | 558,068 |  |  | 313,978 | 

Trade deposits are the payments of deposits to suppliers for
procurement of goods.

2.21   OTHER
RECEIVABLES

| |                                     |  | 2009    |  |  | 2008    | 
| | ----------------------------------- |  | ------- |  |  | ------- | 
| |                                     |  | $       |  |  | $       | 
| |                                     |  |         |  |  |         | 
| | Project tender and other deposits   |  | 69,924  |  |  | 82,260  | 
| | Rental and utility deposits         |  | 14,288  |  |  | 5,883   | 
| | Loan due from employees             |  | 211,721 |  |  | -       | 
| | Due from related party              |  | -       |  |  | 1,380   | 
| | Due from employees                  |  | 213,848 |  |  | 389,350 | 
| | Guarantee deposits                  |  | -       |  |  | 27,726  | 
| | Samples loaned to customers         |  | 14,202  |  |  | 221,013 | 
| | Temporary payments to third parties |  | 12,030  |  |  | -       | 
| |                                     |  | 536,013 |  |  | 727,612 | 

Project tender deposits are refundable on the completion of the
entire tender process. Due from related party represents a loan from Mr.
Mingchun Zhou, Chief Executive Officer of the Company. This loan, which was
repaid on July 10, 2009, was unsecured, interest free and without fixed term of
repayment. Due from employees are the amounts advanced for handling business
transactions on behalf of the Company and will be reconciled by the Company on
the completion of the business transactions. Samples loaned to customers are
physical samples advanced to customers for exhibition and promotion purposes.
Temporary payment to third parties are deposits represents temporary deposits
paid by the Company to suppliers and service providers in anticipation of their
delivery of products and services of the Company. Such deposits are unsecured,
interest free and have no fixed repayment terms.



F-11

---

2.22   TAX
PAYABLE/(RECOVERABLE)

| |                                          |  | 2009   |  |  | 2008    |  
| | ---------------------------------------- |  | ------ |  |  | ------- | -
| |                                          |  | $      |  |  | $       |  
| |                                          |  |        |  |  |         |  
| | VAT                                      |  | 70,455 |  |  | 6,994   |  
| | City maintenance and construction levies |  | 879    |  |  | 391     |  
| | Personal income tax                      |  | 1,826  |  |  | 1,281   |  
| | Enterprise income tax                    |  | -      |  |  | (39,798 | )
| | Tax payable (recoverable)                |  | 73,160 |  |  | (31,132 | )

2.23   OTHER PAYABLES AND ACCRUED EXPENSES

| |                                                   |  | 2009    |  |  | 2008      | 
| | ------------------------------------------------- |  | ------- |  |  | --------- | 
| |                                                   |  | $       |  |  | $         | 
| |                                                   |  |         |  |  |           | 
| | Wages and professional fees accruals              |  | 16,962  |  |  | 58,763    | 
| | Due to employees                                  |  | 14,421  |  |  | -         | 
| | Due to related party                              |  | 447,554 |  |  | 284,158   | 
| | Security deposits for samples loaned to customers |  | 27,654  |  |  | 200,541   | 
| | Sundries                                          |  | 13,171  |  |  | 5,823     | 
| | Temporary receipts from third parties             |  | 22,005  |  |  | 759,786   | 
| |                                                   |  | 541,767 |  |  | 1,309,071 | 

Wages and professional accruals are amounts due to employees
and professional firms. Due to related party represented the amount due to Mr.
Mingchun Zhou, Chief Executive Officer of the Company. SST has borrowed funds
from Mr. Mingchun Zhou at intervals commencing in fiscal year 2008. Until July
10, 2009, these loans were unsecured, interest free and had no fixed repayment
term. On July 10, 2009, the Company entered into a Repayment Agreement with Mr.
Zhou, pursuant to which the Company acknowledged and memorialized its obligation
to repay an outstanding balance of RMB 1,937,000 (approximately, $284,158) to
Mr. Zhou. According to the agreement, the loan remains unsecured, and is
interest free, but the Company is obligated to repay the loan on or before July
10, 2011, the second anniversary of execution date. Security deposits for
samples loaned to customers received are deposits paid by customers in order to
safeguard that samples will be returned to the Company. Temporary receipts from
third parties represent temporary deposits provided to the Company in
anticipation of the Companys delivery of products and services to third parties
in the future. This is a usual and customary way to show a good faith intent to
conduct business with the Company in the future. Such deposits are unsecured
advances, interest free and without a fixed term of repayment.

2.24   FAIR
VALUE OF FINANCIAL INSTRUMENTS

The Company follows paragraph
825-10-50-10 of the FASB Accounting Standards Codification for disclosures about
fair value of its financial instruments and paragraph 820-10-35-37 of the FASB
Accounting Standards Codification (Paragraph 820-10-35-37) to measure the fair
value of its financial instruments. Paragraph 820-10-35-37 establishes a
framework for measuring fair value in accounting principles generally accepted
in the United States of America (U.S. GAAP), and expands disclosures about fair
value measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair
value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three (3) broad levels. The fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities and the lowest priority to unobservable inputs.
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37
are described below:

Level 1 Quoted market prices available in active markets for
identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs other than quoted prices in active
markets included in Level 1, which are either directly or indirectly observable
as of the reporting.

F-12

---

Level 3 Pricing inputs that are generally observable inputs and
not corroborated by market data.

The carrying amounts of the Companys financial assets and
liabilities, such as cash and accrued expenses, approximate their fair values
because of the short maturity of these instruments.

The Company does not have any assets or liabilities measured at
fair value on a recurring or a non-recurring basis, consequently, the Company
did not have any fair value adjustments for assets and liabilities measured at
fair value at December 31, 2009 or December 31, 2008, nor gains or losses are
reported in the statement of income and other comprehensive income that are
attributable to the change in unrealized gains or losses relating to those
assets and liabilities still held at the reporting date for the fiscal year
ended December 31, 2009 or December 31, 2008.

2.25   STOCK
COMPENSATION

The Company adopts both ASC Topic 718, Compensation -
Stock Compensation and ASC Topic 505-50, Equity-Based Payments to
Non-Employees using the fair value method. Under ASC Topic 718 and ASC Topic
505-50, stock compensation expenses is measured at the grant date on the value
of the option or restricted stock and is recognized as expenses, less expected
forfeitures, over the requisite service period, which is generally the vesting
period.

2.26  
RETIREMENT BENEFIT COSTS

PRC state managed retirement benefit programs
are defined contribution scheme and the payments to the scheme are charged as
expenses when employees have rendered service entitling them to the contribution

2.27   INCOME
TAXES

The Company adopted ASC Topic 740, Income Taxes that requires
recognition of deferred income tax liabilities and assets for the expected
future tax consequences of temporary differences between income tax basis and
financial reporting basis of assets and liabilities. Provision for income taxes
consist of taxes currently due plus deferred taxes. Since the Company had no
operations within the United States there is no provision for US income taxes
and there are no deferred tax amounts as of December 31, 2009 and December 31,
2008.

The charge for taxation is based on the results for the year as
adjusted for items, which are non-assessable or disallowed. It is calculated
using tax rates that have been enacted or substantively enacted by the balance
sheet date. Deferred tax is accounted for using the balance sheet liability
method in respect of temporary differences arising from differences between the
carrying amount of assets and liabilities in the financial statements and the
corresponding tax basis used in the computation of assessable tax profit. In
principle, deferred tax liabilities are recognized for all taxable temporary
differences, and deferred tax assets are recognized to the extent that it is
probably that taxable profit will be available against which deductible
temporary differences can be utilized.

Deferred tax is calculated at the tax rates that are expected
to apply to the period when the asset is realized or the liability is settled.
Deferred tax is charged or credited in the income statement, except when it
related to items credited or charged directly to equity, in which case the
deferred tax is also dealt with in equity. Deferred tax assets and liabilities
are offset when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and
liabilities on a net basis.

A tax position is recognized as a benefit only if it is more
likely than not that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the
largest amount of tax benefit that is greater than 50% likely of being realized
on examination. For tax positions not meeting the more likely than not test,
no tax benefit is recorded. The adoption had no affect on the Companys
financial statements.

2.28  
PRODUCT WARRANTIES

Substantially all of the Companys products are
covered by a standard warranty of 2 years for products. In the event of a
failure of products covered by this warranty, the Company must repair or replace
the software or products or, if those remedies are insufficient, and at the
discretion of the Company, provide a refund. The sales contracts encompass its
warranty obligations. Occurrence of the failure of products within warranty
period is few and insignificant; therefore, the Company provides nil% of sales
income for product warranties for the years ended December 31, 2009 and December
31, 2008. The product warranty reserve was $nil at December 31, 2009 and
December 31, 2008.

F-13

---

2.29  
RELATED PARTIES

Parties are considered to be related to the Company if the
Company has the ability, directly or indirectly, to control the party, or
exercise significant influence over the party in making financial and operating
decisions, or vice versa, or where the Company and the party are subject to
common control or common significance. Related parties may be individuals (being
members of key management personnel, significant shareholders and/or their close
family members) or other entities which are under the significant influence of
related parties of the company where those parties are individuals, and
post-employment benefit plans which are for the benefits of employees of the
Company or of any entity that is a related party of the Company.

2.30   CASH
AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash at bank and
on hand, demand deposits with banks and other financial institutions, and
short-term, highly liquid investments which are readily convertible into known
amounts of cash and which are subject to an insignificant risk of changes in
value, and have a short maturity of generally within three months when acquired.

| |                        |  | 2009    |  |  | 2008    | 
| | ---------------------- |  | ------- |  |  | ------- | 
| |                        |  | $       |  |  | $       | 
| |                        |  |         |  |  |         | 
| | Cash and bank balances |  | 409,718 |  |  | 508,272 | 

2.31 
 CONCENTRATIONS OF CREDIT RISK

The Companys operations are carried
out in the PRC. Accordingly, its business, financial condition and results of
operations may be influenced by the political, economic and legal environment in
the PRC, and by the general state of the PRC's economy. The Companys operations
in the PRC are subject to specific considerations and significant risks not
typically associated with companies in North America and Western Europe. The
Companys results may be adversely affected by changes in governmental policies
with respect to laws and regulations, anti-inflationary measures, currency
conversion and remittance abroad, and rates and methods of taxation, among other
things. Cash includes cash on hand and demand deposits in accounts maintained
with state owned banks within the Peoples Republic of China. Total cash (not
including restricted cash balances) in these banks on December 31, 2009 and
December 31, 2008 amounted to $409,718 and $508,272, respectively, of which no
deposits are covered by insurance. The Company has not experienced any losses in
such accounts and believes it is not exposed to any risks on its cash in bank
accounts.

The Company had 5 major customers whose revenue individually
represented of the Companys total revenue as follows:

| |            |  | 2009   |  |  | 2008   | 
| | ---------- |  | ------ |  |  | ------ | 
| | Customer A |  | 31.93% |  |  | -      | 
| | Customer B |  | 10.98% |  |  | -      | 
| | Customer C |  | 6.58%  |  |  | -      | 
| | Customer D |  | 5.16%  |  |  | 8.75%  | 
| | Customer E |  | 4.22%  |  |  | -      | 
| | Customer F |  | 2.51%  |  |  | 8.53%  | 
| | Customer G |  | 3.39%  |  |  | 8.46%  | 
| | Customer H |  | 3.40%  |  |  | 6.84%  | 
| | Customer I |  | -      |  |  | 6.30%  | 
| |            |  | 68.17% |  |  | 38.88% | 

The company had 5 major customers whose accounts receivable
balance individually represented of the Companys total accounts receivable as
follows:

F-14

---

| |            |  | 2009   |  |  | 2008   | 
| | ---------- |  | ------ |  |  | ------ | 
| |            |  | $      |  |  | $      | 
| | Customer A |  | 13.35% |  |  | 9.39%  | 
| | Customer B |  | 9.90%  |  |  | 8.93%  | 
| | Customer C |  | 9.13%  |  |  | 7.94%  | 
| | Customer D |  | 9.11%  |  |  | -      | 
| | Customer E |  | 8.76%  |  |  | 6.89%  | 
| | Customer F |  | -      |  |  | 11.57% | 
| |            |  | 50.25% |  |  | 44.72% | 

3.        WEIGHTED
AVERAGE NUMBER OF SHARES

In September 2009, the Company entered into
share exchange transaction which has been accounted for as a reverse merger
under the purchase method of accounting since there has been a change of
control. The Company computes the weighted-average number of common shares
outstanding in accordance with ASC Topic 805 Business Combination which states
that in calculating the weighted average shares when a reverse merger takes
place in the middle of the year, the number of common shares outstanding from
the beginning of that period to the acquisition date shall be computed on the
basis of the weighted-average number of common shares of the legal acquiree (the
accounting acquirer) outstanding during the period multiplied by the exchange
ratio established in the merger agreement. The number of common shares
outstanding from the acquisition date to the end of that period shall be the
actual number of common shares of the legal acquirer (the accounting acquiree)
outstanding during that period.

4.        EARNING PER
COMMON SHARES

The Company reports earnings per share in accordance with
the provisions of ASC Topic 260 Earning per Share 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 per share
excludes dilution and is computed by dividing income available to common
stockholders by the weighted average common shares outstanding during the
period. Diluted earnings per share takes into account the potential dilution
(using the treasury stock method) that could occur if securities or other
contracts to issue common stock were exercised and converted into common stock.

For the years ended December 31, 2009 and December 31, 2008,
basic and diluted earnings per share amount to $0.0553 and $0.0723,
respectively.

5.        ACCUMULATED
OTHER COMPREHENSIVE INCOME

ASC Topic 220 Comprehensive Income
establishes standards for reporting and displaying comprehensive income and its
components in financial statements. Comprehensive income is defined as the
change in stockholders equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources. The
comprehensive income for all periods presented includes both the reported net
income and net change in cumulative translation adjustments.

6.        RECENT
ACCOUNTING PRONOUNCEMENTS

On June 5, 2003, the United States Securities
and Exchange Commission (SEC) adopted final rules under Section 404 of the
Sarbanes-Oxley Act of 2002 (Section 404), as amended by SEC Release No.
33-9072 on October 13, 2009. Under the provisions of Section 404 of the
Sarbanes-Oxley Act, public companies and their independent auditors are each
required to report to the public on the effectiveness of a companys internal
controls. The smallest public companies with a public float below $75 million
have been given extra time to design, implement and document these internal
controls before their auditors are required to attest to the effectiveness of
these controls. This extension of time will expire beginning with the annual
reports of companies with fiscal years ending on or after June 15, 2010.
Commencing with its annual report for the fiscal year ending September 30, 2010,
the Company will be required to include a report of management on its internal
control over financial reporting. The internal control report must include a
statement

In June 2009, the FASB approved the FASB Accounting Standards
Codification (the Codification) as the single source of authoritative
nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does
not change current U.S. GAAP, but is intended to simplify user access to all
authoritative U.S. GAAP by providing all the authoritative literature related to
a particular topic in one place. All existing accounting standard documents will
be superseded and all other accounting literature not included in the
Codification will be considered non-authoritative. The Codification is effective
for interim and annual periods ending after September 15, 2009.

F-15

---

In August 2009, the FASB issued the FASB Accounting Standards
Update No. 2009-04 Accounting for Redeemable Equity Instruments - Amendment to
Section 480-10-S99 which represents an update to section 480-10-S99,
distinguishing liabilities from equity, per EITF Topic D-98, Classification and
Measurement of Redeemable Securities . The Company does not expect the adoption
of this update to have a material impact on its consolidated financial position,
results of operations or cash flows.

In August 2009, the FASB issued the FASB Accounting Standards
Update No. 2009-05 Fair Value Measurement and Disclosures Topic 820  Measuring
Liabilities at Fair Value , which provides amendments to subtopic 820-10, Fair
Value Measurements and Disclosures  Overall, for the fair value measurement of
liabilities. This update provides clarification that in circumstances in which a
quoted price in an active market for the identical liability is not available, a
reporting entity is required to measure fair value using one or more of the
following techniques: 1. A valuation technique that uses: a. The quoted price of
the identical liability when traded as an asset b. Quoted prices for similar
liabilities or similar liabilities when traded as assets. 2. Another valuation
technique that is consistent with the principles of topic 820; two examples
would be an income approach, such as a present value technique, or a market
approach, such as a technique that is based on the amount at the measurement
date that the reporting entity would pay to transfer the identical liability or
would receive to enter into the identical liability. The amendments in this
update also clarify that when estimating the fair value of a liability, a
reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in this update also clarify that both
a quoted price in an active market for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the asset
are required are Level 1 fair value measurements. The Company does not expect
the adoption of this update to have a material impact on its consolidated
financial position, results of operations or cash flows

In September 2009, the FASB issued the FASB Accounting
Standards Update No. 2009-08 Earnings Per Share  Amendments to Section
260-10-S99, which represents technical corrections to topic 260-10-S99,
Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share
for a Period that includes a Redemption or an Induced Conversion of a Portion of
a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred Stock .
The Company does not expect the adoption of this update to have a material
impact on its consolidated financial position, results of operations or cash
flows.

In September 2009, the FASB issued the FASB Accounting
Standards Update No. 2009-09 Accounting for Investments -Equity Method and
Joint Ventures and Accounting for Equity-Based Payments to Non-Employees . This
update represents a correction to Section 323-10-S99-4, Accounting by an
Investor for Stock-Based Compensation Granted to Employees of an Equity Method
Investee . Additionally, it adds observer comment Accounting Recognition for
Certain Transactions Involving Equity Instruments Granted to Other Than
Employees to the Codification. The Company does not expect the adoption to have
a material impact on its consolidated financial position, results of operations
or cash flows.

In September 2009, the FASB issued the FASB Accounting
Standards Update No. 2009-12 Fair Value Measurements and Disclosures Topic 820
 Investment in Certain Entities That Calculate Net Assets Value Per Share (or
Its Equivalent) , which provides amendments to Subtopic 820-10, Fair Value
Measurements and Disclosures-Overall, for the fair value measurement of
investments in certain entities that calculate net asset value per share (or its
equivalent). The amendments in this update permit, as a practical expedient, a
reporting entity to measure the fair value of an investment that is within the
scope of the amendments in this update on the basis of the net asset value per
share of the investment (or its equivalent) if the net asset value of the
investment (or its equivalent) is calculated in a manner consistent with the
measurement principles of Topic 946 as of the reporting entitys measurement
date, including measurement of all or substantially all of the underlying
investments of the investee in accordance with Topic 820. The amendments in this
update also require disclosures by major category of investment about the
attributes of investments within the scope of the amendments in this update,
such as the nature of any restrictions on the investors ability to redeem its
investments a the measurement date, any unfunded commitments (for example, a
contractual commitment by the investor to invest a specified amount of
additional capital at a future date to fund investments that will be make by the
investee), and the investment strategies of the investees. The major category of
investment is required to be determined on the basis of the nature and risks of
the investment in a manner consistent with the guidance for major security types
in U.S. GAAP on investments in debt and equity securities in paragraph 320-10-50-1B. The disclosures are required for all
investments within the scope of the amendments in this update regardless of
whether the fair value of the investment is measured using the practical
expedient. The Company does not expect the adoption to have a material impact on
its consolidated financial position, results of operations or cash flows.

F-16

---

In October 2009, the Financial Accounting Standards Board
issued an Accounting Standards Update (ASU) regarding accounting for own-share
lending arrangements in contemplation of convertible debt issuance or other
financing. This ASU requires that at the date of issuance of the shares in a
share-lending arrangement entered into in contemplation of a convertible debt
offering or other financing, the shares issued shall be measured at fair value
and be recognized as an issuance cost, with an offset to additional paid-in
capital. Further, loaned shares are excluded from basic and diluted earnings per
share unless default of the share-lending arrangement occurs, at which time the
loaned shares would be included in the basic and diluted earnings-per-share
calculation. This ASU is effective for fiscal years beginning on or after
December 15, 2009, and interim periods within those fiscal years for
arrangements outstanding as of the beginning of those fiscal years. The Company
is currently assessing the impact of this ASU on its consolidated financial
statements.

7.        INCOME TAXES

No Hong Kong corporate income tax has been provided in the financial
statements, as UDH did not have any assessable profits for the years ended
December 31, 2009 and December 31, 2008.

The Companys subsidiaries are governed by the income tax law
of the PRC concerning foreign investment enterprises and foreign enterprises and
various local income tax laws. Beginning January 1, 2008, the new enterprise
income tax law (New EIT Law) replaced the prior tax laws for domestic
enterprises and foreign invested enterprises (FIEs). The new standard
enterprise income tax (EIT) rate of 25% replaced the 33% rate applicable to
both domestic enterprises and FIEs. Prior to 2008, under the existing Chinese
income tax laws, FIEs generally were subject to an income tax at an effective
rate of 33% (30% state income taxes plus 3% local income taxes) on income as
reported in their statutory financial statements after appropriate tax
adjustments unless the enterprise is located in specially designated regions for
which more favorable effective tax rates apply.

Despite these changes, the New EIT Law gives the FIEs
established before March 16, 2007 (Old FIEs) a five-year grandfather period
during which they can continue to enjoy their existing preferential tax
treatments. During this five-year grandfather period, the Old FIEs which enjoyed
tax rates lower than 25% under the original EIT law will be subject to gradually
increased EIT rates over a 5-year period until their tax rate reaches 25%. In
addition, the Old FIEs that are eligible for other preferential tax treatments
by the PRC government under the original EIT law are allowed to continue
enjoying their preference until these preferential treatment periods expire.

Under the old EIT law, SST was entitled to certain tax
exemptions and reductions available to software companies. Under these tax
holidays, SST is entitled to exemption from EIT for 3 years and reduced tax
rates for 2 years after that, effective as of 2007. Therefore, SST incurred no
income tax expenses during fiscal years 2007 and 2008 and will incur no income
tax expenses for fiscal year 2009. SSD is subject to the New EIT Law and is not
entitled to certain tax exemptions and reductions available to software
companies. Provision for income tax is made at 25% on monthly reported profits.
No deferred tax has been provided in the financial statements as there are no
material temporary differences.

In addition, the New EIT Law and its implementing rules
generally provide that a 10% withholding tax applies to China-sourced income
derived by non-resident enterprises for PRC enterprise income tax purposes
unless the jurisdiction of incorporation of such enterprises shareholder has a
tax treaty with China that provides for a different withholding arrangement. SST
is considered an FIE and is directly held by UDH, a Hong Kong company. According
to a 2006 tax treaty between the Mainland and Hong Kong, dividends payable by an
FIE in China to the company in Hong Kong who directly holds at least 25% of the
equity interests in the FIE will be subject to a no more than 5% withholding
tax.

The following table reconciles the U.S statutory rates to the
companys effective tax rate for the years ended December 31, 2009 and December
31, 2008:

F-17

---

| | U.S. statutory rate                       |  | 34%    |  
| | ----------------------------------------- |  | ------ | -
| | Foreign income not recognized in USA      |  | (34%   | )
| | China Enterprise income tax rate          |  | 25%    |  
| | Hong Kong profits tax rate                |  | 16.5%  |  
| | Offshore subsidiary income not recognized |  | (16.5% | )
| | Total provision for income taxes          |  | 25%    |  

Provision for income taxes is as follows:

| |                |  | 2009  |  |  | 2008 | 
| | -------------- |  | ----- |  |  | ---- | 
| |                |  | $     |  |  | $    | 
| | Income tax     |  |       |  |  |      | 
| | CSD            |  | -     |  |  | -    | 
| | UDH            |  | -     |  |  | -    | 
| | SST            |  | -     |  |  | -    | 
| | SSE- China EIT |  | 4,301 |  |  | 312  | 
| | Deferred tax   |  | -     |  |  | -    | 
| |                |  | 4,301 |  |  | 312  | 

8.        SHORT TERM DEBT

There are no provisions in the Companys bank borrowings that
would accelerate repayment of debt as a result of a change in credit ratings or
a material adverse change in the Companys business. Under certain agreements,
the Company has the option to retire debt prior to maturity, either at par or at
a premium over par.

| |                                                     |  | 2009    |  |  | 2$008   | 
| | --------------------------------------------------- |  | ------- |  |  | ------- | 
| |                                                     |  | $       |  |  |         | 
| | Short term debt Loan from Ping An Bank, Shenzhen    |  |         |  |  |         | 
| | Interest rate 5.5755% (2008: 7.47%) per
      annum |  | 440,100 |  |  | 623,475 | 

9.        COMMON STOCK

The Company has authorized 75,000,000 common shares with a par value of
$0.001 per share. No preferred shares have been authorized or issued.

On September 25, 2009, the Company issued 12,379,800 shares of
common stock to the shareholders of UDH. The total consideration for the
12,379,800 shares was 10,000 shares of UDH, which is all the issued and
outstanding capital stock of UDH.

As a result of the reverse merger, the equity account of the
Company, prior to the share exchange date, has been retroactively restated so
that the ending outstanding share balance as of the share exchange date is equal
to the number of post share-exchange shares.

On September 25, 2009, the Company issued 4,105,750 shares of
common stock to certain individuals for services to be rendered to the company
in connection with the reverse acquisition of UDH. These services per agreement
with the company are to be provided over a 5 years period and were valued at
$41,057 or $0.01 per share. Stock based complementation expense will be
recognized prorate over the life of the agreement.

As of December 31, 2009, and December 31, 2008, the Company has
outstanding 21,110,550 and 12,379,800 issued common shares with a par value of
$0.001 per share respectively.

F-18

---

10.       STOCK OPTIONS

The Company has not granted any stock options and has not recorded any
stock-based compensation as of December 31, 2009. The Company does not have a
formal stock option plan, however, options may be granted with terms and
conditions at the discretion of the Companys board of directors.

On September 25, 2009, Mr. Lai, the owner of approximately
65.75% of our issued and outstanding common stock, entered into an option
agreement with Mr. Mingchun Zhou, our Chairman and Chief Executive Officer and
an original shareholder of SST, pursuant to which Mr. Zhou was granted an option
to purchase all shares of our common stock currently owned or later acquired by
Mr. Lai. Mr. Zhou may exercise this option, in whole but not in part, during the
period commencing on the 365th day following of the date of the option
agreement and ending on the second anniversary of the date thereof. Other than
the foregoing, we do not currently have any arrangements which if consummated
may result in a change of control of our Company.

11.       STOCK BASED
COMPENSATION

On September 25, 2009, the Company issued 4,105,750 shares
of common stock to certain individuals who provided services for the benefit of
the Company and/or its subsidiaries in connection with reverse acquisition of
UDH. The fair value of the common stock issued is determined using the fair
value of the Companys common stock on the grant date at $0.01 per share. The
Company calculated a stock based compensation of $41,058 and recognized $8,212
for the year ended December 31, 2009. As of December 31, 2009, the deferred
compensation balance was $32,846 and amortized over four years beginning on 1
January 2010.

12.       COMMITMENTS AND
CONTINGENCIES

For the years ended December 31, 2009 and December 31,
2008, total lease expenses, were $155,869 and $123,985 respectively. The future
minimum lease payments at December 31, 2009, are as follows:

| |                             |  | $       | 
| | --------------------------- |  | ------- | 
| |                             |  |         | 
| | Year ended December 31,2010 |  | 124,666 | 
| | Year ended December 31,2011 |  | 58,225  | 
| | Thereafter                  |  | -       | 
| |                             |  | 182,891 | 

From time to time and in the ordinary course of business, the
Company may be subject to various claims, damages and litigation. As of December
31, 2009 and December 31, 2008 the Company did not have any pending claims,
charges, or litigation that it expects would have material adverse effects on
its consolidate balance sheets, consolidated statements of income and other
comprehensive income or cash flows.

13.       PRODUCT LINE
INFORMATION

The Company sells software and hardware. There are no
segment managers who are held accountable for operations, operating results and
plans for levels or components below the consolidated unit level. The Company
considers itself to be operating within one reportable segment. The Company does
not have long-lived assets located in foreign countries. The Companys net
revenue from external customers by main product lines is as follows:

F-19

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| |              |  | 2009      |  |  | 2008      | 
| | ------------ |  | --------- |  |  | --------- | 
| |              |  | $         |  |  | $         | 
| | Local sales  |  |           |  |  |           | 
| | - Software   |  | 1,681,906 |  |  | 1,809,409 | 
| | - Hardware   |  | 5,022,111 |  |  | 2,331,273 | 
| | Export sales |  |           |  |  |           | 
| | - Hardware   |  | 152,181   |  |  | -         | 
| |              |  | 6,856,198 |  |  | 4,140,682 | 

14.       RELATED PARTIES
TRANSACTIONS

For the years ended December 31, 2009 and 2008, there was
cash and non-cash compensation of $47,260 and $nil awarded to, earned by, or
paid to any of our executive officers or directors. In addition to the
transactions and balances as disclosed elsewhere in these consolidated financial
statements, during the period, the company had the following significant related
party transactions:

| | Name of related party | Nature of
      transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Mr. Mingchun Zhou     | During the year ended December 31, 2008, the company
      acquired the whole interest in SST from Mingchun Zhou for $575,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Mr. Mingchun Zhou     | Included in other receivable, due from Mr. Mingchun Zhou
      are $nil and $1,380 as of December 31, 2009 and December 31, 2008,
      respectively. This loan, which was repaid on July 10, 2009, was unsecured,
      interest free and without fixed term of repayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Mr. Mingchun Zhou     | Included in other payable, due to Mr. Mingchun Zhou are
      $447,554 and $284,158 as of December 31, 2009 and December 31, 2008,
      respectively. SST has borrowed funds from Mr. Mingchun Zhou at intervals
      commencing in fiscal year 2008. Until July 10, 2009, these loans were
      unsecured, interest free and had no fixed repayment term. On July 10,
      2009, the Company entered into a Repayment Agreement with Mr. Zhou,
      pursuant to which the Company acknowledged and memorialized its obligation
      to repay an outstanding balance of RMB 1,937,000 (approximately, $284,158)
      to Mr. Zhou. According to the agreement, the loan remains unsecured, and
      is interest free, but the Company is obligated to repay the loan on or
      before July 10, 2011, the second anniversary of execution date.
| |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Mr. Kin Keung Lai     | On September 25, 2009, the company entered into a side
      letter regarding share allocation and distribution with the shareholders
      of UDH, Asia Regal and Mr. Kin Keung Lai, and certain service providers of
      the Company, pursuant to which Asia Regal agreed to transfer to Mr. Lai
      485,576 of the shares issuable to Asia Regal in connection with the
      reverse acquisition of UDH.                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Ms. Hai Yan Huang     | During the year ended December 31, 2009, our sole
      director and officer, Ms. Hai Yan Huang, made a capital contribution to
      the Company in the amount of $59,841.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Mr. Steven Goertz     | During the year ended December 31, 2009, the company
      entered into and closed the Stock Purchase Agreement with Flourishing
      Wisdom and Mr. Steven Goertz, our Chairman, Chief Executive Officer and
      controlling stockholder at such time. Pursuant to the Stock Purchase
      Agreement, Flourishing Wisdom purchased 2,500,000 shares of our common
      stock, representing 54% of our issued and outstanding common stock as of
      the closing, from Mr. Goertz for $555,000, or $0.22, per share. As a
      result of the transaction, Flourishing Wisdom became our controlling
      stockholder.                                                                                                                                                                                                                         

F-20

---

| | Mr. Steven Goertz, | During the year ended December 31, 2008 our president
      loaned $36,104 to the Company. The loan contained no terms of repayment,
      was unsecured, and bore no interest. During the year ended December 31,
      2008 , the Company repaid $5,739 of the loan and the remaining balance of
      $30,365 was forgiven.
| | ------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15.       SUBSEQUENT EVENTS

As required by ASC Topic 855 Subsequent Events, the Company has
evaluated subsequent events that have occurred through March 24, 2010, the date
the consolidated financial statements were available to be issued.

F-21

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EXHIBIT INDEX

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                         
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         |  | Share Exchange Agreement, dated September 25, 2009, among
      the registrant, United Digital Home H.K. Group Company Limited and its
      shareholders [incorporated by reference to Exhibit 2.1 to the registrants
      Current Report on Form 8-K filed on October 1, 2009].                                                                                                                                                 
|3.1         |  | Amended and Restated Articles of Incorporation of the
      registrant [incorporated by reference to Exhibit 3.1 to the registrants
      Current Report on Form 8-K filed on October 1, 2009].                                                                                                                                                                                                                                    
|3.2         |  | Amended and Restated Bylaws of the registrant, adopted on
      December 3, 2008 [incorporated by reference to Exhibit 3.2 to the
      registrants Annual Report on Form 10-K filed on December 15, 2008].                                                                                                                                                                                                                        
|10.1        |  | Form of Side Letter re Share Allocation and Distribution,
      dated September 25, 2009, among the registrant, Asia Regal Holdings
      Limited, Kin Keung Lai and certain individuals [incorporated by reference
      to Exhibit 10.1 to the registrants Current Report on Form 8-K filed on
      October 1, 2009].                                                                                                           
|10.2        |  | Stock Purchase Agreement, dated September 10, 2008, by
      and among the registrant, Steven Goertz and Flourishing Wisdom Holdings
      Limited [incorporated by reference to Exhibit 2.1 to the registrants
      Current Report on Form 8-K filed on September 11, 2008].                                                                                                                                                     
|10.3        |  | Equity Transfer Agreement, dated January 28, 2008, among
      Mingchun Zhou, Weibing Wang, Shengrong Dong, Yagang Lu, Yagang Lu and
      United Digital Home H.K. Group Company Limited (English Translation)
      [incorporated by reference to Exhibit 10.3 to the registrants Current
      Report on Form 8-K filed on October 1, 2009].                                                                                    
|10.4        |  | Investment Agreement, dated September 15, 2009, between
      Asia Regal Finance Capital Group, Co., Ltd. and United Digital Home H.K.
      Group Company Limited (English Translation) [incorporated by reference                                                                                                                                                                                                                 
|10.5        |  | Equipment Supply and Installation Contract, dated
      November 17, 2008, between Shenzhen Skyrise Technology Co., Ltd. and
      Shenzhen City Hwaloilee Industrial Co. Ltd (English Translation)
      [incorporated by reference to Exhibit 10.5 to the registrants Current
      Report on Form 8-K filed on October 1, 2009]. to Exhibit 10.4 to the
      registrants Current Report on Form 8-K filed on October 1, 2009].
|10.6        |  | Contract for Purchase and Sales of Video Intercom
      Equipment, dated April 9, 2008, between Shenzhen Skyrise Technology Co.,
      Ltd. and Shenzhen Nanhai Yitian House Developing Co., Ltd (English
      Translation) [incorporated by reference to Exhibit 10.6 to the
      registrants Current Report on Form 8-K filed on October 1, 2009].                                                                             
|10.7        |  | Sales Contract, dated January 5, 2009, between Shenzhen
      Skyrise Technology Co., Ltd. and Yangzhou Jinghua Living City Real Estate
      Co., Ltd. (English Translation) [incorporated by reference to Exhibit 10.7
      to the registrants Current Report on Form 8-K filed on October 1, 2009].                                                                                                                            
|10.8        |  | Equipment Purchasing Contract, dated August 1, 2008,
      among Shenzhen First Construction Engineering Co., Ltd, Shenzhen Skyrise
      Technology Co., Ltd. and Shenzhen Zhenye (Group) Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.8 to the
      registrants Current Report on Form 8-K filed on October 1, 2009].                                                                         
|10.9        |  | Lease Agreement, dated June 3, 2008, between Shenzhen
      Shunping Industrial Co., Ltd and Shenzhen Skyrise Technology Co., Ltd.
      (English Translation) [incorporated by reference to Exhibit 10.9 to the
      registrants Current Report on Form 8-K filed on October 1, 2009].                                                                                                                                           
|10.10       |  | Shenzhen Skyrise Technology Co., Ltd. Form of
      Confidentiality Agreement (English Translation) [incorporated by reference
      to Exhibit 10.10 to the registrants Current Report on Form 8-K filed on
      October 1, 2009].                                                                                                                                                                                               
|10.11       |  | Employment Contact, dated May 27, 2009, between Shenzhen
      Skyrise Technology Co., Ltd. and Mingchun Zhou (English Translation)
      [incorporated by reference to Exhibit 10.11 to the registrants Current
      Report on Form 8-K filed on October 1, 2009].                                                                                                                                                               
|10.12       |  | Employment Contact, dated June 11, 2009, between Shenzhen
      Skyrise Technology Co., Ltd. and Dongmei Wu (English Translation)
      [incorporated by reference to Exhibit 10.12 to the registrants Current                                                                                                                                                                                                                     

---

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                         
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  | Report on Form 8-K filed on
        October 1, 2009].                                                                                                                                                                                                                               
|10.13       |  | Employment Contact,
        dated May 27, 2009, between Shenzhen Skyrise Technology Co., Ltd. and
        Shengrong Dong (English Translation) [incorporated by reference to Exhibit
        10.13 to the registrants Current Report on Form 8-K filed on October
        1, 2009].
|10.14       |  | Employment Contact, dated May
        27, 2009, between Shenzhen Skyrise Technology Co., Ltd. and Weibing Wang
        (English Translation) [incorporated by reference to Exhibit 10.14 to the
        registrants Current Report on Form 8-K filed on October 1, 2009].          
|10.15       |  | Employment Contact,
        dated May 27, 2009, between Shenzhen Skyrise Technology Co., Ltd. and
        Yanchun Jiang (English Translation) [incorporated by reference to Exhibit
        10.15 to the registrants Current Report on Form 8-K filed on October
        1, 2009]. 
|21          |  | Subsidiaries of the registrant
        [incorporated by reference to Exhibit 21 to the registrants Current
        Report on Form 8-K filed on October 1, 2009].                                                                                                                   
|31.1*       |  | Certifications
        of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                
|31.2*       |  | Certifications
        of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                
|32.1*       |  | Certification
        of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                 
|32.2*       |  | Certification
        of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                 

*Filed herewith.

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