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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,
2010

[   ] 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 518070 People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, 2010 (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 OTCQB Marketplace maintained
  by Pink OTC Markets Inc.) was approximately $14.5 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 21,433,550 shares of the registrants
common stock outstanding as of March 30, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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CHINA SKYRISE DIGITAL SERVICE INC.

Annual Report on FORM 10-KFor the Fiscal
Year Ended December 31, 2010

TABLE OF CONTENTS

|PART I        
|--------------
|              
|Item
      1. 
|Item
      1A.
|Item
      1B.
|Item
      2. 
|Item
      3. 
|Item
      4. 
|              
|PART II       
|              
|Item
      5. 
|Item
      6. 
|Item
      7. 
|Item
      7A.
|Item
      8. 
|Item
      9. 
|Item
      9A.
|Item
      9B.
|              
|PART III      
|              
|Item
      10.
|Item
      11.
|Item
      12.
|Item
      13.
|Item
      14.
|              
|PART IV       
|              
|Item
      15.

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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; 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 and for the
purposes of this report only, references in this report to:

- We, us, our, or the Company are to the combined business of China Skyise and its consolidated subsidiaries, United Digital, Skyrise Technology
  and Skyrise Digital;
- China Skyrise are to China Skyrise Digital Service Inc., a Nevada
  corporation;
- United Digital are to United Digital Home H.K. Group Company Limited, a
  Hong Kong limited company;
- Skyrise Technology are to Shenzhen Skyrise Technology Co., Ltd., a PRC
  limited company;
- Skyrise Digital are to Shenzhen Skyrise Digital Electronics Co., Ltd., a
  PRC limited company;
- Hong Kong are to the Hong Kong Special Administrative Region of the
  Peoples Republic of China;
- PRC and China are to the Peoples Republic of China;
- SEC are to the Securities and Exchange Commission;
- Securities Act are to the Securities Act of 1933, as amended;
- Exchange Act are to the Securities Exchange Act of 1934, as amended;
- Renminbi and RMB are to the legal currency of China; and
- U.S. dollars, dollars and $ are to the legal currency of the United
  States.

2

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PART I

ITEM 1. BUSINESS.

Overview of Our Business

We are engaged in the development and sale of digital
residential intercom and safety products. We are also developing a
system-on-chip product, as well as community e-business value-added services
which we expect will generate recurring revenues from our existing clients.

Our customers are primarily urban and suburban residents in
multifamily dwellings, property managers, real estate developments, engineering
companies and system integration companies in China. We plan to expand our
customer base by marketing our products to commercial entities and customers,
such as airports, hotels, banks, supermarkets and entertainment venues. Our
customers are spread across China, including Hong Kong, Macao and Taiwan but are
primarily located in the coastal and central metropolitan regions, such as
Beijing, Shanghai, Guangzhou and Shenzhen.

Our revenues are mainly derived from sale of digital
residential intercom and safety products. Revenues derived from the sale of our
products are not concentrated within any one customer or group of related
customers.

Our digital residential intercom and safety products are
comprised of manufactured electronic components, specifically LCD screens and
integrated circuitsthat we source from domestic suppliers based in the
Shenzhen, China.

Our sales network covers most major metropolitan
regions in China  including Beijing, Shanghai, Guangzhou and Shenzhen. We have more than
10 branch offices and distribution points.

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.chinaskyrise.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. 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 the
time, pursuant to which, Flourishing Wisdom purchased 2,500,000 shares of our
common stock from Steven Goertz, representing 54% of our issued and outstanding
common stock as of the closing, 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. 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.

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, or 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. For accounting
purposes, 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.

3

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As a result of the reverse acquisition of United Digital, our
main business became the business of United Digital and its subsidiaries,
namely, the development and sale for digital residential intercom and safety
products in China. On September 25, 2009, we changed our name to China Skyrise
Digital Service Inc., to more accurately reflect our new business
operations.

Our Corporate Structure

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



Our Industry and Principal Market

A residential intercom and safety system is one of the most
important subsystems of overall residential real property safety and security, and the residential intercom
and safety industry is currently undergoing a turbulent period of transformation
from analog to digital. We have become one of the leading companies in the
digital residential intercom and safety industry in China, largely attributable
to the high level quality of our digital residential intercom and safety
products.

The residential intercom
and safety industry in China has grown over the past three decades. At present,
there are over 300 mid- to large-sized manufacturers.  We believe that only
30 companies in our industry sector have more than 100 employees. Most of the manufacturers in this
industry can only provide analog products. Domestic residential intercom and
safety products account for over 90% of the market share and imported products
account for the remaining 10%. Due to the fast economic growth and growing real
estate market in Guangdong Province, residential intercom and safety products
and accessories in Guangdong Province have been rapidly developed and have made
Guangdong Province the center of the residential intercom and safety industry.

Competition in the market for residential intercom and safety
systems remains intense, however, based on data obtained from the Guangdong
Public Security Protection Technology Association, few of our competitors have
the mature technology for digital products.

4

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During recent years, the residential intercom and safety market
  has grown alongside of the  PRC real estate industry.

|The PRC state
        government committed to invest RMB 900 billion during 2009 to 2011 in
        the construction of low-priced housing. According to the Guangdong Public Security Protection
        Technology Association, mid- to low-priced commercial residential housings
        and public rental housing is projected to expand. We believe that the government's efforts
        in encouraging low-priced and mid-to-small sized commercial housing will
        further drive the demands for residential intercom products.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|In January, 2010, the State Council General Office
      resolved to encourage healthy development of the real estate
      market to increase the supply of land for housing construction and develop
      utilities to increase the supply of low-cost and commercial housing.                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

We believe that the rapid replacement and update
  of residential intercom and safety products, and the increasing concerns about
  community security will drive demand for updated intercom products with optimized
  functions will increase, which, in turn will continue to stimulate growth in
  our industry.

Our Competitive Strengths

We believe that the following competitive strengths enable us
to compete effectively and distinguish us from our competitors:

- Innovative Products and Services: Our  research and
  development team strives to rapidly react to changing market
  conditions, quickly adapt to the latest technical developments, and develop
  new features which enable us to capitalize on the latest consumer trends. We
  believe that the technology used in our digital products helps us to offer advanced products to
  our clients, at a premium rate. In
  addition, we believe that, as a result of our technical capabilities,
  businesses in the vertical digital intercom and safety 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: We believe our product
  offerings
  allow us to cover a varying degree of customer needs, ranging from the low to
  high end of the digital market. We believe our low-end digital residential
  intercom and safety products compare favorably to high-end analog products in the marketplace. Our new system-on-chip solution and
  community e-business value-added services are designed to allow us to target upstream and downstream,
  respectively, of the digital residential intercom and safety industry and help
  us to form a complete value chain in the market.
- Industry Leading Marketing and Sales Team: Our strong
  marketing and sales organization brings us quality clients. We also have the
  ability to rapidly expand our sales coverage once additional funding becomes
  available to support additional projects.

5

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- Strict Quality and Process Management: We are committed to rapidly respond to customer demands and offer superior products and
  service by streamlining manufacturing
  processes and enhancing employee professional development. 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.

Our Growth Strategy

We believe that Chinas highly fragmented residential intercom
and safety 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 capitalize on anticipated  growth of Chinas
      real estate industry. The residential intercom and safety industry is  transitioning  from analog intercom to digital solutions, which
    aligns with our product offerings.  We will continue
      to invest in research and development to maintain innovative and quality
    products, and increase our overall market share in the residential
      intercom and safety industry. We will also expand our business into the
      conversion of existing residential neighborhoods from analog intercom to digital solutions.
- System-on-Chip Solution:
      We continue to enhance and expand our core products and further expand our
      customer base by developing our new system-on-chip solution. Through our
      system-on-chip program, we have worked out the integration of the hardware
      and software used in our digital intercom system onto a single chipset,
      which will reduce the overall cost of our products. We have also marketed
      this product to companies that do not have their own research and development
      capabilities.
- 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.
- Pursue Strategic Acquisitions to
      Augment Strong Internal Growth: We expect that acquisitions will
      enable our geographic expansion, enhance our competitive advantages, provide
      licensing and recurring revenue opportunities and propel our expansion into
      high-growth enterprise class markets.

Our Products and Services

We develop and sell digital residential intercom and safety products
and solutions in China. In 2010, we derived most of our revenue from the sales
of digital residential intercom and safety products in urban and suburban homes.
Commencing in the fourth quarter, our system-on-chip integration solution has
begun to contribute to our sales growth.

We manufacture the key components of digital residential
intercom and safety products for residential use, and rely on third-party
electronic assembling companies to assemble the products utilizing our
technology.  Our main products include standalone DVRs, embedded DVRs, mobile
DVRs, digital cameras, intelligent control system software platforms, perimeter
security alarm systems monitors, and auxiliary apparatuses.

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 four models, Standard, High-end, Luxury and Wireless. The
specifications of each monitor are provided below:

6

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|Standard Model:
      LCD touch screen: 4 in/5.6 inCompliant to telecom SP specificationsSupport VoIP                                                                                           | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|High-end Model:
      LCD tough screen: 10.2 inBuild-in CMOS color camera                                                                                                                       | 
|Luxury Model:
      ABS material shellBuild-in custom UI skins                                                                                                                                  | 
|Wireless Model:
      Rechargeable lithium battery with one hour usage timeBuild-in WiFi or 3G servicesExternal microphone, compliant with home phones or as a standalone
          3G terminal | 

7

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We are also developing system-on-chip solutions and community
e-business value-added services, both of which are based on digital network
technology. System-on-chip involves the integration of the hardware and software
used in our digital intercom system onto a single chipset, which we expect will
reduce the overall cost of our products. We have also marketed this product to
companies that do not have their own research and development capabilities.
System-on-chip products target upstream markets, with the potential customers
being other manufacturers in the industry who lack the mature technology
necessary for digital residential intercom and safety products.

Community e-business value-added services target the downstream
market, with the potential customers being the end users of the digital
residential intercom and safety products 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. Our value-added services will be offered
via the same platform on which we offer our digital residential intercom and
safety products, which can bring us recurring revenue from existing customers.

We expect such service revenue to make up a significant portion
of our future revenue

Our 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 principal suppliers of hardware for
certain of our products:

|Supplier                                              | Primary Items Supplied
|----------------------------------------------------- | ----------------------
|Shenzhen Weierjian Technology Co. Ltd.                | Integrated Circuits   
|Shenzhen Xinyeheng Technology Co. Ltd.                | Integrated Circuits   
|Shenzhen QuanAn Technology Development Co.
      Ltd. | Integrated Circuits   
|Shenzhen Langtuo Electronic Technology Co. Ltd.       | Integrated Circuits   
|Shenzhen Kedimei Technology, Co. Ltd.                 | Integrated Circuits   
|Dongguan Changan Shangming Plastics Products Plant    | Mold                  
|Shenzhen Huangjinyan Industrial Co. Ltd.              | OEM Product           
|Shenzhen Taiyu Kaida Technology Development Co. Ltd.  | Monitor               

We develop most of our own software, including drivers,
embedded software, and software applications. 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 Customers and Marketing Efforts

Our customers are primarily urban and suburban residential
communities, real estate development companies, engineering companies and system
integration companies. Our customers include: Shenzhen Youka Technology, Ltd.,
Hangzhou Greentown Group, Yangzhou Jinghua Chengzhongcheng living city Ltd.,
China Telecom Project Ltd. Guangdong Branch and Shenzhen Zhenye Group.

A large percentage of our revenues are derived from the sales
of digital residential intercom and safety products. The existing end customers
can form client basis of our community e-business value added service, which
will be developed in the near future and bring recurring revenue.

8

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We market and promote our products through: participation 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.

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 to a wider client base.

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

|Office    | Location                     
|--------- | -----------------------------
|Shenzhen  | Shenzhen, Guangdong Province 
|Guangzhou | Guangzhou, Guangdong Province
|Beijing   | Beijing                      
|Shanghai  | Shanghai                     
|Zhengzhou | Zhengzhou, Henan Province    
|Haikou    | Hiakou, Hainan Province      
|Hefei     | Hefei, Anhui Province        
|Hangzhou  | Hangzhou, Zhejiang Province  
|Nanjing   | Nanjing, Jiangsu Province    
|Hubei     | Wuhan, Hubei Province        
|Shenyang  | Shenyang, Liaoning Province  

Our Competition

There are many companies in China engaged in the business of
marketing residential intercom and safety products. However, the digital
residential intercom and safety industry in China is still nascent and no
company has yet attained a market leadership position.

In our industry, competition is based on price, product
quality and a company's ability to distribute products, and ability to provide after-sales
service. Our primary competition comes from Shenzhen Shidean Technology
Industries Co., Ltd., Guangzhou Anjubao Technology Co., Ltd. and Fujian Aurine
Technology 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.

We believe that the quality of our product and our broad sales
network enable us to compete favorably in the market for the digital residential
intercom and safety products in China.

Our Research and Development Efforts

Our research and development activities focus on developing new
products and technologies. We currently have 43 employees dedicated to research
and development. We have initiated 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.

9

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Our 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, 2010, we held 12 patents, including one
invention patent, and three trademarks, and had five patents or trademarks
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.

Our Employees

As of December 31, 2010, we employed a total of 145 full-time
employees. The following table sets forth the number of our employees by
function.

Function
    Number Of EmployeesSales and Marketing Department
    55Customer Service Department
    8Research and Development Department
    43Financial Department
    6Administrative Office
    5Production
    28Total
    145


Approximately 56% of our employees hold bachelor degrees, and
most majored in computer science.

Our technical personnel are familiar with the digital network
technology, 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.

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.

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 intercom and safety products produced in China must satisfy
China Public Security Bureau testing standards, 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. Our facilities have passed the
ISO9001: 2000 certification and the China Compulsory Certification (CCC),

10

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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.

Environmental Matters

Our operations are not subject to any environmental
regulations.

Foreign Currency Exchange

Our sales revenue and expenses are mainly denominated in RMB.
Under the PRC foreign currency exchange regulations applicable to us, RMB is
convertible for current account items, including the distribution of dividends,
interest payments, trade and service-related foreign exchange transactions.
Currently, our PRC operating subsidiaries may purchase foreign currencies for
settlement of current account transactions, including payments of dividends to
us, employee salaries (even if employees are based outside of China), and
payment for equipment purchases outside of China, without the approval of the
State Administration of Foreign Exchange of the Peoples Republic of China, or
SAFE, by complying with certain procedural requirements. Conversion of RMB for
capital account items, such as direct investment, loan, security investment and
repatriation of investment, however, is still subject to the approval of SAFE.
In particular, if our PRC operating subsidiaries borrow foreign currency through
loans from us or other foreign lenders, these loans must be registered with
SAFE, and if we finance the subsidiaries by means of additional capital
contributions, these capital contributions must be approved by certain
government authorities, including the Ministry of Commerce, or MOFCOM, or their
respective local branches. These limitations could affect our PRC operating
subsidiaries ability to obtain foreign exchange through debt or equity
financing. In the event of a liquidation of our PRC subsidiaries, SAFE approval
is required before the remaining proceeds can be expatriated from China.

Taxation

On March 16, 2007, the National Peoples Congress of China
passed a new Enterprise Income Tax Law, or EIT Law, and on November 28, 2007,
the State Council of China passed its implementing rules, which took effect on
January 1, 2008. Before the implementation of the EIT Law, foreign invested
enterprises, or FIEs, and domestic-invested enterprises established in the PRC,
unless granted preferential tax treatments by the PRC government, were generally
subject to an earned income tax, or EIT, rate of 15% and 33% respectively. The
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, such as companies designated as High- and New-Technology
Enterprises which may enjoy a reduced EIT of 15%. Despite these changes, the EIT
Law gives FIEs established before March 16, 2007, or 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.

In addition to the changes to the current tax structure, under
  the 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%.

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For detailed discussion of PRC tax issues related to resident
  enterprise status, see Item 1A Risk FactorsRisks Related to Doing
  Business in ChinaUnder the New Enterprise Income Tax 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.

In addition, the 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, United Digital. 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.

Pursuant to the Provisional Regulation of China on Value Added
Tax and its implementing rules, all entities and individuals that are engaged in
the sales of goods, the provision of repairs and replacement services and the
importation of goods in China are generally required to pay value added tax, or
VAT, at a rate of 17.0% of the gross sales proceeds received, less any
deductible VAT already paid or borne by the taxpayer. Further, when exporting
goods, the exporter is entitled to some or all of the refund of VAT that it has
already paid or borne, and part of VAT for software sales can also be refund by
tax bureau to encourage software development.

Dividend Distribution

Substantially all of our sales are earned by our PRC
subsidiaries. However, PRC regulations restrict the ability of our PRC
subsidiaries to make dividends and other payments to its offshore parent
company. PRC legal restrictions permit payments of dividends 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 their 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.

Circular 75

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. 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.

Failure to comply with the requirements of Circular 75 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.

As we stated under Item 1A Risk factorsRisks Related
  to Doing Business in China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 PRC subsidiaries, limit our
  PRC subsidiaries ability to distribute profits to us or otherwise materially
  adversely affect us, 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, many of the
  terms and provisions in Circular 75 remain unclear and implementation by central
  SAFE and local SAFE branches of Circular 75 have been inconsistent since its
  adoption. Therefore, we cannot predict how Circular 75 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 by our PRC resident beneficial holders.

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2006 M&A Rule

On August 8, 2006, six PRC regulatory agencies promulgated the
Regulation on Mergers and Acquisitions of Domestic Companies by Foreign
Investors, referred to as the 2006 M&A Rule, which became effective on
September 8, 2006, and was amended in 2009. The 2006 M&A Rule regulates
Round-trip Investments, 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 Rule, any Round-trip Investment must be approved by 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, our Chairman and Chief Executive
Officer, Mr. Mingchun Zhou, entered into an option agreement with Mr. Kin Keung
Lai, 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. On September 27, 2010, Mr. Zhou exercised this option, thereby becoming 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.

As we stated under Item 1A Risk factorsRisks Related to Doing
Business in China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, the PRC regulatory authorities may take the view that the
Acquisition and the reverse acquisition of United Digital are part of an overall
series of arrangements which constitute a Round-trip Investment because at the
end of these transactions Mr. Zhou became the 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 reverse
acquisition of United Digital and its link with the Acquisition. 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. 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 we 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.

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, such as
insurance for plant. 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We have limited insurance
coverage in China and 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.

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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 sales of digital
residential intercom and safety systems. Our customers are primarily urban and
suburban residents in multifamily dwellings, real estate developments, property
management companies, engineering companies and system integration companies. We
manufacture and sell digital residential intercom and safety products for these
customers and generate revenues from the sale from these products to our
customers. After we have manufactured and sold the products at any particular
customer site, we have generated the revenues from that particular client. Each
client could form part of our customer basis for our community e-business
value-added service, and additional recurring revenue can be generated from such
business. If the subsequent value-added service business could not be developed
and operated well, we will loss the recurring revenue source.

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

We frequently supply products 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. 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.

We face risks related to general domestic and global
economic conditions.

Our current operating cash flows combined with access to
the credit markets afford us sufficient short term liquidity.
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.

Risks related to the development of real estate
industry

As a provider of digital residential intercom and safety
solutions, our products are mainly used in residential communities in different
areas in China. Therefore, the development of real estate industry has a
material effect on our business. During recent years, there has been excessive investment
and fast increases in real estate prices. In the event of a slow-down of the
development of Chinese economy or unfavorable regulatory policies adopted by the
government, real estate industry will be greatly affected.  If we are unable to
correctly predict the development of real estate industry and adjust the
business act of the Company, our business and financial performance will be
materially adversely affected.

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. 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.

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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,  cash
flows from operations and borrowings from banks and other institutions have
afforded us sufficient liquidity. 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 2010 and expect to be out of compliance with these covenants
during fiscal 2011. 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
installation. We perform ongoing credit evaluations of our customers financial
condition and generally have few
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 those we
believed carried unfavorable payment terms. We believe that we will be able to
collect current amounts due from our customers.

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;
- 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.

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.

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

We target the rapidly evolving residential market for our
digital residential intercom and safety products. 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 digital residential
intercom and safety products 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 emerging nature of products and
services in the residential digital intercom and safety 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 intercom and safety industry, and we expect
this competition to continue to intensify.

Chinas digital residential intercom and safety industry is
nascent and rapidly evolving. Our primary competition comes from domestic
companies such as Shenzhen Shidean Technology Industries Co., Ltd., Guangzhou
Anjubao Technology Co., Ltd. and Fujian Aurine Technology 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 and 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 marketing.  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.

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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.

We have limited insurance coverage in China.

We do not have any business liability, interruption or
litigation insurance coverage for our operations in China. While business
interruption insurance and other types of insurance are 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.
Therefore, our existing insurance coverage may not be sufficient to cover all
risks associated with our business. As a result, we may be required to pay for
financial and other losses, damages and liabilities, including those caused by
natural disasters and other events beyond our control, out of our own funds,
which could have a material adverse effect on our business, financial condition
and results of operations.

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.

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 Chief Executive Officer, Mr. Mingchun Zhou, our
Chief Financial Officer, Mr. Jiabo Fan, and our Vice President of Marketing and
Sales, Mr. Weibing Wang. 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.

RISKS RELATED TO DOING BUSINESS IN CHINA

If we become directly subject to the recent scrutiny,
criticism and negative publicity involving U.S.-listed companies with operations
in China, we may have to expend significant resources to investigate and resolve
or defend ourselves, which could harm our business operations, stock price and
reputation and result in a loss of your investment in our stock, especially if
we are unable to address or resolve such matters favorably.
Recently, U.S. public companies that have substantially all of their operations
in China, particularly companies like ours that have completed so-called reverse
merger transactions, have been the subject of intense scrutiny, criticism and
negative publicity by investors, financial commentators and regulatory agencies,
such as the United States Securities and Exchange Commission. Much of the
scrutiny, criticism and negative publicity has centered around financial and
accounting irregularities and mistakes, a lack of effective internal controls
over financial accounting, inadequate corporate governance policies or a lack of
adherence thereto and, in many cases, allegations of fraud. As a result of such
scrutiny, criticism and negative publicity, the publicly traded stock of many
U.S. listed China-based companies has sharply decreased in value and, in some
cases, has become virtually worthless. Furthermore, many of these companies are
conducting internal and external investigations into such allegations and in the
interim are subject to trading halts, SEC investigative and enforcement actions
and shareholder lawsuits. It is not clear what effect this sector-wide scrutiny,
criticism and negative publicity will have on our company, our business and our
stock price. If we become the subject of any unfavorable allegations, whether
such allegations are proven to be true or untrue, we will have to expend
significant resources to investigate such allegations and/or defend our company.
Such a development would be costly and time consuming and would distract our
management from growing our company. If such allegations are not proven to be
groundless, our company and business operations will be severely harmed and your
investment in our stock could be rendered worthless.

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;
- Methods of allocating resources;

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- 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 the lack of a 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.

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.

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
subsidiaries in the PRC. Our 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 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.

Most of our assets are located outside of the United States and
all of our current operations are conducted in the PRC. In addition, all 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.

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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.

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 5.9% and as low as
-0.8%. 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 sales effectively.

The majority of our sales will be settled in RMB 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 the U.S. dollar 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.

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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
business.

Substantially all of our sales are earned by our PRC
subsidiaries. However, as discussed more fully under Item 1 Business
RegulationDividend Distributions, PRC regulations restrict the ability of our
PRC subsidiaries to make dividends and other payments to their offshore parent
company. 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 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. Circular 75 requires PRC residents to register with the competent
local SAFE branch before establishing or acquiring control over an SPV for the
purpose of engaging in an equity financing outside of China. See Item 1
BusinessRegulationCircular 75 for a detailed discussion of Circular 75 and
its implementation.

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. 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 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. 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, 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.

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, referred to as the 2006 M&A Rule, which regulate Round-trip
Investments, 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). See Item 1
BusinessRegulation2006 M&A Rule for a detailed discussion of the 2006
M&A Rule.

The PRC regulatory authorities may take the view that Mr. Mingchun
  Zhous acquisition of our equity interest (following exercise of his option),
  or the Acquisition, and the reverse acquisition of United Digital are part of
  an overall series of arrangements which constitute a Round-trip Investment because
  at the end of these transactions, Mr. Zhou became the 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 reverse
  acquisition 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 Rule, we cannot assure you we may be able to obtain the approval
  required from MOFCOM.

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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 we 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 Enterprise Income Tax 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.

The EIT Law and its implementing rules became effective on
January 1, 2008. Under the 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 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.

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 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
stockholders. 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 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 stockholders and
with respect to gains derived by our non-PRC stockholders from transferring our
shares. We are actively monitoring the possibility of resident enterprise
treatment for the 2011 tax year and are evaluating appropriate organizational
changes to avoid this treatment, to the extent possible.

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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 face uncertainty from Chinas Circular on
Strengthening the Administration of Enterprise Income Tax on Non-Resident
Enterprises' Share Transfer that was released in December 2009 with retroactive
effect from January 1, 2008.

The Chinese State Administration of Taxation, or SAT, released
a circular on December 15, 2009 that addresses the transfer of shares by
nonresident companies, generally referred to as Circular 698. Circular 698,
which is effective retroactively to January 1, 2008, may have a significant
impact on many companies that use offshore holding companies to invest in China.
Circular 698, which provides parties with a short period of time to comply with
its requirements, indirectly taxes foreign companies on gains derived from the
indirect sale of a Chinese company. Where a foreign investor indirectly
transfers equity interests in a Chinese resident enterprise by selling the
shares in an offshore holding company, and the latter is located in a country or
jurisdiction where the effective tax burden is less than 12.5% or where the
offshore income of his, her, or its residents is not taxable, the foreign
investor is required to provide the tax authority in charge of that Chinese
resident enterprise with the relevant information within 30 days of the
transfers. Moreover, where a foreign investor indirectly transfers equity
interests in a Chinese resident enterprise through an abuse of form of
organization and there are no reasonable commercial purposes such that the
corporate income tax liability is avoided, the PRC tax authority will have the
power to re-assess the nature of the equity transfer in accordance with PRCs
substance-over-form principle and deny the existence of the offshore holding
company that is used for tax planning purposes. There is uncertainty as to the
application of Circular 698. For example, while the term indirectly transfer
is not defined, it is understood that the relevant PRC tax authorities have
jurisdiction regarding requests for information over a wide range of foreign
entities having no direct contact with China. Moreover, the relevant authority
has not yet promulgated any formal provisions or formally declared or stated how
to calculate the effective tax in the country or jurisdiction and to what extent
and the process of the disclosure to the tax authority in charge of that Chinese
resident enterprise. In addition, there are not any formal declarations with
regard to how to decide abuse of form of organization and reasonable
commercial purpose, which can be utilized by us to balance if our Company
complies with the Circular 698. As a result, we may become at risk of being
taxed under Circular 698 and we may be required to expend valuable resources to
comply with Circular 698 or to establish that we should not be taxed under
Circular 698, which could have a material adverse effect on our financial
condition and results of operations.

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 make most of
our sales in China. The 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.

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RISKS RELATED TO THE MARKET FOR OUR STOCK GENERALLY

Our common stock is quoted on the OTCQB Marketplace which
may have an unfavorable impact on our stock price and liquidity.

Our common stock is quoted on the OTCQB Marketplace. The OTCQB
Marketplace 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 OTCQB Marketplace 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.

We are 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.

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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.

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. Our which lease expires on June
14, 2011. Under the lease agreement, we pay 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 OTCQB
Marketplace maintained by the Pink OTC Markets Inc., 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.

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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, 2010 |   |                           | 
|1stQuarter                   | $ | 2.00                      | 
|2ndQuarter                   |   | 2.00                      | 
|3rdQuarter                   |   | 2.00                      | 
|4thQuarter                   |   | 1.01                      | 
|                             |   |                           | 
|Year Ended December 31, 2009 |   |                           | 
|1stQuarter                   |   | 3.50                      | 
|2ndQuarter                   |   | 1.00                      | 
|3rdQuarter                   |   | 2.38                      | 
|4thQuarter                   |   | 2.35                      | 

|(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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Approximate Number of Holders of Our Common Stock

As of March 30, 2011, there were approximately 127 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, 2010 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 2010
fiscal year.

Purchases of Equity Securities

No repurchases of our common stock were made during the fourth
quarter of 2010.

ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

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

Overview

We develop and sell digital
residential intercom and safety products. We are also developing a
system-on-chip product, as well as community e-business value-added services
which we expect will generate recurring revenues from our existing clients.

Our customers are primarily urban and suburban residents in
multifamily dwellings, property managers, real estate developments, engineering
companies and system integration companies in China. We plan to expand our
customer base by marketing our products to commercial entities and customers,
such as airports, hotels, banks, supermarkets and entertainment venues. Our
customers are spread across China, including Hong Kong, Macao and Taiwan but are
primarily located in the major metropolitan regions, such as
Beijing, Shanghai, Guangzhou and Shenzhen.

Our revenues are mainly derived from sales of digital
residential intercom and safety products. Revenues derived from the sale of our
products are not concentrated within any one customer or group of related
customers.

Our digital residential intercom and safety products are
comprised of manufactured electronic componentsin particular LCD screens and
integrated circuitsthat we source from domestic suppliers based in the
Shenzhen, China.

Our sales network covers most coastal and central metropolitan
regions including Beijing, Shanghai, Guangzhou and Shenzhen. We have more than
10 branch offices and distribution points.

2010 Financial Performance Highlights

In fiscal year 2010, our revenues, gross profit, gross margin
and net income increased significantly from last year, due largely to improved
economic conditions in 2010.

The following are some financial highlights for the 2010 fiscal
year:

- Revenues: Revenues increased $3.36 million, or 49%, to $10.22
  million for the fiscal year ended December 31, 2010 from $6.86 million last
  year.
- Gross Margin: Gross margin was 38.63% for the fiscal year
  ended December 31, 2010, as compared to 31.47% last year.
- Net Income: Net income increased $0.79 million, or 75.34%, to
  $1.85 million for the fiscal year ended December 31, 2010 from $1.05 million
  last year.
- Fully diluted earnings per share: Fully diluted earnings per
  share were $0.0872 for the fiscal year ended December 31, 2010, as compared to
  $0.0541 last year.

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. Despite the global
      economic turmoil which resulted in a slowing of its growth rate, China experienced
      significant economic growth in recent years, achieving a 10.1% growth rate
      in gross domestic product in 2010. China appears to be emerging from the
      economic slowdown and is expected to experience continued growth in all
      areas of investment and consumption.
- PRC Economic Stimulus Plans.The PRC government has
      issued a policy entitled Central Government Policy On 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.

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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

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.

Skyrise Technology was entitled to certain tax exemptions and
reductions available to software companies under tax regulations in place prior
to the EIT Law. Under these tax holidays, Skyrise Technology was entitled to
exemption from EIT for 2 years and reduced tax rates for 3 years after that,
effective from fiscal year of 2008. Therefore, this company incurred no income
tax expenses during fiscal years 2008 and 2009 and paid a reduced rate of 11%
during fiscal year 2010. We expect to pay a reduced tax rate of 12% during
fiscal year 2011, and will be required to pay the full tax rate of 25%
commencing in fiscal year 2012, unless our subsidiaries qualify for reduced tax
treatment as High- and New-Technology Enterprises. Under the EIT Law, companies
designated as High- and New-Technology Enterprises may enjoy a reduced EIT rate
of 15%. Skyrise Technology is designated as High- and New-Technology Enterprise
and enjoys the reduced income tax rate. However, there can be no assurance that
Skyrise Technology will continue to qualify as a High- and New-Technology
Enterprise.

Prior to the EIT Law, Skyrise Digital, as a software company,
entitled a preferential income tax rate of 15%. According to the EIT Law, the
income tax rate should be changed to 25% gradually from year 2008 to year 2012.
The transiting tax rates for years 2008, 2009, 2010 and 2011 are 18% , 20%, 22%
and 24% respectively,

See Item 1 BusinessRegulationTaxation for a detailed
description of the EIT Law and tax regulations applicable to our Chinese
subsidiaries.

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Results of Operations

Comparison of Years Ended December 31, 2010 and December
31, 2009

The following table sets forth key components of our results of
operations during the fiscal years ended December 31, 2010 and 2009, both in
dollars and as a percentage of our revenues.

|                                         |   | Year Ended December 31, |   |  | Year Ended December 31, |  
|---------------------------------------- | - | ----------------------- | - |  | ----------------------- | -
|                                         |   | 2010                    |   |  | 2009                    |  
|                                         |   |                         |   |  | Percent of              |  
|                                         |   | Amount                  |   |  | Revenues                |  
|Revenues                                 | $ | 10,217,061              |   |  | 100%                    |  
|Cost of goods sold                       |   | (6,269,940              | ) |  | (61.36%                 | )
|Gross profit                             |   | 3,947,121               |   |  | 38.63%                  |  
|Selling and marketing expenses           |   | (682,692                | ) |  | (6.68%                  | )
|General and administrative expenses      |   | (1,470,068              | ) |  | (14.39%                 | )
|Income from operations                   |   | 1,794,361               |   |  | 17.56%                  |  
|Other income (expenses)                  |   |                         |   |  |                         |  
|Other income                             |   | 1,582                   |   |  | 0%                      |  
|Government grant                         |   | 380,394                 |   |  | 3.72%                   |  
|Interest expense                         |   | (30,080                 | ) |  | (0.30%                  | )
|Total other income (expenses)            |   | 351,896                 |   |  | 3.44%                   |  
|Income before provision for income taxes |   | 2,146,257               |   |  | 21.00%                  |  
|Provision for income taxes               |   | (299,770                | ) |  | (2.92%                  | )
|Net income                               |   | 1,846,487               |   |  | 18.07%                  |  
|Foreign currency translation gain        |   | 154,891                 |   |  | 1.5%                    |  
|Total comprehensive income               | $ | 2,001,378               |   |  | 19.57%                  |  

Revenues. Our revenue is mainly derived from the
sale of digital intercom packaged solutions. Our revenues increased to
$10,217,061 in the fiscal ended December 31, 2010, from $6,856,198 in 2009,
representing an increase of 49% year-on-year. The growth was mainly due to
improved economic conditions during 2010, as compared to 2009, the growth of our
total market scale and our escalated marketing and sales efforts.

Cost of good sold. Our cost of goods sold
consists primarily of direct material costs, direct labor costs, direct
depreciation and related direct expenses attributable to the production of our
products. Our cost of goods sold increased $1,571,645, or 33.45%, to $6,269,940
in the fiscal year ended December 31, 2010, from $4,698,295 in 2009. We believe
this is consistent with growth in our revenue and sales volume.  Cost of
goods sold as a percentage of revenue decreased to 61.36% in 2010, from 68.53%
in 2009, as a result of the decrease in the cost of production cost contributed
by our strong research and development capacities.

Gross profit and gross margin. Gross profit is
equal to the difference between our revenue and the cost of revenue. Our gross
profit increased $1,789,218, or 82.91%, to $3,947,121, in the fiscal year ended
December 31, 2010, from $2,157,903 in 2009. Gross profit as a percentage of net
revenue (gross margin) was 38.63% and 31.47% for the fiscal years ended December
31, 2010 and 2009, respectively. Such increase in gross margin is primarily due
to the decrease of production cost contributed by our strong research and
development capacities.

Selling and marketing expenses. Our selling and
marketing expenses consist primarily of compensation and benefits for our sales
and marketing staff, sales commissions, the cost of advertising, promotional and
travel activities, transportation expenses, after-sales support services and
other sales related costs. Our selling and marketing expenses increased
$150,200, or 28.21%, to $682,692 in the fiscal year ended December 31, 2010,
from $532,492 in 2009. To enlarge our business volume and market share, we
expended more resources on sales and marketing during 2010. The total selling
and marketing expenses increased in line with the increase in revenue.

General and administrative expenses. Our general
  and administrative expenses consist primarily of compensation and benefits for
  our general management, finance and administrative staff, professional and advisory
  fees, bad debts reserves, research and development cost and other expenses incurred
  in connection with general corporate purposes. Our general and administrative
  expenses increased $678,067, or 85.61%, to $1,470,068 in the fiscal year ended
  December 31, 2010, from $792,001 in 2009, primarily due to increased research
and development activities.

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Government grant. Government grant represents the
value-added tax refund for software sales, which increased in line with revenue.

Interest expense. Interest expense increased
$7,442, or 32.87%, to $30,080 in the fiscal year ended December 31, 2010, from
$22,638 in 2009, primarily due to higher outstanding loan balances during 2010.

Income taxes. Our income tax increased to
$299,770 in the fiscal year ended December 31, 2010, from $4,301 in 2009. Such
increase was mainly due to changes in income tax rates. Skyrise Technology has
been entitled to certain tax exemptions and reductions available to software
companies. Under these tax holidays, Skyrise Technology was entitled to
exemption or tax holidays, from earned income taxes for years 2008 and 2009 and reduced tax rates
for years 2010, 2011 and 2012 . Therefore, Skyrise Technology incurred no income
tax expenses during fiscal year 2009 and paid a reduced tax rate of 11% during
fiscal year 2010.

Net income. In the fiscal year ended December 31,
2010, our a net income was $1,846,487, an increase of $793,396, or
75.34%, from $1,053,091 in 2009, as a result of the factors described above.

Liquidity and Capital Resources

As of December 31, 2010, we had cash and cash equivalents of
$427,558, 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.

Cash Flow

|                                                           |   | Year Ended December 31, |  
|---------------------------------------------------------- | - | ----------------------- | -
|                                                           |   | 2010                    |  
|                                                           |   |                         |  
|Net cash (used in) operating
      activities              |   | (339,842                | )
|Net cash (used in) investing
      activities              |   | (128,081                | )
|Net cash provided by  financing
      activities           |   | 291,264                 |  
|Effects of exchange rate change in cash                    |   | 194,499                 |  
|Net increase (decrease) in cash and cash
      equivalents |   | 17,840                  |  
|Cash and cash equivalents at beginning of
      the year   |   | 409,718                 |  
|Cash and cash equivalent at end of the year                | $ | 427,558                 |  

Operating activities

Net cash used in operating activities was $339,842 for the
fiscal year ended December 31, 2010, as compared to $334,045 net cash used in
operating activities for the fiscal year ended December 31, 2009. Our operations
are, and expansion will be, mainly supported by cash generated from operating
activities. We apply most of our cash to marketing and sales and
research and development activities to enhance our competitive position
consistent with our strategic goals.

Investing activities

Net cash used in investing activities for the fiscal year ended
December 31, 2010 was $128,081, as compared to $269,549 for the fiscal year
ended December 31, 2009. The decrease was mainly due to our reduced investment
in property, plant and equipment for the 2010 fiscal year. For the 2009 fiscal
year, we invested in new equipment to support expansion of our product lines.

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Financing activities

Net cash provided by financing activities for the fiscal year
ended December 31, 2010 was $291,264, as compared to $500,218 in net cash
provided by financing activities during 2009. Stockholder contributed capital
amounting to $683,593 in 2009, but no such activity in 2010.

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 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

From time to time, we have borrowed funds from Mr. Mingchun
Zhou, our Chief Executive Officer, and have entered into agreements with him to
memorialize our obligation to repay these amounts. As of December 31, 2010, the
total outstanding amount due to Mr. Zhou is RMB 3,450,000 (approximately,
$521,145). These loans are unsecured, interest free and have no fixed repayment
term, except for one part amounting to RMB 1,937,000 (approximately,
$284,158)and the loan must be repaid before July 10, 2011.

We are also obligated, when the objectives and requirements
described in the agreement can be met, to deliver 500,000 shares of our common
stock to JW Junwei Financial Group, or Junwei, in five equal installments,
commencing on December 31, 2009, pursuant to an exclusive financial advisory
agreement, dated December 10, 2007.  Under the
terms of the agreement, Junwei is obligated to provide the Company with
financial advisory services over a five-year term commencing on January 1, 2008
and ending on December 31, 2012, and is responsible for providing the Company
financial advisory services.

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.

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.

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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 critical accounting policies involve the most
  significant estimates and judgments used in the preparation of our financial
  statements, including the following:

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). In the opinion of management, the accompanying balance
sheets, and statements of income, and cash flows and include all adjustments,
consisting only of normal recurring items, considered necessary to give a fair
presentation of operating results for the periods presented. 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 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.

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.

Revenue Recognition

Sales revenue includes sales of hardware and ready-made
software. 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. Revenue is recognized upon both
the delivery of products and customer acceptance through successful testing of
the products by the customer. Upon the delivery of products and successful
testing of the products, customer acknowledges the receipts and acceptance of
the products, and agrees the risk of loss and the title of products are passed
to them instantly.

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. 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.

The Company also provides repair services. The Company
recognized revenue on these services once the services have been rendered.

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.

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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. 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.

Foreign Currency Transaction and Other Comprehensive
Income

The reporting currency of the Company is the United States
Dollars ($). The functional currencies of the Company and its subsidiaries UDH,
SST and SSD, are the United States Dollars ($) 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 $188,229 and $33,338 as of December
31, 2010 and December 31, 2009, respectively. The balance sheet amounts with the
exception of equity at December 31, 2010 and December 31, 2009 were translated
at RMB6.59 to $1.00 and RMB6.82 to $1.00, respectively. The average translation
rates applied to the statements of income and of cash flows for the years ended
December 31, 2010 and December 31, 2009 were RMB6.62 to $1.00 and RMB6.82 to
$1.00, respectively.

Capitalized Interest 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.

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.

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.

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.

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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.

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.

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 as of December 31, 2010 or December 31, 2009, nor gains or losses are
reported in the statement of income and 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, 2010 or December 31, 2009.

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, 2010 and December 31,
2009.

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.

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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
  consolidated financial statements.

Recent Accounting Pronouncements

In January 2010, FASB issued ASU No. 2010-01 Accounting for
Distributions to Shareholders with Components of Stock and Cash. The amendments
in this Update clarify that the stock portion of a distribution to shareholders
that allows them to elect to receive cash or stock with a potential limitation
on the total amount of cash that all shareholders can elect to receive in the
aggregate is considered a share issuance that is reflected in EPS prospectively
and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity
and Earnings Per Share). The amendments in this update are effective for interim
and annual periods ending on or after December.

In January 2010, FASB issued ASU No. 2010-02 regarding
accounting and reporting for decreases in ownership of a subsidiary. Under this
guidance, an entity is required to deconsolidate a subsidiary when the entity
ceases to have a controlling financial interest in the subsidiary. Upon
deconsolidation of a subsidiary, and entity recognizes a gain or loss on the
transaction and measures any retained investment in the subsidiary at fair
value. In contrast, an entity is required to account for a decrease in its
ownership interest of a subsidiary that does not result in a change of control
of the subsidiary as an equity transaction. This ASU clarifies the scope of the
decrease in ownership provisions, and expands the disclosures about the
deconsolidation of a subsidiary or de-recognition of a group of assets. This ASU
is effective for beginning in the first interim or annual reporting period
ending on or after December 31, 2009. The Company does not expect the adoption
of this ASU to have a material impact on its consolidated financial statements
In January 2010, FASB issued ASU No. 2010-02  Accounting and Reporting for
Decreases in Ownership of a Subsidiary  a Scope Clarification. The amendments
in this Update affect accounting and reporting by an entity that experiences a
decrease in ownership in a subsidiary that is a business or nonprofit activity.
The amendments also affect accounting and reporting by an entity that exchanges
a group of assets that constitutes a business or nonprofit activity for an
equity interest in another entity. The amendments in this update are effective
beginning in the period that an entity adopts SFAS No. 160, Non-controlling
Interests in Consolidated Financial Statements  An Amendment of ARB No. 51. If
an entity has previously adopted SFAS No. 160 as of the date the amendments in
this update are included in the Accounting Standards Codification, the
amendments in this update are effective beginning in the first interim or annual
reporting period ending on or after December 15, 2009. The amendments in this
update should be applied retrospectively to the first period that an entity
adopted SFAS No. 160. The Company adopted this standard and has determined the
standard does not have material effect on the Companys consolidated financial
statements.

In January 2010, FASB issued ASU No. 2010-06  Improving
Disclosures about Fair Value Measurements. This update provides amendments to
Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out
of Levels 1 and 2. A reporting entity should disclose separately the amounts of
significant transfers in and out of Level 1 and Level 2 fair value measurements
and describe the reasons for the transfers. 2) Activity in Level 3 fair value
measurements. In the reconciliation for fair value measurements using
significant unobservable inputs (Level 3), a reporting entity should present
separately information about purchases, sales, issuances, and settlements (that
is, on a gross basis rather than as one net number). This update provides
amendments to Subtopic 820-10 that clarify existing disclosures as follows: 1)
Level of disaggregation. A reporting entity should provide fair value
measurement disclosures for each class of assets and liabilities. A class is
often a subset of assets or liabilities within a line item in the statement of
financial position. A reporting entity needs to use judgment in determining the
appropriate classes of assets and liabilities. 2) Disclosures about inputs and
valuation techniques. A reporting entity should provide disclosures about the
valuation techniques and inputs used to measure fair value for both recurring
and nonrecurring fair value measurements. Those disclosures are required for
fair value measurements that fall in either Level 2 or Level 3.The new
disclosures and clarifications of existing disclosures are effective for interim
and annual reporting periods beginning after December 15, 2009, except for the
disclosures about purchases, sales, issuances, and settlements in the roll
forward of activity in Level 3 fair value measurements. Those disclosures are
effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years. The Company is currently evaluating the
impact of this ASU, however, the Company does not expect the adoption of this
ASU to have a material impact on its consolidated financial statements.

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In February 2010, the FASB issued Accounting Standards Update
2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and
Disclosure Requirements, or ASU 2010-09. ASU 2010-09 primarily rescinds the
requirement that, for listed companies, financial statements clearly disclose
the date through which subsequent events have been evaluated. Subsequent events
must still be evaluated through the date of financial statement issuance;
however, the disclosure requirement has been removed to avoid conflicts with
other SEC guidelines. ASU 2010-09 was effective immediately upon issuance and
was adopted in February 2010.

In April 2010, the FASB issued Accounting Standards Update
2010-13,"Compensation-Stock Compensation (Topic 718): Effect of Denominating the
Exercise Price of a Share-Based Payment Award in the Currency of the Market in
Which the Underlying Equity Security Trades," or ASU 2010-13. ASU 2010-13
provides amendments to Topic 718 to clarify that an employee share-based payment
award with an exercise price denominated in currency of a market in which a
substantial porting of the entity's equity securities trades should not be
considered to contain a condition that is not a market, performance, or service
condition. Therefore, an entity would not classify such an award as a liability
if it otherwise qualifies as equity. The amendments in this Update are effective
for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2010. The Company does not expect the adoption of ASU 2010-17
to have a significant impact on its consolidated financial statements.

In April 2010, the FASB issued Accounting Standard Update
2010-17, "Revenue Recognition-Milestone Method (Topic 605): Milestone Method of
Revenue Recognition" or ASU 2010-17. This Update provides guidance on the
recognition of revenue under the milestone method, which allows a vendor to
adopt an accounting policy to recognize all of the arrangement consideration
that is contingent on the achievement of a substantive milestone (milestone
consideration) in the period the milestone is achieved. The pronouncement is
effective on a prospective basis for milestones achieved in fiscal years and
interim periods within those years, beginning on or after June 15, 2010. The
adoption of ASU 2010-17 does not have any significant impacts on the
consolidated financial statements.

In July 2010, the FASB issued ASU 2010-20, Disclosures about
the Credit Quality of Financing Receivables and the Allowance for Credit
Losses. This update amends codification topic 310 on receivables to improve the
disclosures that an entity provides about the credit quality of its financing
receivables and the related allowance for credit losses. As a result of these
amendments, an entity is required to disaggregate by portfolio segment or class
certain existing disclosures and provide certain new disclosures about its
financing receivables and related allowance for credit losses. This guidance is
being phased in, with the new disclosure requirements for period end balances
effective as of December 31, 2010, and the new disclosure requirements for
activity during the reporting period are effective March 31, 2011. The troubled
debt restructuring disclosures in this ASU have been delayed by ASU 2011-01
Deferral of the Effective Date of Disclosures about Troubled Debt
Restructurings in Update No. 2010-20, which was issued in January 2011.

In December 2010, the FASB issued Accounting Standards Update
2010-28 which amend Intangibles- Goodwill and Other (Topic 350). The ASU
modifies Step 1 of the goodwill impairment test for reporting units with zero or
negative carrying amounts. For those reporting entities, they are required to
perform Step 2 of the goodwill impairment test if it is more likely than not
that a goodwill impairment exists. An entity should consider whether there are
any adverse qualitative factors indicating that impairment may exist. The
qualitative factors are consistent with the existing guidance in Topic 350,
which requires that goodwill of a reporting unit be tested for impairment
between annual tests if an event occurs or circumstances changes that would more
likely than not reduce the faire value of a reporting unit below its carrying
amount. ASU 2010-28 is effective for fiscal years, and interim periods within
those years beginning after December 15, 2010. Early adoption is not permitted.
The Company is currently evaluating the impact of this ASU; however, the Company
does not expect the adoption of this ASU will have a material impact on its
consolidated financial statements.

In December 2010, the FASB issued Accounting Standards Update
  2010-29 which address diversity in practice about the interpretation of the
  pro forma revenue and earnings disclosure requirements for business combinations
  (Topic 805). This ASU specifies that if a public entity presents comparative
  financial statements, the entity should disclose revenue and earnings of the
  combined entity as though the business combination(s) that occurred during the
  current year had occurred as of the beginning of the comparable prior annual
  reporting period only. This ASU also expands the supplemental pro forma disclosures
  under Topic 805 to include a description of the nature and amount of material,
  nonrecurring pro forma adjustments directly attributable to the business combination
  included in the reported pro forma revenue and earnings. ASU 2010-29 is effective
  prospectively for business combinations for which the acquisition date is on
  or after the beginning of the first annual reporting period beginning on or
  after December 15, 2010. Early adoption is permitted. The Company is currently
  evaluating the impact of this ASU and expected the adoption of this ASU will
  have an impact on its future business combinations.

35

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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.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer
to controls and other procedures designed to ensure that information required to
be disclosed in the reports we file or submit under the Securities Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.

As required by Rule 13a-15(e), our management has carried out
an evaluation, with the participation and under the supervision of our Chief
Executive Officer, Mr. Mingchun Zhou and our Chief Financial Officer, Mr. Jiabo
Fan, of the effectiveness of the design and operation of our disclosure controls
and procedures, as of December 31, 2010. Based upon, and as of the date of this
evaluation, Mr. Zhou and Mr. Fan, determined that, for the reasons disclosed
below, as of December 31, 2010, and as of the date of this Report, our
disclosure controls and procedures were not effective.

Internal Controls over Financial Reporting

(a) Managements Annual Report on Internal Control over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal controls over our financial reporting as defined in Rule
13a-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, a
companys principal executive and principal financial officers and effected by a
companys 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: (1) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) 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, or US GAAP, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Companys assets that could have a material effect on the financial
statements.

There are inherent limitations in the effectiveness of any system
  of internal controls, including the possibility of human error and the circumvention
  or overriding of controls, such that internal control over financial reporting
  may not prevent or detect misstatements. 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 and procedures may deteriorate. A material weakness is a deficiency,
  or a combination of deficiencies, in internal controls over financial reporting,
  such that there is a reasonable possibility that a material misstatement of
  the Companys annual or interim financial statements will not be prevented
  or detected on a timely basis.

36

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A significant deficiency is a deficiency, or a combination of
  deficiencies, in internal control over financial reporting that is less severe
  than a material weakness, yet important enough to merit attention by those responsible
  for oversight of our financial reporting.

Our management, with the participation and under the
supervision of our Chief Executive Officer, Mr. Mingchun Zhou and our Chief
Financial Officer, Mr. Jiabo Fan, assessed the effectiveness of our internal
control over financial reporting as of December 31, 2010. In assessing the
effectiveness of our internal controls over financial reporting as of December
31, 2010, we used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control  Integrated
Framework. Based on our assessment, we determined that, for the reasons
disclosed below, as of December 31, 2010, our internal controls over financial
reporting were not effective based on those criteria.

During its audit of our consolidated financial statements for
the fiscal year ended December 31, 2010, our management discovered a material
weaknesses in our internal controls over financial reporting process,
including:

|(i)   | lack of sufficient accounting personnel qualified in US
      GAAP;                                                                                                                                    
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                        
|(ii)  | deficiencies in the supervision, monitoring, and annual
      financial statements preparation and review processes in accordance with
      US GAAP; and                                              
|      |                                                                                                                                                                                                        
|(iii) | insufficient identification, documentation and review of
      various reconciliations and related supporting documentation necessary to
      prepare financial statements in accordance with US
GAAP.

Management has taken the measures below and plan to continue
taking measures to remediate these material weaknesses as soon as practicable.

On December 30, 2010, the Board of Directors of the Company
appointed Mr. Jiabo Fan as the Companys new Chief Financial Officer. Prior to
joining the Company, Mr. Fan served from August 2003 to November 2010 in various
positions with PricewaterhouseCoopers China including as Engagement Manager and Assurance Department Manager.
As an Engagement Manager, Mr. Fan was in charge of auditing several PRC and Hong
Kong listed companies, in accordance with Chinese Accounting Standards, as well
as the auditing of subsidiaries of several multinational corporations in
accordance with U.S. GAAP and International Financial Reporting Standards. Mr.
Fan holds a Bachelors Degree in Finance from Shanghai Jiao Tong University. Our
management is confident that, in light of Mr. Fans professional history and
background, he has the relevant accounting experience, skills and knowledge in
the preparation of financial statements and financial reporting disclosures in
accordance with US GAAP and applicable SEC regulations.

In addition to the foregoing measures, we plan to take one or
  more of the following measures to remediate the material weaknesses identified:

- hire additional financial reporting and accounting personnel
      with relevant accounting experience, skills and knowledge in the preparation
      of financial statements under the requirements of US GAAP and financial
      reporting disclosure under the requirement of SEC rules;
- engage a qualified external consultant with extensive experience
      in US GAAP reporting and accounting to assist us in the supervision of the
      financial reporting process; and
- fine tune our processes for collecting and reviewing information
      required for the preparation of the financial statements and related footnotes.

Our Board of Directors also intends to establish an independent
audit committee to oversee our accounting and financial reporting processes and
the audits of our financial statements. An audit committee would be responsible
for, among other things:

37

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- selecting our independent auditors and pre-approving all auditing and
  non-auditing services permitted to be performed by our independent auditors;
- reviewing with our independent auditors any audit problems or difficulties
  and managements response;
- reviewing and approving all proposed related-party transactions;
- discussing the annual audited financial statements with management and our
  independent auditors;
- reviewing major issues as to the adequacy of our internal controls and any
  special audit steps adopted in light of significant internal control
  deficiencies;
- annually reviewing and reassessing the adequacy of our audit committee
  charter;
- such other matters that are specifically delegated to our Audit Committee
  by our Board of Directors from time to time;
- meeting separately and periodically with management and our internal and
  independent auditors; and
- reporting regularly to the Board of Directors.

These functions were previously being performed by the Board of
Directors. However, we believe that an independent audit committee performing
these functions will help to remediate the material weaknesses identified above.

When implemented, management believes that these proposed
controls will operate effectively for a sufficient period of time to reduce to a
less than reasonably possible likelihood the possibility of a material
misstatement and remediate the material weakness reported by our independent
registered public accounting firm.

Our management does not believe that these material weaknesses
had a material effect on our financial condition or results of operations or
caused our financial statements as of and for the year ended December 31, 2010
to contain a material misstatement.

(b) Attestation Report of the Registered Public Accounting Firm

As a smaller reporting Company we are not required to provide
a registered public accounting firms attestation report on our internal control
over financial reporting.

Changes in Internal Controls over Financial Reporting

Except as described above, there were no changes in our
internal controls over financial reporting during the fourth quarter of fiscal
year 2010 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 2010, 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 | 40  | Chairman, Chief
      Executive Officer and President   
|Jiabo Fan     | 31  | Chief Financial Officer                                 
|Weibing Wang  | 41  | Director and Vice
      President of Marketing and Sales
|Shenrong Dong | 34  | Director                                                

38

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Mr. Mingchun Zhou. Mr. Zhou 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 of 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. Jiabo Fan. Mr. Fan has served as our Chief Financial
Officer since December 30, 2010. Prior to joining us, Mr. Fan served from August
2003 to November 2010 in various positions with PriceWaterhouseCoopers China,  including Engagement Manager and
Assurance Department Manager. As an Engagement Manager, Mr. Fan was in charge
of auditing several PRC and Hong Kong listed companies, in accordance with
Chinese Accounting Standards, as well as the auditing of subsidiaries of several
multinational corporations in accordance with U.S. GAAP and International
Financial Reporting Standards. Mr. Fan holds a Bachelors Degree in Finance from
Shanghai Jiao Tong University.

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 13 years industry experience and previously served as the Vice President of
Marketing of Yinjie Co. and the 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 7 years. Mr. Dong has 11 years of experience in product design,
focusing on circuit design and firmware design and specializing in digital voice
and video communication.

Directors are elected until their successors are duly elected
and qualified.

Except as set forth in our discussion below in Item 13 Certain
Relationships and Related Transactions, and Director Independence Transactions
with Related Persons, 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.

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.

Director Qualifications

Our board of directors has identified particular
qualifications, attributes, skills and experience that are important to be
represented on our board as a whole, in light of our current needs and business
priorities. We are a U.S. public company that develops and sells digital
residential intercom and safety products in China. Therefore, the board believes
that a diversity of professional experiences in the residential intercom and
safety industry in China, specific knowledge of key geographic growth areas, and
knowledge of U.S. capital markets and of U.S. accounting and financial reporting
standards should be represented on the board.

Set forth below is a summary of some of the specific
qualifications, attributes, skills and experiences of our directors.

Mingchun Zhou

- Served as President of Skyrise Technology and Skyrise Digital since their
  inception in May 2003 and April 2008, respectively
- Holds a Bachelor of Science Degree in Engineering and an MBA
- Mr. Zhous long-term knowledge of the Companys business and operations
  makes him a key member of our management staff and a valuable member of our
  board of directors

39

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Weibing Wang

- Served as the Vice President of Skyrise Technology and Skyrise Digital
  since their inception in May 2003 and April 2008, respectively
- Has over 13 years of industry experience
- Holds a Bachelor of Science Degree in Engineering
- Mr. Wangs long-term knowledge of the Companys business and operations
  and his extensive experience in our industry makes him a key member of our
  management staff and a valuable member of our board of directors

Shenrong Dong

- Has led the key product strategy for our company for over 7 years
- Has 11 years of experience in product design, focusing on circuit design
  and firmware design and specializing in digital voice and video communication
- Mr. Dong contributes his extensive knowledge and hands-on experience in
  product design to our board of directors

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 | 36  | 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 13 years of research
and development experience. Prior to 2007, Mr. Jiang held development and
management positions at Great Wall Computer, Inc. and Huawei Technologies, Co.,
Ltd.

Family Relationships

There are no family relationships 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, during the past ten years:

- been convicted in a criminal proceeding or been subject to a pending criminal
      proceeding (excluding traffic violations and other minor offences);
- had any bankruptcy petition filed by or against the business or property
      of the person, or of any partnership, corporation or business association
      of which he was a general partner or executive officer, either at the time
      of the bankruptcy filing or within two years prior to that time;
- been subject to any order, judgment, or decree, not subsequently reversed,
      suspended or vacated, of any court of competent jurisdiction or federal
      or state authority, permanently or temporarily enjoining, barring, suspending
      or otherwise limiting, his involvement in any type of business, securities,
      futures, commodities, investment, banking, savings and loan, or insurance
      activities, or to be associated with persons engaged in any such activity;
- been found by a court of competent jurisdiction in a civil action or by
      the SEC or the Commodity Futures Trading Commission to have violated a federal
      or state securities or commodities law, and the judgment has not been reversed,
      suspended, or vacated;
- been the subject of, or a party to, any federal or state judicial or administrative
      order, judgment, decree, or finding, not subsequently reversed, suspended
      or vacated (not including any settlement of a civil proceeding among private
      litigants), relating to an alleged violation of any federal or state securities
      or commodities law or regulation, any law or regulation respecting financial
      institutions or insurance companies including, but not limited to, a temporary
      or permanent injunction, order of disgorgement or restitution, civil money
      penalty or temporary or permanent cease-and-desist order, or removal or
      prohibition order, or any law or regulation prohibiting mail or wire fraud
      or fraud in connection with any business entity; or

40

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- been the subject of, or a party to, any sanction or order, not subsequently
    reversed, suspended or vacated, of any self-regulatory organization (as defined
    in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered
    entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.
    1(a)(29))), or any equivalent exchange, association, entity or organization
    that has disciplinary authority over its members or persons associated with
    a member.

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.

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)
      2010
      23,565
      23,5652009
      22,941
      22,941


|(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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41

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Summary of Employment Agreements and Material Terms

Mr. Mingchun Zhou, our Chief Executive Officer, and Mr. Weibing
Wang, our Vice President of Sales and Marketing, have executed our standard
employment agreement with Skyrise Technology. These employment agreements
provide the amount of each executive officers salary and establish their
eligibility to receive a bonus. Mr. Zhous employment agreement provides for an
annual salary of RMB192,000 (approximately $29,000) and Mr. Wangs employment
agreement provide for an annual salary of RMB96,000 (approximately $14,000). The
employment agreements are set for expiration or renewal in May of 2013.

On December 30, 2010, we entered into an employment agreement
with our Chief Financial Officer, Mr. Jiabo Fan. Pursuant to the terms of the
employment agreement, Mr. Fan is entitled to a base salary of RMB 33,000
(approximately $5,000) per month, and he is eligible to receive an annual
performance bonus at the discretion of our board of directors. Either we or Mr.
Fan may terminate the employment agreement for any reason by giving the other
party 30 days notice, however, if we terminate the agreement without cause (as
defined in the employment agreement), we will be obligated to reimburse Mr. Fan
for his relocation expenses.

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.

Outstanding Equity Awards at Fiscal Year End

For the year ended December 31, 2010, 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.

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, 2010.

42

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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 30, 2011 (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 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
    7,169,471
    33.45%Jiabo Fan
      Chief Executive Officer
    Common Stock
    0
    0Weibing Wang
      Director and VP of Marketing and Sales
    Common Stock
    498,285
    2.32%Shengrong Dong
      Director
    Common Stock
    1,262,542
    5.89%All officers and directors as a group (4 persons named
      above)
      
    Common Stock
    8,930,298
    41.66%5% Security
      HoldersFeng Yu
      -
    Common Stock
    1,363,750
    6.36%Tonghao Li
      -
    Common Stock
    1,195,051
    5.58%Qiang Wang
      -
    Common Stock
    1,110,384
    5.18%


|(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 21,433,550 shares of our common stock are
      considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of March
      30, 2011.                                                                                                                                                                                          

Changes in Control

None.

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 fiscal 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 Item 11 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.

43

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- 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 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 the execution date. As of December 31, 2010 and 2009, we owed Mr. Zhou a $521,145 and $447,554,
    respectively.
- During the year ended December 31,
    2009, we entered into and closed a 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 at
    the time.

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, 2010 and 2009:

|                   |   | Year Ended December 31, | 
|------------------ | - | ----------------------- | 
|                   |   | 2010                    | 
|Audit Fees         | $ | 43,300                  | 
|Audit-Related Fees |   | 211                     | 
|Tax Fees           |   | 595                     | 
|All Other Fees     |   | 609                     | 
|TOTAL              | $ | 44,715                  | 

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.

44

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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, 2010.

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:

|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                                                                                                                         

45

---

|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            | 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].                                                                                        
|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].                                                                                      
|10.16       | Employment Agreement, dated December 30, 2010, by and
      between the registrant and Mr. Jaibo Fan [incorporated by reference to
      Exhibit 10.1 to the registrants Current Report on Form 8-K filed on
      January 5, 2011].                                                                                                                      
|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.

46

---

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: April 01, 2011

| | **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    | April 01, 2011
|Mingchun Zhou     |  | (Principal Executive Officer)                      |               
|                  |  |                                                    |               
|/s/ Jiabo Fan     |  | Chief Financial Officer                            | April 01, 2011
|Jiabo Fan         |  | (Principal Financial and Accounting Officer)       |               
|                  |  |                                                    |               
|/s/ Weibing Wang  |  | Director and Vice President of Marketing and Sales | April 01, 2011
|Weibing Wang      |  |                                                    |               
|                  |  |                                                    |               
|/s/ Shenrong Dong |  | Director                                           | April 01, 2011
|Shenrong Dong     |  |                                                    |               

---

CHINA SKYRISE DIGITAL SERVICE INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 2010 AND 2009

|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 

---

1

Madsen & Associates CPAs, Inc.

---

|684 East Vine Street #3, Murray, UT 84107 | PHONE: (801) 268-2632
|----------------------------------------- | ---------------------
|FAX: (801) 268-3978                       |                      

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, 2010 and 2009 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, 2010 and 2009. 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, 2010 and 2009, and the
consolidated results of its operations and cash flows for each of the years in
the two year period ended December 31, 2010 and 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 29, 2011 Salt Lake City, Utah

F-1

---

CHINA SKYRISE DIGITAL SERVICE, INC.

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2010 AND DECEMBER
31, 2009

|                                                                                                                                                                                                            |   | 2010      |  |   | 2009      | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------- |  | - | --------- | 
|                                                                                                                                                                                                            |   |           |  |   |           | 
|ASSETS                                                                                                                                                                                                      |   |           |  |   |           | 
|Current assets                                                                                                                                                                                              |   |           |  |   |           | 
|Cash and cash equivalents                                                                                                                                                                                   | $ | 427,558   |  | $ | 409,718   | 
|Accounts receivable, net of allowance for doubtful
      accounts                                                                                                                                           |   | 5,195,896 |  |   | 3,089,672 | 
|Inventory                                                                                                                                                                                                   |   | 2,119,846 |  |   | 1,373,733 | 
|Deposits and prepaid expenses                                                                                                                                                                               |   | 775,706   |  |   | 558,068   | 
|Other receivables                                                                                                                                                                                           |   | 384,649   |  |   | 536,013   | 
|Total current assets                                                                                                                                                                                        |   | 8,903,655 |  |   | 5,967,204 | 
|Property, plant and equipment, net of
      accumulated depreciation                                                                                                                                        |   | 339,317   |  |   | 340,616   | 
|Other assets                                                                                                                                                                                                |   |           |  |   |           | 
|Intangible assets, net of accumulated
      amortization                                                                                                                                                    |   | 136,206   |  |   | 122,650   | 
|Goodwill                                                                                                                                                                                                    |   | 193,754   |  |   | 193,754   | 
|Total other assets                                                                                                                                                                                          |   | 329,960   |  |   | 316,404   | 
|                                                                                                                                                                                                            |   |           |  |   |           | 
|Total assets                                                                                                                                                                                                | $ | 9,572,932 |  | $ | 6,624,224 | 
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                        |   |           |  |   |           | 
|Current liabilities                                                                                                                                                                                         |   |           |  |   |           | 
|Accounts payable                                                                                                                                                                                            | $ | 895,599   |  | $ | 1,005,679 | 
|Unearned revenue                                                                                                                                                                                            |   | 456,668   |  |   | 81,009    | 
|Other payables and accrued expenses                                                                                                                                                                         |   | 784,404   |  |   | 541,767   | 
|Short term debt                                                                                                                                                                                             |   | 746,364   |  |   | 440,100   | 
|Taxes payable                                                                                                                                                                                               |   | 166,220   |  |   | 73,160    | 
|                                                                                                                                                                                                            |   | 3,049,255 |  |   | 2,141,715 | 
|Commitments and contingencies                                                                                                                                                                               |   | -         |  |   | -         | 
|Stockholders' equity                                                                                                                                                                                        |   |           |  |   |           | 
|Common stock: $0.001 par
      value     Authorized: 75,000,000 common
      shares     21,283,550 and 21,110,550 shares
      issued and outstanding at     December 31,
      2010 and 2009, respectively |   | 21,284    |  |   | 21,111    | 
|Additional paid-in capital                                                                                                                                                                                  |   | 2,246,689 |  |   | 2,207,072 | 
|Statutory reserve                                                                                                                                                                                           |   | 381,829   |  |   | 2,791     | 
|Retained earnings                                                                                                                                                                                           |   | 3,685,646 |  |   | 2,218,197 | 
|Accumulated other comprehensive income                                                                                                                                                                      |   | 188,229   |  |   | 33,338    | 
|Total stockholders' equity                                                                                                                                                                                  |   | 6,523,677 |  |   | 4,482,509 | 
|Total liabilities and stockholders' equity                                                                                                                                                                  | $ | 9,572,932 |  | $ | 6,624,224 | 

See accompanying notes to consolidated financial statements

F-2

---

CHINA SKYRISE DIGITAL SERVICE, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2010 AND DECEMBER 31, 2009

China Skyrise Digital Service Inc. Consolidated income
statement

|                                                     |   | 2010       |   |   | 2009      |  
|---------------------------------------------------- | - | ---------- | - | - | --------- | -
|Revenues                                             | $ | 10,217,061 |   | $ | 6,856,198 |  
|Cost of goods sold                                   |   | 6,269,940  |   |   | 4,698,295 |  
|Gross profit                                         |   | 3,947,121  |   |   | 2,157,903 |  
|Selling and marketing expenses                       |   | 682,692    |   |   | 532,492   |  
|General and administrative expenses                  |   | 1,470,068  |   |   | 792,001   |  
|Net income from operations                           |   | 1,794,361  |   |   | 833,410   |  
|Other income (expenses)                              |   |            |   |   |           |  
|Other income                                         |   | 1,582      |   |   | 3,672     |  
|Government grant                                     |   | 380,394    |   |   | 242,948   |  
|Interest expense                                     |   | (30,080    | ) |   | (22,638   | )
|Total other income (expenses)                        |   | 351,896    |   |   | 223,982   |  
|Income before provision for income taxes             |   | 2,146,257  |   |   | 1,057,392 |  
|Provision for income taxes                           |   | (299,770   | ) |   | (4,301    | )
|Net income                                           |   | 1,846,487  |   |   | 1,053,091 |  
|Other comprehensive income                           |   |            |   |   |           |  
|Foreign currency translation gain                    |   | 154,891    |   |   | 656       |  
|Comprehensive income                                 | $ | 2,001,378  |   | $ | 1,053,747 |  
|Earnings per share                                   |   |            |   |   |           |  
|**Basic**                                            | $ | 0.0872     |   | $ | 0.0541    |  
|Diluted                                              | $ | 0.0872     |   | $ | 0.0541    |  
|Weighted average number of shares
      outstanding: |   |            |   |   |           |  

See accompanying notes to consolidated financial statements

F-3

---

CHINA SKYRISE DIGITAL SERVICE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY FOR THE
YEARS ENDED DECEMBER 31, 2010 AND DECEMBER 31, 2009

|                                                                            |  |              |  |   |            |  |   |                 |   |   |          |  |   |               |   |   | Accumulated |  |   |           | 
|--------------------------------------------------------------------------- |  | ------------ |  | - | ---------- |  | - | --------------- | - | - | -------- |  | - | ------------- | - | - | ----------- |  | - | --------- | 
|                                                                            |  |              |  |   |            |  |   |                 |   |   |          |  |   |               |   |   | other       |  |   |           | 
|                                                                            |  | Common stock |  |   | Additional |  |   | Statutory       |   |   | Retained |  |   | comprehensive |   |   |             | 
|                                                                            |  | Shares       |  |   | Amount     |  |   | paid-in capital |   |   | reserve  |  |   | earnings      |   |   | income      |  |   | Total     | 
|Balance at January 1, 2009                                                  |  | 12,379,800   |  | $ | 12,380     |  | $ | 1,528,104       |   | $ | 2,791    |  | $ | 1,165,106     |   | $ | 32,682      |  | $ | 2,741,063 | 
|Common stock issued for services                                            |  | 4,105,750    |  |   | 4,106      |  |   | 36,952          |   |   | -        |  |   | -             |   |   | -           |  |   | 41,058    | 
|Recapitalization - reverse merger
      Acquisition of getpokerrakeback.com |  | 4,625,000    |  |   | 4,625      |  |   | (4,625          | ) |   | -        |  |   | -             |   |   | -           |  |   | -         | 
|Capital contribution - director                                             |  | -            |  |   | -          |  |   | 59,841          |   |   | -        |  |   | -             |   |   | -           |  |   | 59,841    | 
|Capital contribution from UDH shareholders                                  |  | -            |  |   | -          |  |   | 586,800         |   |   | -        |  |   | -             |   |   | -           |  |   | 586,800   | 
|Foreign currency translation gain                                           |  | -            |  |   | -          |  |   | -               |   |   | -        |  |   | -             |   |   | 656         |  |   | 656       | 
|Net income for the year                                                     |  | -            |  |   | -          |  |   | -               |   |   | -        |  |   | 1,053,091     |   |   | -           |  |   | 1,053,091 | 
|Balance at December 31, 2009                                                |  | 21,110,550   |  | $ | 21,111     |  | $ | 2,207,072       |   | $ | 2,791    |  | $ | 2,218,197     |   | $ | 33,338      |  | $ | 4,482,509 | 
|Foreign currency translation gain                                           |  | -            |  |   | -          |  |   | -               |   |   | -        |  |   | -             |   |   | 154,891     |  |   | 154,891   | 
|Common stock issued for services                                            |  | 173,000      |  |   | 173        |  |   | 39,617          |   |   | -        |  |   | -             |   |   | -           |  |   | 39,790    | 
|Net income for the year                                                     |  | -            |  |   | -          |  |   | -               |   |   | -        |  |   | 1,846,487     |   |   | -           |  |   | 1,846,487 | 
|Transfer retained earnings to statutory
      reserve                       |  | -            |  |   | -          |  |   | -               |   |   | 379,038  |  |   | (379,038      | ) |   | -           |  |   | -         | 
|Balance at December 31, 2010                                                |  | 21,283,550   |  | $ | 21,284     |  | $ | 2,246,689       |   | $ | 381,829  |  | $ | 3,685,646     |   | $ | 188,229     |  | $ | 6,523,677 | 

See accompanying notes to consolidated financial statements

F-4

---

CHINA SKYRISE DIGITAL SERVICE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 2010 AND DECEMBER 31, 2009

|                                                                       |   | 2010       |   |   | 2009       |  
|---------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                       |   |            |   |   |            |  
|Cash flows from operating activities                                   |   |            |   |   |            |  
|Net income for the year                                                | $ | 1,846,487  |   | $ | 1,053,091  |  
|Adjustments to reconcile net income
      to net cash from operations: |   |            |   |   |            |  
|Depreciation                                                           |   | 84,029     |   |   | 65,896     |  
|Amortization of intangible assets                                      |   | 46,977     |   |   | 32,310     |  
|Changes in operating assets and liabilities                            |   |            |   |   |            |  
|Increase in inventory                                                  |   | (746,113   | ) |   | (74,070    | )
|Increase in deposits and prepaid expenses                              |   | (217,638   | ) |   | (207,138   | )
|Increase in accounts receivable                                        |   | (2,106,224 | ) |   | (1,040,316 | )
|Decrease in other receivables                                          |   | 151,364    |   |   | 191,599    |  
|Increase in tax payable                                                |   | 93,060     |   |   | 73,160     |  
|Decrease in tax recoverable                                            |   | -          |   |   | 31,132     |  
|(Decrease) increase in accounts
      payable                          |   | (110,080   | ) |   | 285,279    |  
|Increase in unearned revenue                                           |   | 375,659    |   |   | 22,317     |  
|Increase (decrease) in other payables
      and accrued expenses       |   | 242,637    |   |   | (767,305   | )
|Net cash used in operating activities                                  |   | (339,842   | ) |   | (334,045   | )
|Cash flows from investing activities                                   |   |            |   |   |            |  
|Purchases of property, plant and equipment                             |   | (71,510    | ) |   | (217,685   | )
|Purchase of intangible assets                                          |   | (56,571    | ) |   | (51,864    | )
|Net cash used in investing activities                                  |   | (128,081   | ) |   | (269,549   | )
|Cash flows from financing activities                                   |   |            |   |   |            |  
|Proceeds from short term debt                                          |   | 758,500    |   |   | 440,100    |  
|Repayment of short term debt                                           |   | (467,236   | ) |   | (623,475   | )
|Capital contributed by stockholders                                    |   | -          |   |   | 683,593    |  
|Net cash provided by financing activities                              |   | 291,264    |   |   | 500,218    |  
|Effects of exchange rate changes on cash                               |   | 194,499    |   |   | 4,822      |  
|Increase (decrease) in cash and cash
      equivalents                 |   | 17,840     |   |   | (98,554    | )
|Cash and cash equivalents, beginning of year                           |   | 409,718    |   |   | 508,272    |  
|Cash and cash equivalents, end of year                                 | $ | 427,558    |   | $ | 409,718    |  
|Supplementary disclosures of cash flow information:                    |   |            |   |   |            |  
|Cash paid for interest                                                 | $ | 30,080     |   | $ | 22,638     |  
|Cash paid for taxes                                                    | $ | 209,622    |   | $ | 4,301      |  
|Common stock issued for services                                       | $ | 173        |   | $ | 4,106      |  

See accompanying notes to consolidated financial statements

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 development and sale of digital residential intercom and safety
products and solutions. On April 23, 2008, SST established SSD, a corporation
incorporated under the laws of the PRC. SSDs principal activity is development
and sales 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 development and sale of digital residential intercom and
safety products, system-on-chip solutions, as well as the development and
operation of community e-business value-added services. 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

The Company has adopted December 31 as its fiscal year end.

F-6

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 REPORTING ENTITIES

The accompanying consolidated financial statements include the
following entities:

Place of
    Date of
    Percentage of
    PrincipalName of subsidiaries
    incorporation
    incorporation
    interest
    activityUnited Digital Home H.K.
    
    December 11,
    100% (2009:
    InvestmentGroup Company Limited
    Hong Kong
    2007
    100%)directly
    holdingPeople's
    
    
    DigitalShenzhen Skyrise
    Republic of
    
    100% (2009:
    intercomTechnology Co ., Limited
    China
    May 27, 2003
    100%)directly
    systemComputingPeople's
    
    
    network andShenzhen Skyrise Digital
    Republic of
    
    100% (2009:
    intelligenceElectronic Co ., Limited
    China
    April 23, 2008
    100%)directly
    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). In the opinion of management, the accompanying balance
sheets, and statements of income, and cash flows and include all adjustments,
consisting only of normal recurring items, considered necessary to give a fair
presentation of operating results for the periods presented. 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 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.

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.

F-7

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

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 includes sales of hardware and ready made
software. 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. Revenue is recognized upon both
the delivery of products and customer acceptance through successful testing of
the products by the customer. Upon the delivery of products and successful
testing of the products, customer acknowledges the receipts and acceptance of
the products, and agrees the risk of loss and the title of products are passed
to them instantly.

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. 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.

The Company also provides repair services. The Company
recognized revenue on these services once the services have been rendered.

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 $28,532 and $16,854 for the years ended December 31, 2010 and
December 31, 2009, respectively.

2.9 ADVERTISING

Advertising costs are included in selling and marketing
expenses which totaled $40,857and $20,525 for the years ended December 31, 2010
and December 31, 2009, 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 $645,675 and $418,177 for the years ended
December 31, 2010 and December 31, 2009, 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.

F-8

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 ($). The functional currencies of the Company and its subsidiaries UDH,
SST and SSD, are the United States Dollars ($) 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 $188,229 and $33,338 as of December
31, 2010 and December 31, 2009, respectively. The balance sheet amounts with the
exception of equity at December 31, 2010 and December 31, 2009 were translated
at RMB6.59 to $1.00 and RMB6.82 to $1.00, respectively. The average translation
rates applied to the statements of income and of cash flows for the years ended
December 31, 2010 and December 31, 2009 were RMB6.62 to $1.00 and RMB6.82 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 the 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.

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


F-9

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

|                                         |  | 2010     |   |  | 2009     |  
|---------------------------------------- |  | -------- | - |  | -------- | -
|                                         |  | $        |   |  | $        |  
|                                         |  |          |   |  |          |  
|Furniture, fixtures and office equipment |  | 238,276  |   |  | 207,128  |  
|Plant and machinery                      |  | 281,406  |   |  | 226,273  |  
|Motor vehicles                           |  | 39,602   |   |  | 38,296   |  
|                                         |  | 559,284  |   |  | 471,697  |  
|                                         |  |          |   |  |          |  
|Less: Accumulated depreciation           |  | (219,967 | ) |  | (131,081 | )
|Net book value                           |  | 339,317  |   |  | 340,616  |  

Depreciation expense was $84,029 and $65,896 for the years
ended December 31, 2010 and December 31, 2009 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,
2010 and December 31, 2009, 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.

F-10

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

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.

|                               |  | 2010     |   |  | 2009    |  
|------------------------------ |  | -------- | - |  | ------- | -
|                               |  | $        |   |  | $       |  
|Patent                         |  | 8,825    |   |  | 7,058   |  
|Software system                |  | 232,555  |   |  | 171,660 |  
|                               |  | 241,380  |   |  | 178,718 |  
|Less: Accumulated amortization |  | (105,174 | ) |  | (56,068 | )
|Net book value                 |  | 136,206  |   |  | 122,650 |  

Amortization expense was $46,977and $32,310 for the years ended
December 31, 2010 and December 31, 2009, 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 development and sales of digital residential
intercom and safety products and solutions and SSD is engaged in the development
and sales 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, 2010 and determined 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.

|                          |  | 2010      |  |  | 2009      | 
|------------------------- |  | --------- |  |  | --------- | 
|                          |  | $         |  |  | $         | 
|Raw materials             |  | 349,539   |  |  | 472,280   | 
|Consumable stores         |  | 130,964   |  |  | 126,647   | 
|Components                |  | 90,594    |  |  | 156,399   | 
|Finished goods-in-transit |  | 394,750   |  |  | 166,336   | 
|Finished goods            |  | 1,153,999 |  |  | 452,071   | 
|                          |  | 2,119,846 |  |  | 1,373,733 | 

F-11

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.18 INVENTORY (CONTINUED)

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 ACCOUNTS RECEIVABLE, NET OF 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, 2010 and December 31, 2009 are $46,312 and $nil, respectively. Bad debts
written off for years ended December 31, 2010 and December 31, 2009 are $nil.

Aging of accounts receivable of the Company is as follows:

|                                |  | 2010      |   |  | 2009      | 
|------------------------------- |  | --------- | - |  | --------- | 
|                                |  | $         |   |  | $         | 
|                                |  |           |   |  |           | 
|within 1 year                   |  | 4,791,800 |   |  | 2,988,032 | 
|within 1- 2 years               |  | 350,500   |   |  | 101,063   | 
|over 2 years                    |  | 99,908    |   |  | 577       | 
|                                |  | 5,242,208 |   |  | 3,089,672 | 
|Allowance for doubtful accounts |  | (46,312   | ) |  | -         | 
|                                |  | 5,195,896 |   |  | 3,089,672 | 

2.20 DEPOSITS AND PREPAID EXPENSES

|                 |  | 2010    |  |  | 2009    | 
|---------------- |  | ------- |  |  | ------- | 
|                 |  | $       |  |  | $       | 
|                 |  |         |  |  |         | 
|Trade deposits   |  | 740,061 |  |  | 508,660 | 
|Prepaid expenses |  | 35,645  |  |  | 49,408  | 
|                 |  | 775,706 |  |  | 558,068 | 

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

F-12

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.21 OTHER RECEIVABLES

|                                    |  | 2010    |  |  | 2009    | 
|----------------------------------- |  | ------- |  |  | ------- | 
|                                    |  | $       |  |  | $       | 
|                                    |  |         |  |  |         | 
|Project tender and other deposits   |  | 54,612  |  |  | 69,924  | 
|Rental and utility deposits         |  | 13,728  |  |  | 14,288  | 
|Loan due from employees             |  | -       |  |  | 211,721 | 
|Due from employees                  |  | 181,800 |  |  | 213,848 | 
|Guarantee deposits                  |  | 13,098  |  |  | -       | 
|Samples loaned to customers         |  | 2,108   |  |  | 14,202  | 
|Temporary payments to third parties |  | 15,125  |  |  | 12,030  | 
|Government grant receivable         |  | 104,178 |  |  | -       | 
|                                    |  | 384,649 |  |  | 536,013 | 

Project tender deposits are refundable on the completion of the
entire tender process. 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 payments to third parties are deposits represent
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.

2.22 TAXES PAYABLE

|                                         |  | 2010    |  |  | 2009   | 
|---------------------------------------- |  | ------- |  |  | ------ | 
|                                         |  | $       |  |  | $      | 
|                                         |  |         |  |  |        | 
|VAT                                      |  | 11,118  |  |  | 70,455 | 
|City maintenance and construction levies |  | 6,657   |  |  | 879    | 
|Personal income tax                      |  | 19,971  |  |  | 1,826  | 
|Enterprise income tax                    |  | 126,532 |  |  | -      | 
|Education levies                         |  | 1,863   |  |  | -      | 
|Other levies                             |  | 79      |  |  | -      | 
|Taxes payable                            |  | 166,220 |  |  | 73,160 | 

F-13

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.23 OTHER PAYABLES AND ACCRUED EXPENSES

|                                                  |  | 2010    |  |  | 2009    | 
|------------------------------------------------- |  | ------- |  |  | ------- | 
|                                                  |  | $       |  |  | $       | 
|                                                  |  |         |  |  |         | 
|Wages and professional fees accruals              |  | 194,222 |  |  | 16,962  | 
|Due to employees                                  |  | 2,219   |  |  | 14,421  | 
|Due to related party                              |  | 521,145 |  |  | 447,554 | 
|Security deposits for samples loaned to customers |  | 35,042  |  |  | 27,654  | 
|Sundries                                          |  | 1,073   |  |  | 13,171  | 
|Temporary receipts from third parties             |  | 30,703  |  |  | 22,005  | 
|                                                  |  | 784,404 |  |  | 541,767 | 

Wages and professional fees 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 amount
remains unsecured, and is interest free, but the Company is obligated to repay
the amount on or before July 10, 2011, the second anniversary of execution date.
The other remaining amount due to Mr. Zhou was unsecured, interest free and had
no fixed repayment term. 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.

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

F-14

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.24 FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

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 as of December 31, 2010 or December 31, 2009, nor gains or losses are
reported in the statement of income and 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, 2010 or December 31, 2009.

2.25 STOCK COMPENSATION

The Company has adopted 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, 2010 and December 31,
2009.

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
consolidated financial statements.

F-15

---

CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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, 2010 and December 31, 2009.
The product warranty reserve was $nil as of December 31, 2010 and December 31,
2009.

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 in bank and on
hand.

|                       |  | 2010    |  |  | 2009    | 
|---------------------- |  | ------- |  |  | ------- | 
|                       |  | $       |  |  | $       | 
|                       |  |         |  |  |         | 
|Cash and bank balances |  | 427,558 |  |  | 409,718 | 

F-16

---

CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 in these banks as
of December 31, 2010 and December 31, 2009 amounted to $413,736 and $371,463,
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:

|           |  | 2010   |  |  | 2009   | 
|---------- |  | ------ |  |  | ------ | 
|Customer A |  | 14.34% |  |  | 31.93% | 
|Customer B |  | 9.18%  |  |  | -      | 
|Customer C |  | 8.71%  |  |  | -      | 
|Customer D |  | 4.76%  |  |  | -      | 
|Customer E |  | 4.75%  |  |  | -      | 
|Customer F |  | -      |  |  | 10.98% | 
|Customer G |  | -      |  |  | 6.58%  | 
|Customer H |  | -      |  |  | 5.16%  | 
|Customer I |  | -      |  |  | 4.22%  | 
|           |  | 41.74% |  |  | 58.87% | 

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

|           |  | 2010   |  |  | 2009   | 
|---------- |  | ------ |  |  | ------ | 
|           |  |        |  |  |        | 
|Customer A |  | 14.29% |  |  | -      | 
|Customer B |  | 8.43%  |  |  | -      | 
|Customer C |  | 8.06%  |  |  | -      | 
|Customer D |  | 6.29%  |  |  | 13.35% | 
|Customer E |  | 5.88%  |  |  | 9.90%  | 
|Customer F |  | -      |  |  | 9.13%  | 
|Customer G |  | -      |  |  | 9.11%  | 
|Customer H |  | -      |  |  | 8.76%  | 
|           |  | 42.95% |  |  | 50.25% | 

F-17

---

CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2010 and December 31, 2009,
basic and diluted earnings per share amount to $0.0872 and $0.0541,
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

In January 2010, FASB issued ASU No. 2010-01 Accounting for
Distributions to Shareholders with Components of Stock and Cash. The amendments
in this Update clarify that the stock portion of a distribution to shareholders
that allows them to elect to receive cash or stock with a potential limitation
on the total amount of cash that all shareholders can elect to receive in the
aggregate is considered a share issuance that is reflected in EPS prospectively
and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity
and Earnings Per Share). The amendments in this update are effective for interim
and annual periods ending on or after December.

F-18

---

CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In January 2010, FASB issued ASU No. 2010-02 regarding
accounting and reporting for decreases in ownership of a subsidiary. Under this
guidance, an entity is required to deconsolidate a subsidiary when the entity
ceases to have a controlling financial interest in the subsidiary. Upon
deconsolidation of a subsidiary, and entity recognizes a gain or loss on the
transaction and measures any retained investment in the subsidiary at fair
value. In contrast, an entity is required to account for a decrease in its
ownership interest of a subsidiary that does not result in a change of control
of the subsidiary as an equity transaction. This ASU clarifies the scope of the
decrease in ownership provisions, and expands the disclosures about the
deconsolidation of a subsidiary or de-recognition of a group of assets. This ASU
is effective for beginning in the first interim or annual reporting period
ending on or after December 31, 2009. The Company does not expect the adoption
of this ASU to have a material impact on its consolidated financial statements
In January 2010, FASB issued ASU No. 2010-02  Accounting and Reporting for
Decreases in Ownership of a Subsidiary  a Scope Clarification. The amendments
in this Update affect accounting and reporting by an entity that experiences a
decrease in ownership in a subsidiary that is a business or nonprofit activity.
The amendments also affect accounting and reporting by an entity that exchanges
a group of assets that constitutes a business or nonprofit activity for an
equity interest in another entity. The amendments in this update are effective
beginning in the period that an entity adopts SFAS No. 160, Non-controlling
Interests in Consolidated Financial Statements  An Amendment of ARB No. 51. If
an entity has previously adopted SFAS No. 160 as of the date the amendments in
this update are included in the Accounting Standards Codification, the
amendments in this update are effective beginning in the first interim or annual
reporting period ending on or after December 15, 2009. The amendments in this
update should be applied retrospectively to the first period that an entity
adopted SFAS No. 160. The Company adopted this standard and has determined the
standard does not have material effect on the Companys consolidated financial
statements.

In January 2010, FASB issued ASU No. 2010-06  Improving
Disclosures about Fair Value Measurements. This update provides amendments to
Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out
of Levels 1 and 2. A reporting entity should disclose separately the amounts of
significant transfers in and out of Level 1 and Level 2 fair value measurements
and describe the reasons for the transfers. 2) Activity in Level 3 fair value
measurements. In the reconciliation for fair value measurements using
significant unobservable inputs (Level 3), a reporting entity should present
separately information about purchases, sales, issuances, and settlements (that
is, on a gross basis rather than as one net number). This update provides
amendments to Subtopic 820-10 that clarify existing disclosures as follows: 1)
Level of disaggregation. A reporting entity should provide fair value
measurement disclosures for each class of assets and liabilities. A class is
often a subset of assets or liabilities within a line item in the statement of
financial position. A reporting entity needs to use judgment in determining the
appropriate classes of assets and liabilities. 2) Disclosures about inputs and
valuation techniques. A reporting entity should provide disclosures about the
valuation techniques and inputs used to measure fair value for both recurring
and nonrecurring fair value measurements. Those disclosures are required for
fair value measurements that fall in either Level 2 or Level 3.The new
disclosures and clarifications of existing disclosures are effective for interim
and annual reporting periods beginning after December 15, 2009, except for the
disclosures about purchases, sales, issuances, and settlements in the roll
forward of activity in Level 3 fair value measurements. Those disclosures are
effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years. The Company is currently evaluating the
impact of this ASU, however, the Company does not expect the adoption of this
ASU to have a material impact on its consolidated financial statements.

In February 2010, the FASB issued Accounting Standards Update
2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and
Disclosure Requirements, or ASU 2010-09. ASU 2010-09 primarily rescinds the
requirement that, for listed companies, financial statements clearly disclose
the date through which subsequent events have been evaluated. Subsequent events
must still be evaluated through the date of financial statement issuance;
however, the disclosure requirement has been removed to avoid conflicts with
other SEC guidelines. ASU 2010-09 was effective immediately upon issuance and
was adopted in February 2010.

F-19

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In April 2010, the FASB issued Accounting Standards Update
2010-13,"Compensation-Stock Compensation (Topic 718): Effect of Denominating the
Exercise Price of a Share-Based Payment Award in the Currency of the Market in
Which the Underlying Equity Security Trades," or ASU 2010-13. ASU 2010-13
provides amendments to Topic 718 to clarify that an employee share-based payment
award with an exercise price denominated in currency of a market in which a
substantial porting of the entity's equity securities trades should not be
considered to contain a condition that is not a market, performance, or service
condition. Therefore, an entity would not classify such an award as a liability
if it otherwise qualifies as equity. The amendments in this Update are effective
for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2010. The Company does not expect the adoption of ASU 2010-17
to have a significant impact on its consolidated financial statements.

In April 2010, the FASB issued Accounting Standard Update
2010-17, "Revenue Recognition-Milestone Method (Topic 605): Milestone Method of
Revenue Recognition" or ASU 2010-17. This Update provides guidance on the
recognition of revenue under the milestone method, which allows a vendor to
adopt an accounting policy to recognize all of the arrangement consideration
that is contingent on the achievement of a substantive milestone (milestone
consideration) in the period the milestone is achieved. The pronouncement is
effective on a prospective basis for milestones achieved in fiscal years and
interim periods within those years, beginning on or after June 15, 2010. The
adoption of ASU 2010-17 does not have any significant impacts on the
consolidated financial statements.

In July 2010, the FASB issued ASU 2010-20, Disclosures about
the Credit Quality of Financing Receivables and the Allowance for Credit
Losses. This update amends codification topic 310 on receivables to improve the
disclosures that an entity provides about the credit quality of its financing
receivables and the related allowance for credit losses. As a result of these
amendments, an entity is required to disaggregate by portfolio segment or class
certain existing disclosures and provide certain new disclosures about its
financing receivables and related allowance for credit losses. This guidance is
being phased in, with the new disclosure requirements for period end balances
effective as of December 31, 2010, and the new disclosure requirements for
activity during the reporting period are effective March 31, 2011. The troubled
debt restructuring disclosures in this ASU have been delayed by ASU 2011-01
Deferral of the Effective Date of Disclosures about Troubled Debt
Restructurings in Update No. 2010-20, which was issued in January 2011.

In December 2010, the FASB issued Accounting Standards Update
2010-28 which amend Intangibles- Goodwill and Other (Topic 350). The ASU
modifies Step 1 of the goodwill impairment test for reporting units with zero or
negative carrying amounts. For those reporting entities, they are required to
perform Step 2 of the goodwill impairment test if it is more likely than not
that a goodwill impairment exists. An entity should consider whether there are
any adverse qualitative factors indicating that impairment may exist. The
qualitative factors are consistent with the existing guidance in Topic 350,
which requires that goodwill of a reporting unit be tested for impairment
between annual tests if an event occurs or circumstances changes that would more
likely than not reduce the faire value of a reporting unit below its carrying
amount. ASU 2010-28 is effective for fiscal years, and interim periods within
those years beginning after December 15, 2010. Early adoption is not permitted.
The Company is currently evaluating the impact of this ASU; however, the Company
does not expect the adoption of this ASU will have a material impact on its
consolidated financial statements.

In December 2010, the FASB issued Accounting Standards Update
2010-29 which address diversity in practice about the interpretation of the pro
forma revenue and earnings disclosure requirements for business combinations
(Topic 805). This ASU specifies that if a public entity presents comparative
financial statements, the entity should disclose revenue and earnings of the
combined entity as though the business combination(s) that occurred during the
current year had occurred as of the beginning of the comparable prior annual
reporting period only. This ASU also expands the supplemental pro forma
disclosures under Topic 805 to include a description of the nature and amount of
material, nonrecurring pro forma adjustments directly attributable to the
business combination included in the reported pro forma revenue and earnings.
ASU 2010-29 is effective prospectively for business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2010. Early adoption is permitted. The
Company is currently evaluating the impact of this ASU and expected the adoption
of this ASU will have an impact on its future business combinations.

F-20

---

CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. INCOME TAXES

The Company is incorporated in the State of Nevada in the U.S.
and is subject to a gradual U.S. federal corporate income tax of 15% to 34%. The
State of Nevada does not impose any corporate state income tax.

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, 2010 and December 31, 2009.

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). Prior to 2008,
FIEs and domestic enterprises established in the PRC, unless granted
preferential tax treatments by the PRC government, were generally subject to an
enterprise income tax ("EIT") rate of 15% and 33% respectively. New EIT Law and
its implementing rules impose a unified EIT of 25.0% on all domestic 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 (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 2 years and reduced tax
rates for 3 years after that, effective as of 2008. Therefore, SST incurred no
income tax expense during fiscal years 2008 and 2009 and should pay income tax
expense on the tax rate of 11% for fiscal year 2010. SSD, tax rate prior New EIT
Law was 15%, is subject to the New EIT Law and provides income tax provision on
a gradually increased EIT rate over a 5-year period. Tax rate for SSD for fiscal
year 2010 is 22%. 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, 2010 and December
31, 2009:

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

F-21

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. INCOME TAXES (CONTINUED)

Provision for income taxes is as follows:

|               |  | 2010    |  |  | 2009  | 
|-------------- |  | ------- |  |  | ----- | 
|               |  | $       |  |  | $     | 
|Income tax     |  |         |  |  |       | 
|CSD            |  | -       |  |  | -     | 
|UDH            |  | -       |  |  | -     | 
|SST- China EIT |  | 172,960 |  |  | -     | 
|SSE- China EIT |  | 126,810 |  |  | 4,301 | 
|Deferred tax   |  | -       |  |  | -     | 
|               |  | 299,770 |  |  | 4,301 | 

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.

|                                                         |  | 2010    |  |  | 2009    | 
|-------------------------------------------------------- |  | ------- |  |  | ------- | 
|                                                         |  | $       |  |  | $       | 
|Loan from Ping An Bank, Shenzhen Branch                  |  |         |  |  |         | 
|Interest rate 5.9492% (2009: 5.5755%) per annum          |  |         |  |  |         | 
|and personnal guarantee given
      by Mr. Mingchun Zhou |  | 746,364 |  |  | 440,100 | 

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 at fair value of $0.01 per share 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 5-year period and were valued at $41,058. Stock based compensation
expenses will be recognized pro-rata over the life of the agreement of 5
years.

During the year ended December 31, 2010, the Company issued
certain company a total of 173,000 shares of common stock of $0.001 per share
for $39,790 at stated value as stock based compensation for certain consulting
services to be rendered to the Company. The Company recognized $39,790 of stock
based compensation as this was the dollar amount of the service rendered to the
Company.

F-22

---

CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2010, and December 31, 2009, the Company has
21,283,550 and 21,110,550 issued and outstanding common shares with a par value
of $0.001 per share.

10. STOCK OPTIONS

The Company has not granted any stock options as of December
31, 2010. 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, the Companys 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 the Companys 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. On September 27, 2010, Mr. Zhou exercised this option to purchase all
shares of the Companys common stock owned by Mr. Lai , resulting in a change of
control of the 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 stock based compensation of $41,058 and recognized $8,212 for the
years ended December 31, 2010 and December 31, 2009. As of December 31, 2010 and
December 31, 2009, the deferred compensation balance was $24,634 and $32,846,
respectively, and the deferred compensation balance of $24,634 was amortized
over three years beginning on January 1, 2011.

During the year ended December 31, 2010, the Company issued
173,000 shares of common stock to certain company who provided consulting
services for the benefit of the Company and/or its subsidiaries. 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 $0.23 per share. The Company calculated stock
based compensation of $39,790 and recognized $39,790 and $nil for the years
ended December 31, 2010 and December 31, 2009, respectively.

12. COMMITMENTS AND CONTINGENCIES

For the years ended December 31, 2010 and December 31, 2009,
total lease expenses, were $100,465 and $155,869 respectively. The future
minimum lease payments at December 31, 2010, are as follows:

|                            |  | $      | 
|--------------------------- |  | ------ | 
|                            |  |        | 
|Year ended December 31,2011 |  | 77,133 | 
|Thereafter                  |  | -      | 
|                            |  | 77,133 | 

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, 2010 and December 31, 2009 the Company did not have any pending claims,
charges, or litigation that it expects would have material adverse effects on
its consolidated balance sheets, consolidated statements of income and other
comprehensive income or cash flows.

F-23

---

CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

|             |  | 2010       |  |  | 2009      | 
|------------ |  | ---------- |  |  | --------- | 
|             |  | $          |  |  | $         | 
|Local sales  |  |            |  |  |           | 
|- Software   |  | 2,492,003  |  |  | 1,681,906 | 
|- Hardware   |  | 7,543,399  |  |  | 5,022,111 | 
|Export sales |  |            |  |  |           | 
|- Hardware   |  | 177,068    |  |  | 152,181   | 
|Other income |  |            |  |  |           | 
|- Repairs    |  | 4,591      |  |  | -         | 
|             |  | 10,217,061 |  |  | 6,856,198 | 

14. RELATED PARTIES TRANSACTIONS

For the years ended December 31, 2010 and 2009, there was cash
and non-cash compensation of $52,548 and $47,260 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     | Included in other payables, due to Mr. Mingchun Zhou are
      $521,145 and $447,554 as of December 31, 2010 and December 31, 2009,
      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. The other
      remaining amount due to Mr. Zhou was unsecured, interest free and had no
      fixed repayment term.

F-24

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CHINA SKYRISE DIGITAL SERVICE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|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.

15. SUBSEQUENT EVENTS

On January 1, 2011, the Company issued to a certain company a
total of 150,000 shares of common stock valued at $0.402 per share for $60,397
in the aggregate as payment for services rendered to the Company in 2010. This
amount had been accrued at December 31, 2010 as part of the Companys accrued
expenses.

F-25

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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 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                                                                                                                                                                                                                                                           

1

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|Exhibit No. | Description                                                                                                                                                                                                                                                                 
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            | 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].                                                                                                          
|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]. 
|10.16       | Employment Agreement, dated
      December 30, 2010, by and between the registrant and Mr. Jaibo Fan
      [incorporated by reference to Exhibit 10.1 to the registrants Current
      Report on Form 8-K filed on January 5, 2011].                                       
|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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