UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10−Q



(Mark One)



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




For the quarterly period ended: September 30, 2009



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




For the transition period from ____________ to _____________



Commission File Number: 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 organization) |  | (I.R.S. Employer Identification No.)

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

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

(Former name, former address and former fiscal year, if changed since last
report)



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 Q
             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).

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
    Q



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



The number of shares outstanding of each of the issuers classes of common
equity, as of November 16, 2009 is as follows:



Class of Securities
      
      Shares OutstandingCommon Stock, $0.001 par value
      
      21,110,550




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CHINA SKYRISE DIGITAL SERVICE INC.

Quarterly Report on FORM 10-QThree and
Nine Months Ended September 30, 2009

---

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

|Item 1. | Financial Statements                                                                        | 1 
|------- | ------------------------------------------------------------------------------------------- | --
|Item 2. | Managements Discussion and Analysis of
      Financial Condition and Results of Operations | 21
|Item 3. | Quantitative and
      Qualitative Disclosures About Market Risk                            | 30
|Item 4. | Controls and Procedures                                                                     | 30

PART II OTHER INFORMATION

|Item 1.  | Legal Proceedings                                                 | 30
|-------- | ----------------------------------------------------------------- | --
|Item 1A. | Risk Factors                                                      | 30
|Item 2.  | Unregistered Sales of
      Equity Securities and Use of Proceeds | 30
|Item 3.  | Defaults Upon Senior Securities                                   | 30
|Item 4.  | Submission of Matters to
      a Vote of Security Holders         | 30
|Item 5.  | Other Information                                                 | 31
|Item 6.  | Exhibits                                                          | 31

i

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PART IFINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CHINA SKYRISE DIGITAL SERVICE INC.INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS
ENDEDSEPTEMBER 30, 2009 AND 2008

|Contents                                                                                                                                                 |  | Page(s)
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------
|Consolidated Balance Sheets as of
      September 30, 2009 (unaudited) and December 31, 2008                                                             |  | 2      
|Consolidated Statements of Income and Other Comprehensive
      Income for the three and nine months ended September 30, 2009 and 2008
      (unaudited) |  | 3      
|Consolidated Statements of Cash Flows for
      the nine months ended September 30, 2009 and 2008 (unaudited)                                            |  | 4      
|Notes to the Condensed Consolidated Financial
      Statements (unaudited)                                                                               |  | 5-20   

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CHINA SKYRISE DIGITAL SERVICE INC. CONSOLIDATED BALANCE
SHEETSExpressed in US Dollars

|                                                                         |   | September 30, 2009 |  |   | December 31, 2008 | 
|------------------------------------------------------------------------ | - | ------------------ |  | - | ----------------- | 
|                                                                         |   | (Unaudited)        |  |   | (Audited)         | 
|ASSETS                                                                   |   |                    |  |   |                   | 
|CURRENT ASSETS                                                           |   |                    |  |   |                   | 
|Cash and cash equivalents                                                | $ | 196,722            |  | $ | 508,272           | 
|Inventory                                                                |   | 1,277,908          |  |   | 1,336,615         | 
|Deposits and prepaid expenses                                            |   | 147,945            |  |   | 313,978           | 
|Accounts receivable, net of allowance for doubtful
      accounts        |   | 2,799,555          |  |   | 2,049,356         | 
|Other receivables                                                        |   | 682,221            |  |   | 727,612           | 
|Tax recoverable                                                          |   | 9,768              |  |   | 31,132            | 
|Total current assets                                                     |   | 5,114,119          |  |   | 4,966,965         | 
|                                                                         |   |                    |  |   |                   | 
|Property and equipment, net                                              |   | 358,112            |  |   | 188,867           | 
|Intangible assets, net of accumulated amortization                       |   | 106,669            |  |   | 103,115           | 
|Goodwill                                                                 |   | 193,754            |  |   | 193,754           | 
|Total other assets                                                       |   | 300,423            |  |   | 296,869           | 
|TOTAL ASSETS                                                             | $ | 5,772,654          |  | $ | 5,452,701         | 
|                                                                         |   |                    |  |   |                   | 
|LIABILITIES AND SHAREHOLDERS
      EQUITY CURRENT LIABILITIES           |   |                    |  |   |                   | 
|Accounts payable                                                         | $ | 1,122,732          |  | $ | 720,400           | 
|Unearned revenue                                                         |   | 76,354             |  |   | 58,692            | 
|Other payables and accrued expenses                                      |   | 1,570,685          |  |   | 1,309,072         | 
|Short term debt                                                          |   | -                  |  |   | 623,475           | 
|Total current liabilities                                                |   | 2,769,771          |  |   | 2,711,639         | 
|                                                                         |   |                    |  |   |                   | 
|SHAREHOLDERS EQUITY                                                     |   |                    |  |   |                   | 
|Common stock: 0.001 par value                                            |   |                    |  |   |                   | 
|Authorized: 75,000,000
      common shares                               |   |                    |  |   |                   | 
|Issued and outstanding: 21,110,550(2008: 17,004,800) common
      shares |   | 21,111             |  |   | 17,005            | 
|Additional paid-in capital                                               |   | 1,523,479          |  |   | 1,523,479         | 
|Statutory reserves                                                       |   | 2,791              |  |   | 2,791             | 
|Retained earnings                                                        |   | 1,422,597          |  |   | 1,165,106         | 
|Accumulated other comprehensive income                                   |   | 32,905             |  |   | 32,681            | 
|                                                                         |   |                    |  |   |                   | 
|Total shareholders equity                                               |   | 3,002,883          |  |   | 2,741,062         | 
|                                                                         |   |                    |  |   |                   | 
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                               | $ | 5,772,654          |  | $ | 5,452,701         | 

See accompanying notes to consolidated financial statements.

2

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CHINA SKYRISE DIGITAL SERVICE INC.CONSOLIDATED
STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME Expressed in US
Dollars

|                                                    |   | ThreeMonths   |   |   | Three Months  |   |   | Nine Months   |   |   | Nine Months   |  
|--------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | ------------- | - | - | ------------- | -
|                                                    |   | Ended         |   |   | Ended         |   |   | Ended         |   |   | Ended         |  
|                                                    |   | September 30, |   |   | September 30, |   |   | September 30, |   |   | September 30, |  
|                                                    |   | 2009          |   |   | 2008          |   |   | 2009          |   |   | 2008          |  
|                                                    |   | (Unaudited)   |   |   | (Unaudited)   |   |   | (Unaudited)   |   |   | (Unaudited)   |  
|                                                    |   |               |   |   |               |   |   |               |   |   |               |  
|Revenues                                            | $ | 2,363,104     |   | $ | 1,050,886     |   | $ | 3,998,618     |   | $ | 2,998,045     |  
|                                                    |   |               |   |   |               |   |   |               |   |   |               |  
|Cost of goods sold                                  |   | 1,985,879     |   |   | 571,982       |   |   | 2,931,042     |   |   | 1,246,963     |  
|                                                    |   |               |   |   |               |   |   |               |   |   |               |  
|Gross profit                                        |   | 377,225       |   |   | 478,904       |   |   | 1,067,576     |   |   | 1,751,082     |  
|                                                    |   |               |   |   |               |   |   |               |   |   |               |  
|Selling and marketing
      expenses                |   | (159,502      | ) |   | (192,586      | ) |   | (395,141      | ) |   | (402,541      | )
|General and administrative expenses                 |   | (225,916      | ) |   | (141,086      | ) |   | (588,770      | ) |   | (456,978      | )
|Income (loss) from
      operations, net            |   | (8,193        | ) |   | 145,232       |   |   | 83,665        |   |   | 891,563       |  
|Other Income (Expense)                              |   |               |   |   |               |   |   |               |   |   |               |  
|Other income                                        |   | 57            |   |   | 16,180        |   |   | 908           |   |   | 83,475        |  
|Government grant                                    |   | 72,061        |   |   | 103,021       |   |   | 193,697       |   |   | 149,931       |  
|Interest expense                                    |   | (4,785        | ) |   | (15,957       | ) |   | (16,478       | ) |   | (29,633       | )
|Total Other Income
      (Expense)                  |   | 67,333        |   |   | 103,244       |   |   | 178,127       |   |   | 203,773       |  
|                                                    |   |               |   |   |               |   |   |               |   |   |               |  
|Income before
    provision for income taxes        |   | 59,140        |   |   | 248,476       |   |   | 261,792       |   |   | 1,095,336     |  
|                                                    |   |               |   |   |               |   |   |               |   |   |               |  
|Provision for income
      taxes                    |   | (4,300        | ) |   | -             |   |   | (4,300        | ) |   | -             |  
|Net  income                                         |   | 54,840        |   |   | 248,476       |   |   | 257,492       |   |   | 1,095,336     |  
|                                                    |   |               |   |   |               |   |   |               |   |   |               |  
|Other comprehensive income                          |   |               |   |   |               |   |   |               |   |   |               |  
|Foreign currency translation gain                   |   | 44,002        |   |   | 2,506         |   |   | 32,905        |   |   | 25,806        |  
|Comprehensive
      income                          | $ | 98,842        |   | $ | 250,982       |   | $ | 290,397       |   | $ | 1,121,142     |  
|                                                    |   |               |   |   |               |   |   |               |   |   |               |  
|Earnings Per Share                                  |   |               |   |   |               |   |   |               |   |   |               |  
|Basic                                               |   | 0.0031        |   |   | 0.0140        |   |   | 0.0136        |   |   | 0.0638        |  
|Diluted                                             |   | 0.0031        |   |   | 0.0140        |   |   | 0.0136        |   |   | 0.0638        |  
|Weighted Average Number of
      Shares Outstanding |   |               |   |   |               |   |   |               |   |   |               |  
|Basic                                               |   | 21,110,550    |   |   | 17,004,800    |   |   | 21,110,550    |   |   | 17,004,800    |  
|Diluted                                             |   | 21,110,550    |   |   | 17,004,800    |   |   | 21,110,550    |   |   | 17,004,800    |  

See accompanying notes to consolidated financial statements.

3

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CHINA SKYRISE DIGITAL SERVICE INC. CONSOLIDATED
STATEMENTS OF CASH FLOWSExpressed in US Dollars

|                                                                     |   | Nine Months Ended  |   |   | Nine Months Ended  |  
|-------------------------------------------------------------------- | - | ------------------ | - | - | ------------------ | -
|                                                                     |   | September 30, 2009 |   |   | September 30, 2008 |  
|                                                                     |   | (Unaudited)        |   |   | (Unaudited)        |  
|                                                                     |   |                    |   |   |                    |  
|Cash flows from operating
      activities:                          |   |                    |   |   |                    |  
|Net income for the period                                            | $ | 257,492            |   | $ | 1,095,336          |  
|Adjustments to
      reconcile net loss to net cash from operations: |   |                    |   |   |                    |  
|Depreciation                                                         |   | 43,864             |   |   | 54,536             |  
|Amortization of intangible assets                                    |   | 22,834             |   |   | 10,069             |  
|Changes in operating assets and
      liabilities:                   |   |                    |   |   |                    |  
|Decrease (increase) in inventory                                     |   | 58,707             |   |   | (1,334,441         | )
|Decrease (increase) in deposits and prepaid expenses                 |   | 166,033            |   |   | (252,737           | )
|Increase in accounts receivable                                      |   | (750,199           | ) |   | (1,712,518         | )
|Decrease (increase) in other receivable                              |   | 45,391             |   |   | (442,734           | )
|Decrease (increase) in tax recoverable                               |   | 21,364             |   |   | (17,069            | )
|Increase in accounts payable                                         |   | 402,332            |   |   | 476,209            |  
|Increase in unearned revenue                                         |   | 17,662             |   |   | 59,590             |  
|Increase in other payable and accruals                               |   | 261,613            |   |   | 1,246,317          |  
|Net cash generated from (provided by) operating
      activities     |   | 547,093            |   |   | (817,442           | )
|Cash flows from investing activities                                 |   |                    |   |   |                    |  
|Purchases of property, plant and
      equipment                     |   | (213,141           | ) |   | (249,195           | )
|Purchases of
      goodwill                                          |   | -                  |   |   | (204,754           | )
|Purchases of intangible assets                                       |   | (26,405            | ) |   | (119,456           | )
|Net cash provided by investing
      activities                      |   | (239,546           | ) |   | (573,405           | )
|Cash flows from financing activities                                 |   |                    |   |   |                    |  
|Proceeds from
      short term debt                                  |   | -                  |   |   | 862,470            |  
|Repayment of short term debt                                         |   | (623,475           | ) |   | (130,970           | )
|Statutory
      reserve                                              |   |                    |   |   | 2,791              |  
|Additional paid-in capital
      introduced                          |   |                    |   |   | 1,472,739          |  
|Common stock
      issued                                            |   | 4,106              |   |   |                    |  
|Net cash (provided by) generated from financing
      activities     |   | (619,369           | ) |   | 2,207,030          |  
|Effects of exchange rate changes on
      cash                       |   | 272                |   |   | (8,202             | )
|(Decrease) increase in cash and cash equivalents                     |   | (311,550           | ) |   | 807,981            |  
|Cash and cash equivalents, beginning
      of period                 |   | 508,272            |   |   | -                  |  
|Cash and cash equivalents, end of period                             | $ | 196,722            |   | $ | 807,981            |  
|Supplementary disclosures of cash
      flow information:            |   |                    |   |   |                    |  
|Cash paid for interest                                               | $ | 16,478             |   | $ | 6,455              |  
|Cash paid for income
      taxes                                     | $ | 4,300              |   | $ | -                  |  

See accompanying notes to consolidated financial statements.

4

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CHINA SKYRISE DIGITAL SERVICE INC.NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

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 10, 2008, the Company entered into and closed a
stock purchase agreement (the Stock Purchase Agreement) with Flourishing
Wisdom Holdings Limited, a Samoan limited company (Flourishing Wisdom), and
Steven Goertz, the Companys then Chairman, Chief Executive Officer and controlling
stockholder. Pursuant to the Stock Purchase Agreement, Flourishing
Wisdom purchased 2,500,000 shares of the Companys common stock, representing
54% of the Companys issued and outstanding common stock as of the closing, from
Steven Goertz for $555,000, or $0.22, per share. As a result of the transaction,
Flourishing Wisdom became the Companys controlling stockholder and the Company
entered into a new business. From and after the closing of the Stock Purchase
Agreement, the Company no longer engaged in the business of marketing and
promoting getpokerrakeback.com, its web site. Instead, the Companys business
plan consisted of exploring potential targets for a business combination through
a purchase of assets, share purchase or exchange, merger or similar type of
transaction.

2. REVERSE MERGER WITH UDH

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, with UDH as the acquirer and China Skyrise Digital Service
Inc. as the acquired party.

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

As a result of the reverse acquisition of UDH, the Company
entered into a new business. Through its Chinese subsidiaries, the Company is
now engaged in the development, sale, installation and maintenance of digital
residential safety and video surveillance products, and in the development and
integration of related software in China. On September 25, 2009, the Company
changed its name to China Skyrise Digital Service Inc. to more accurately
reflect its new business operations.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 FISCAL YEAR

In connection with the reverse acquisition of UDH, the Company
has changed its fiscal year end from August 31 to December 31.

5

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CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.2 REPORTING ENTITIES

|                                                   | Place of      | Registered    |                   | Date of          | Percentage     | Principal                             
|-------------------------------------------------- | ------------- | ------------- | ----------------- | ---------------- | -------------- | --------------------------------------
|Name of subsidiaries                               | incorporation | capital       | Paid - in capital | incorporation    | of interest    | activity                              
|United Digital
      HomeH.K. Group CompanyLimited | Hong Kong     | HK$10,000     | HK$10,000         | December 11,2007 | 100%directly   | InvestmentHolding                     
|Shenzhen SkyriseTechnology Co., Ltd.               | PRC           | RMB8,000,000  | RMB8,000,000      | May 27, 2003     | 100%directly   | Digital homesecurity system           
|Shenzhen SkyriseDigitalElectronics Co., Ltd.       | PRC           | RMB1,000,0000 | RMB200,000        | April 23,2008    | 100%indirectly | Computingnetwork andintelligencesystem

3.3 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, (i) the combination of the company and
UDH was accounted for under reverse merger method with UDH as the acquirer and
CSD as the acquired party and (ii) 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.

Interim results are not necessarily indicative of results for a
full year. The information included in this Form 10-Q should be read in
conjunction with information included in the Companys annual report on Form
10-K for the fiscal year ended August 31, 2008.

3.4 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.

3.5 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.

6

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CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.6 REVENUE RECOGNITION

The Companys revenue recognition policies are in compliance
with Staff Accounting Bulletin (SAB) 104. Sales revenue is recognized when all
of the following have occurred: (i) persuasive evidence of an arrangement
exists, (ii) delivery has occurred or services have been rendered, (iii) the
price is fixed or determinable, and (iv) the ability to collect is reasonably
assured. These criteria are generally satisfied at the time of shipment when
risk of loss and title passes to the customer.

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

3.7 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.

3.8 SHIPPING AND HANDLING

Shipping and handling costs related to costs of goods sold are
included in selling and marketing expenses which totaled $7,116 and $3,724 for
the three months ended September 30, 2009 and September 30, 2008, respectively.
Shipping and handling costs amounted to $13,700 and $10,819 for the nine months
ended September 30, 2009 and September 30, 2008, respectively.

3.9 ADVERTISING

Advertising costs are expensed as incurred and totaled $1,832
and $1,792 for the three months ended September 30, 2009 and September 30, 2008,
respectively. Advertisement costs amounted to $3,225 and $3,154 for the nine
months ended September 30, 2009 and September 30, 2008, respectively.

3.10 RESEARCH AND DEVELOPMENT COSTS

Research and development costs include cost incurred to develop
new products and are expensed when incurred and totaled $109,988 and $121,235 for
the three months ended September 30, 2009 and September 30, 2008, respectively.
Research and development costs amounted to $300,075 and $292,285 for the nine
months ended September 30, 2009 and September 30, 2008, respectively. The costs
for development of new products and substantial enhancements to existing
products are expensed as incurred until technological feasibility has been
established, at which time any additional costs would be capitalized. The
Company has determined that technological feasibility is established at the time
a working model of products is completed. No costs have been capitalized to
date.

3.11 GOVERNMENT GRANT

Government grants represent local authority grants to the
company for software development. Grants are recognized on a cash basis.

7

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CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.12 FOREIGN CURRENCY TRANSLATION AND OTHER COMPREHENSIVE
INCOME

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

For those entities whose functional currency is other than the
US dollars, all assets and liabilities are translated into US dollars at the
exchange rate on the balance sheet date; stockholders equity is translated at
historical rates and items in the statements of income and of cash flows are
translated at the average rate for the period. 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 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 amounted to $32,905 as
of September 30, 2009. The balance sheet amounts with the exception of equity at
September 30, 2009 and December 31, 2008 were translated at RMB 6.82 to $1.00
and RMB7.00 to $1.00, respectively. The average translation rates applied to the
statements of income and of cash flows for the nine months ended September 30,
2009 and September 30, 2008 were RMB 6.82 to $1.00 and RMB6.97 to $1.00,
respectively.

3.13 PROPERTY, PLANT AND EQUIPMENT

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

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

|Assets
      Classifications                   | Estimated useful life
|---------------------------------------------- | ---------------------
|Furniture, fixtures and office
      equipment | 5 years              
|Plant and machinery                            | 5 years              
|Motor vehicles                                 | 10 years             

|                                               |  | September 30, 2009 |   |  | December 31, 2008 |  
|---------------------------------------------- |  | ------------------ | - |  | ----------------- | -
|                                               |  | $                  |   |  | $                 |  
|                                               |  |                    |   |  |                   |  
|Furniture, fixtures and office
      equipment |  | 205,555            |   |  | 203,000           |  
|Plant and machinery                            |  | 233,302            |   |  | 12,715            |  
|Motor vehicles                                 |  | 38,296             |   |  | 38,296            |  
|                                               |  | 467,153            |   |  | 254,011           |  
|                                               |  |                    |   |  |                   |  
|Less: Accumulated depreciation                 |  | (109,041           | ) |  | (65,144           | )
|Net carrying amount                            |  | 358,112            |   |  | 188,867           |  

Depreciation expenses were $16,622 and $13.636 for the three
months ended September 30, 2009 and September 30, 2008 respectively.
Depreciation expenses were $43,864 and $54,536 for the nine months ended
September 30, 2009 and September 30, 2008 respectively.

8

---

CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

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.

3.14 IMPAIRMENT OF LONG LIVED ASSETS

The Company accounts for its long-lived assets in accordance
with Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. This
statement requires that long-lived assets and certain identifiable intangible
assets be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable. Any
write-downs are treated as permanent reductions in the carrying amount of the
assets. Based on this evaluation, the Company believes that, as of each of the
balance sheet dates presented, none of the Companys long-lived assets were
impaired.

3.15 CAPITALIZED INTERNAL-USE SOFTWARE

The Company capitalizes certain costs incurred to purchase or
create internal-use software in accordance with SOP 98-1, Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use. 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
software systems in intangible assets. Once the capitalization criteria of SOP 98-1
have been met, such costs are classified as software and are amortized on a
straight-line basis over seven 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.

3.16 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.

|                               |  | September 30, 2009 |   |  | December 31, 2008 |  
|------------------------------ |  | ------------------ | - |  | ----------------- | -
|                               |  | $                  |   |  | $                 |  
|Patent                         |  | 6,676              |   |  | 2,276             |  
|Software system                |  | 146,583            |   |  | 124,578           |  
|                               |  | 153,259            |   |  | 126,854           |  
|Less: Accumulated amortization |  | (46,590            | ) |  | (23,739           | )
|Net carrying amount            |  | 106,669            |   |  | 103,115           |  

Amortization expenses were $9,020 and $6,807 for the three
months ended September 30, 2009 and September 30, 2008, respectively.
Amortization expenses were $22,834 and $10,069 for the nine months ended
September 30, 2009 and September 30, 2008, respectively.

9

---

CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.17 GOODWILL

Goodwill represents the fair value of the assets acquired in
the acquisitions over the cost of the assets acquired. Goodwill is tested for
impairment on an annual basis of the end of the companys fiscal year, or when
impairment indicators arise. The Company uses a fair-value-based approach to
test for impairment. The Company indirectly acquired two
separate companies, SST and SSD. SST is engaged
in the sale, installation and development of digital home security networks,
peripherals and software and SSD is engaged in the sale, installation and
development of computing network and intelligence systems. As a result of these
acquisitions, the Company recorded goodwill in the amount of $193,754.
This goodwill represents the fair value of the assets acquired in these acquisitions over
the cost of the assets acquired.

3.18 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.

|                           |  | September 30, 2009 |  |  | December 31, 2008 | 
|-------------------------- |  | ------------------ |  |  | ----------------- | 
|                           |  | $                  |  |  | $                 | 
|Raw materials              |  | 496,904            |  |  | 515,273           | 
|Consumable stores          |  | 126,648            |  |  | 126,647           | 
|Components                 |  | 22,194             |  |  | 221,575           | 
|Finished goods-in-transits |  | 213,397            |  |  | 120,992           | 
|Finished goods             |  | 418,765            |  |  | 352,128           | 
|                           |  | 1,277,908          |  |  | 1,336,615         | 

The Company provides for inventory losses based on obsolescence
and levels in excess of forecasted demand. In these cases, inventory is reduced
to estimated realizable value based on historical usage and expected demand.
Inherent in the Companys estimates of market value in determining inventory
valuation are estimates related to economic trends, future demand for the
Companys products, and technical obsolescence of products. When products have
been delivered, but the product revenue associated with the arrangement has been
deferred as a result of not meeting the revenue recognition criteria required by
SOP 97-2, the Company includes the costs for the delivered items in inventory
until recognition of the related revenue occurs.

10

---

CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.19 ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company reduces gross trade accounts receivable by an
allowance for doubtful accounts. The allowance for doubtful accounts is the
Companys best estimate of the amount of probable credit losses in the Companys
existing accounts receivable. The Company reviews its allowance for doubtful
accounts on a regular basis and all past due balances are reviewed individually
for collectability. Account balances are charged off against the allowance after
all means of collection have been exhausted and the potential for recovery is
considered remote. Provisions for doubtful accounts for the nine month period
ended September 30, 2009 and year ended December 31, 2008 are $nil. Bad debts
written off for the three month periods ended September 30, 2009 and September
30, 2008 are $nil. Bad debts written off for the nine months ended September 30,
2009 and September 30, 2008 are $nil.

Aging of accounts receivable of the company is as follows:

|                  |  | September 30, 2009 |  |  | December 31, 2008 | 
|----------------- |  | ------------------ |  |  | ----------------- | 
|                  |  | $                  |  |  | $                 | 
|                  |  |                    |  |  |                   | 
|                  |  | 2,142,954          |  |  | 2,048,779         | 
|within 1 year     |  | 656,601            |  |  | 147               | 
|within 1- 2 years |  | -                  |  |  | 430               | 
|over 2 years      |  | 2,799,555          |  |  | 2,049,356         | 

3.20 DEPOSITS AND PREPAID EXPENSES

|                 |  | September 30, 2009 |  |  | December 31, 2008 | 
|---------------- |  | ------------------ |  |  | ----------------- | 
|                 |  | $                  |  |  | $                 | 
|                 |  |                    |  |  |                   | 
|Trade deposits   |  | 131,854            |  |  | 288,331           | 
|Prepaid expenses |  | 16,091             |  |  | 25,647            | 
|                 |  | 147,945            |  |  | 313,978           | 

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

3.21 OTHER RECEIVABLE

|                                    |  | September 30, 2009 |  |  | December 31, 2008 | 
|----------------------------------- |  | ------------------ |  |  | ----------------- | 
|                                    |  | $                  |  |  | $                 | 
|                                    |  |                    |  |  |                   | 
|Project tender deposits             |  | 61,497             |  |  | 82,260            | 
|Rental and utility deposits         |  | 821                |  |  | 5,883             | 
|Due from related party              |  | -                  |  |  | 1,380             | 
|Due from employees                  |  | 435,802            |  |  | 389,350           | 
|Guarantee deposits                  |  | -                  |  |  | 27,726            | 
|Samples loaned to customers         |  | 18,930             |  |  | 221,013           | 
|Temporary payments to third parties |  | 165,171            |  |  | -                 | 
|                                    |  | 682,221            |  |  | 727,612           | 

Project tender deposits were refundable on the completion of
the whole tender process. Due from related party represented a loan from Mr.
Mingchun Zhou, Chief Executive Officer of the Company. This loan, which was
repaid on July 10, 2009, was unsecured, interest free and without fixed term of
repayment. Due from employees are the amounts advanced for handling business
transactions on behalf of the Company and will be reimbursed by the Company on
the completion of the business transactions. Samples loaned to customers are
physical samples advanced to customers for exhibition and promotion purpose.
Temporary payments received from third parties represent temporary deposits
provided to the Company in anticipation of the Company's delivery of products
and services to such third parties in the future. This is a usual and customary
way to show a good faith intent to conduct businesses with the Company in the
future. Such deposits are unsecured, interest free and have no fixed repayment
terms.



11

---

CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.22 TAX RECOVERABLE

|                                              |  | September 30, 2009 |   |  | December 31, 2008 |  
|--------------------------------------------- |  | ------------------ | - |  | ----------------- | -
|                                              |  | $                  |   |  | $                 |  
|                                              |  |                    |   |  |                   |  
|VAT payable                                   |  | (24,153            | ) |  | (6,994            | )
|City maintenance and construction tax payable |  | (337               | ) |  | (391              | )
|Individual income tax payable                 |  | (1,236             | ) |  | (1,281            | )
|Enterprise income tax recoverable             |  | 39494              |   |  | 39,798            |  
|Tax recoverable                               |  | 9,768              |   |  | 31,132            |  

3.23 OTHER PAYABLE AND ACCRUALS

|                                                  |  | September 30, 2009 |  |  | December 31, 2008 | 
|------------------------------------------------- |  | ------------------ |  |  | ----------------- | 
|                                                  |  | $                  |  |  | $                 | 
|                                                  |  |                    |  |  |                   | 
|Wages and professional fees accruals              |  | 100,603            |  |  | 58,763            | 
|Due to employees                                  |  | 19,089             |  |  | -                 | 
|Due to related party                              |  | 658,156            |  |  | 284,158           | 
|Security deposits for samples loaned to customers |  | 27,582             |  |  | 200,541           | 
|Sundries                                          |  | 21,486             |  |  | 5,823             | 
|Temporary receipts from third parties             |  | 743,769            |  |  | 759,787           | 
|                                                  |  | 1,570,685          |  |  | 1,309,072         | 

Wages and professional accruals are amounts due to employees
and professional firms. Due to related party represented the amount due to Mr.
Mingchun Zhou, Chief Executive Officer of the Company. SST has borrowed funds
from Mr. Mingchun Zhou at intervals commencing in fiscal year 2008. Until July
10, 2009, these loans were unsecured, interest free and had no fixed repayment
term. On July 10, 2009, the Company entered into a Repayment Agreement with Mr.
Zhou, pursuant to which the Company acknowledged and memorialized its obligation
to repay an outstanding balance of RMB 1,937,000 (approximately, $284,158) to
Mr. Zhou. According to the agreement, the loan remains unsecured, and is
interest free, but the Company is obligated to repay the loan on or before July
10, 2011, the second anniversary of execution date. Security deposits for
samples loaned to customers received are deposits paid by customers in order to
safeguard that samples will be returned to the Company. Temporary payments
to third parties represent temporary deposits paid by the Company to suppliers
and service providers in anticipation of their delivery of products and services
to the Company. Such deposits are unsecured, interest free and have no fixed
repayment terms.

3.24 FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS 107, "

Level 1 inputs to the valuation methodology are quoted prices (unadjusted)
for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted
prices for similar assets and liabilities in active markets, and inputs that are
observable for the assets or liability, either directly or indirectly, for
substantially the full term of the financial instruments.

Level 3 inputs to the valuation methodology are unobservable
and significant to the fair value.

12

---

CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

3.25 STOCK-BASED COMPENSATION

As of September 30, 2009 and December 31, 2008, the Company has
not adopted a stock option plan and has not granted stock options to date.
Accordingly, no stock based compensation has been recorded to date.

3.26 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.

3.27 INCOME TAXES

The Company adopted SFAS No. 109, Accounting for 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 September 30, 2009 and December 31, 2008.

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

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

The Company adopted FASB Interpretation 48, Accounting for
Uncertainty in Income Taxes(FIN 48), as of January 1, 2007. A tax
position is recognized as a benefit only if it is more likely than not that
the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax
benefit that is greater than 50% likely of being realized on examination. For
tax positions not meeting the more likely than not test, no tax benefit is
recorded. The adoption had no affect on the Companys financial statements.

3.28 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 three months ended and nine months ended September
30, 2009 and September 30, 2008. The product warranty reserve was $nil at
September 30, 2009 and December 31, 2008.

13

---

CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

3.29 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.

3.30 CASH AND CASH EQUIVALENTS

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

|                       |  | September 30, 2009 |  |  | December 31, 2008 | 
|---------------------- |  | ------------------ |  |  | ----------------- | 
|                       |  | $                  |  |  | $                 | 
|                       |  |                    |  |  |                   | 
|Cash and bank balances |  | 196,722            |  |  | 508,272           | 

3.31 CONCENTRATIONS OF CREDIT RISK AND OFF-BALANCE SHEET
RISK

The Companys operations are carried out in the PRC.
Accordingly, its business, financial condition and results of operations may be
influenced by the political, economic and legal environment in the PRC, and by
the general state of the PRC's economy. The Companys operations in the PRC are
subject to specific considerations and significant risks not typically
associated with companies in North America and Western Europe. The Companys
results may be adversely affected by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures, currency conversion
and remittance abroad, and rates and methods of taxation, among other things.
Cash includes cash on hand and demand deposits in accounts maintained with state
owned banks within the Peoples Republic of China. Total cash (not including
restricted cash balances) in these banks on September 30, 2009 and December 31,
2008 amounted to $196,722 and $508,272, respectively, of which no deposits are
covered by insurance. The Company has not experienced any losses in such
accounts and believes it is not exposed to any risks on its cash in bank
accounts.

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

|           |  | Three months       |  |  | Three months       |  |  | Nine months        |  |  | Nine months        | 
|---------- |  | ------------------ |  |  | ------------------ |  |  | ------------------ |  |  | ------------------ | 
|           |  | ended              |  |  | ended              |  |  | ended              |  |  | ended              | 
|           |  | September 30, 2009 |  |  | September 30, 2008 |  |  | September 30, 2009 |  |  | September 30, 2008 | 
|Customer A |  | 35.94%             |  |  | -                  |  |  | 24.98%             |  |  | -                  | 
|Customer B |  | 15.85%             |  |  | -                  |  |  | 11.93%             |  |  | -                  | 
|Customer C |  | 13.25%             |  |  | -                  |  |  | 7.83%              |  |  | -                  | 
|Customer D |  | 8.87%              |  |  | -                  |  |  | 5.24%              |  |  | -                  | 
|Customer E |  | 6.99%              |  |  | 19.68%             |  |  | -                  |  |  | 6.44%              | 
|Customer F |  | -                  |  |  | 32.00%             |  |  | -                  |  |  | 10.48%             | 
|Customer G |  | -                  |  |  | 11.62%             |  |  | -                  |  |  | -                  | 
|Customer H |  | -                  |  |  | 7.12%              |  |  | -                  |  |  | -                  | 
|Customer I |  | -                  |  |  | 6.30%              |  |  | -                  |  |  | 5.69%              | 
|Customer J |  | -                  |  |  | -                  |  |  | 5.36%              |  |  | -                  | 
|Customer K |  | -                  |  |  | -                  |  |  | -                  |  |  | 9.80%              | 
|Customer L |  | -                  |  |  | -                  |  |  | -                  |  |  | 7.25%              | 
|           |  | 80.90%             |  |  | 76.76%             |  |  | 55.34%             |  |  | 39.66%             | 

14

---

CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

3.31 CONCENTRATIONS OF CREDIT RISK AND OFF-BALANCE SHEET
RISK (CONTINUED)

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

|           |  | September 30, 2009 |  |  | December 31, 2008 | 
|---------- |  | ------------------ |  |  | ----------------- | 
|           |  |                    |  |  |                   | 
|Customer A |  | 8.06%              |  |  | -                 | 
|Customer B |  | 8.28%              |  |  | 11.57%            | 
|Customer C |  | 9.68%              |  |  | -                 | 
|Customer D |  | 11.85%             |  |  | 9.39%             | 
|Customer E |  | 15.18%             |  |  | -                 | 
|Customer F |  | -                  |  |  | 6.89%             | 
|Customer G |  | -                  |  |  | 7.94%             | 
|Customer H |  | -                  |  |  | 8.93%             | 
|           |  | 53.05%             |  |  | 44.72%            | 

4. EARNINGS PER COMMON SHARES

The Company reports earnings per share in accordance with the
provisions of SFAS No. 128, Earnings per Share. SFAS No. 128 requires
presentation of basic and diluted earnings per share in conjunction with the
disclosure of the methodology used in computing such earnings per share. Basic
earnings 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 three months ended September 30, 2009 and September 30,
2008, basic and diluted earnings per share amount to $0.0031 and $0.0140,
respectively. For the nine months ended September 30, 2009 and September 30,
2008, basic and diluted earnings per share amount to $0.0136 and $0.0638,
respectively.

5. ACCUMULATED OTHER COMPREHENSIVE INCOME

SFAS No. 130, Reporting 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 April 2008, the FASB issued FSP FAS 142-3 Determination of
the useful life of Intangible Assets, which amends the factors a company should
consider when developing renewal assumptions used to determine the useful life
of an intangible asset under SFAS 142. This FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. SFAS 142 requires companies to
consider whether renewal can be completed without substantial cost or material
modification of the existing terms and conditions associated with the asset. FSP
FAS 142-3 replaces the previous useful life criteria with a new requirementthat
an entity consider its own historical experience in renewing similar
arrangements. If historical experience does not exist, then the Company would
consider market participant assumptions regarding renewal including 1) highest
and best use of the asset by a market participant, and 2) adjustments for other
entity-specific factors included in SFAS 142. The adoption of FSP FAS 142-3 did
not have a material impact on the Companys financial statements.

15

---

CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

6. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In May 2008, the FASB issued SFAS 162, The Hierarchy of
Generally Accepted Accounting Principles. This Statement identifies the sources
of accounting principles and the framework for selecting the principles to be
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles (GAAP)
in the United States. SFAS 162 did not have any effect on
the Companys financial statements.

In October 2008, the FASB issued FSP FAS 157-3, Determining
the Fair Value of a Financial Asset in a Market That Is Not Active (FSP 157-3),
which clarifies the application of SFAS 157 when the market for a financial
asset is inactive. Specifically, FSP 157-3 clarifies how (1) managements
internal assumptions should be considered in measuring fair value when
observable data are not present, (2) observable market information from an
inactive market should be taken into account, and (3) the use of broker quotes
or pricing services should be considered in assessing the relevance of
observable and unobservable data to measure fair value. The Company adopted the
provisions of FSP 157-3, which did not impact Companys financial position or
results of operations.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly. FSP
FAS 157-4 amends SFAS 157 and provides additional guidance for estimating fair
value in accordance with SFAS 157 when the volume and level of activity for the
asset or liability have significantly decreased and also includes guidance on
identifying circumstances that indicate a transaction is not orderly for fair
value measurements. This FSP shall be applied prospectively with retrospective
application not permitted. This FSP shall be effective for interim and annual
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009. An entity early adopting this FSP must also early
adopt FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. Additionally, if an entity elects to early
adopt either FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments or FSP FAS 115-2 and FAS 124-2, it must also elect to
early adopt this FSP. The Companys is currently evaluating this new FSP but
does not believe that it will have a significant impact on the determination or
reporting of the Companys financial results.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2.
This FSP amends SFAS 115, Accounting for Certain Investments in Debt and Equity
Securities, SFAS 124, Accounting for Certain Investments Held by
Not-for-Profit Organizations, and EITF 99-20, Recognition of Interest Income
and Impairment on Purchased Beneficial Interests and Beneficial Interests That
Continue to Be Held by a Transferor in Securitized Financial Assets, to make
the other-than-temporary impairments guidance more operational and to improve
the presentation of other-than-temporary impairments in the financial
statements. This FSP will replace the existing requirement that the entitys
management assert it has both the intent and ability to hold an impaired debt
security until recovery with a requirement that management assert it does not
have the intent to sell the security, and it is more likely than not it will not
have to sell the security before recovery of its cost basis. This FSP provides
increased disclosure about the credit and noncredit components of impaired debt
securities that are not expected to be sold and also requires increased and more
frequent disclosures regarding expected cash flows, credit losses, and an aging
of securities with unrealized losses. Although this FSP does not result in a
change in the carrying amount of debt securities, it does require that the
portion of an other-than-temporary impairment not related to a credit loss for a
held-to-maturity security be recognized in a new category of other comprehensive
income and be amortized over the remaining life of the debt security as an
increase in the carrying value of the security. This FSP shall be effective for
interim and annual periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009. An entity may early adopt
this FSP only if it also elects to early adopt FSP FAS 157-4. Also, if an entity
elects to early adopt either FSP FAS 157-4 or FSP FAS 107-1 and APB 28-1, the
entity also is required to early adopt this FSP. The Company is currently
evaluating this new FSP but does not believe that it will have a significant
impact on the determination or reporting of the Companys financial results.

16

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CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

6. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1. This
FSP amends SFAS No. 107, Disclosures about Fair Value of Financial
Instruments, to require disclosures about fair value of financial instruments
not measured on the balance sheet at fair value in interim financial statements
as well as in annual financial statements. Prior to this FSP, fair values for
these assets and liabilities were only disclosed annually. This FSP applies to
all financial instruments within the scope of SFAS 107 and requires all entities
to disclose the method(s) and significant assumptions used to estimate the fair
value of financial instruments. This FSP shall be effective for interim periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009. An entity may early adopt this FSP only if it also elects
to early adopt FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2. This FSP does not
require disclosures for earlier periods presented for comparative purposes at
initial adoption. In periods after initial adoption, this FSP requires
comparative disclosures only for periods ending after initial adoption. The
Company is currently evaluating the disclosure requirements of this new FSP.

7. INCOME TAXES

No Hong Kong corporate income tax has been provided in the
financial statements, as UDH did not have any assessable profits for the three
months ended September 30, 2009 and September 30, 2008 and nine months ended
September 30, 2009 and September 30, 2008.

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

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

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

17

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CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

7. INCOME TAXES (CONTINUED)

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 three months ended and nine months ended
September 30, 2009:

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

Provision for income taxes is as follows:

|               |  | September 30, 2009 |  |  | December 31, 2008 | 
|-------------- |  | ------------------ |  |  | ----------------- | 
|               |  | $                  |  |  | $                 | 
|Income tax     |  |                    |  |  |                   | 
|CSD            |  | -                  |  |  | -                 | 
|UDH            |  | -                  |  |  | -                 | 
|SST            |  | -                  |  |  | -                 | 
|SSD- China EIT |  | 4,300              |  |  | -                 | 
|Deferred tax   |  | -                  |  |  | -                 | 
|               |  | 4,300              |  |  | -                 | 

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.

|                                                                                        |  | September 30, 2009 |  |  | December 31, 2008 | 
|--------------------------------------------------------------------------------------- |  | ------------------ |  |  | ----------------- | 
|                                                                                        |  | $                  |  |  | $                 | 
|Short term debt                                                                         |  |                    |  |  |                   | 
|Loan from Ping An Bank, Shenzhen, Interest rate 7.47% per
      annum and no guarantee. |  | -                  |  |  | 623,475           | 

18

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CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

9. CAPITAL 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.

During the period ended December 31, 2006, the Company issued
3,750,000 shares of common stock at $0.002 per share with proceeds to the
Company of $7,500. During the period ended December 31, 2006, the Company issued
875,000 shares of common stock at $0.02 per share with proceeds to the Company
of $17,500.

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.

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 consideration for the 4,105,750 shares was the services provided by these
service providers.

10. STOCK OPTIONS

The Company has not granted any stock options and has not
recorded any stock-based compensation as of September 30, 2009. The Company does
not have a formal stock option plan, however, options may be granted with terms
and conditions at the discretion of the Companys board of directors.

11. COMMITMENTS AND CONTINGENCIES

The Company had lease commitments as of September 30, 2009.

|                            |  | September 30, 2009 |  |  | December 31, 2008 | 
|--------------------------- |  | ------------------ |  |  | ----------------- | 
|                            |  | $                  |  |  | $                 | 
|Year ended December 31,2009 |  | 37,388             |  |  | 132,367           | 
|Year ended December 31,2010 |  | 124,153            |  |  | 116,450           | 
|Year ended December 31,2011 |  | 53,209             |  |  | 58,226            | 
|Thereafter                  |  | -                  |  |  | -                 | 
|                            |  | 214,750            |  |  | 307,043           | 

19

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CHINA SKYRISE DIGITAL SERVICE INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

12. SEGMENT 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. Based on qualitative
and quantitative criteria established by SFAS 131, Disclosures about Segments
of an Enterprise and Related Information, the Company considers itself to be
operating within one reportable segment.

The Company does not have long-lived assets located in foreign
countries. In accordance with the enterprise-wide disclosure requirements of
SFAS 131, the Companys net revenue from external customers by main product
lines is as follows:

|             |  | Three months       |  |  | Three months       |  |  | Nine months        |  |  | Nine months        | 
|------------ |  | ------------------ |  |  | ------------------ |  |  | ------------------ |  |  | ------------------ | 
|             |  | ended              |  |  | ended              |  |  | ended              |  |  | ended              | 
|             |  | September 30, 2009 |  |  | September 30, 2008 |  |  | September 30, 2009 |  |  | September 30, 2008 | 
|             |  | $                  |  |  | $                  |  |  | $                  |  |  | $                  | 
|Local sales  |  |                    |  |  |                    |  |  |                    |  |  |                    | 
|- Software   |  | 245,741            |  |  | 429,989            |  |  | 862,881            |  |  | 1,282,590          | 
|- Hardware   |  | 2,117,363          |  |  | 620,897            |  |  | 3,163,577          |  |  | 1,715,455          | 
|Export sales |  |                    |  |  |                    |  |  |                    |  |  |                    | 
|- Hardware   |  | -                  |  |  | -                  |  |  | 152,160            |  |  | -                  | 
|             |  | 2,363,104          |  |  | 1,050,886          |  |  | 3,998,618          |  |  | 2,998,045          | 

13. RELATED PARTIES TRANSACTIONS

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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Zhou Mingchun         | During the nine months ended September 30, 2008, the
    company acquired the whole interest in SST from Mingchun Zhou for $575,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Zhou Mingchun         | Included in other receivable, due from Mr. Mingchun Zhou
    are $nil and $1,380 as of September 30, 2009 and December 31, 2008,
    respectively. This loan, which was repaid on July 10, 2009, was unsecured,
    interest free and without fixed term of repayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Zhou Mingchun         | Included in other payable, due to Mr. Mingchun Zhou are
    $658,156 and $284,158 as of September 30, 2009 and December 31, 2008,
    respectively. SST has borrowed funds from Mr. Mingchun Zhou at intervals
    commencing in fiscal year 2008.  Until July 10, 2009, these loans were
    unsecured, interest free and had no fixed repayment term.  On July 10,
    2009, the Company entered into a Repayment Agreement with Mr. Zhou, pursuant
    to which the Company acknowledged and memorialized its obligation to repay
    an outstanding balance of RMB 1,937,000 (approximately, $284,158) to Mr.
    Zhou and the Company has subsequently borrowed additional funds from Mr.
    Zhou under this agreement.  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.

20

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q, including the following
Managements Discussion and Analysis of Financial Condition and Results of
Operations, 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. Such statements include, among others, those
concerning our expected financial performance and strategic and operational
plans, 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 that a number of risks
and uncertainties could cause actual results of the Company to differ materially
from those anticipated, expressed or implied in the forward-looking statements.
The words believe, expect, anticipate, project, targets, optimistic,
intend, aim, will or similar expressions are intended to identify
forward-looking statements. All statements other than statements of historical
fact are statements that could be deemed forward-looking statements. Risks and
uncertainties that could cause actual results to differ materially from those
anticipated include risks related to our ability to overcome competition in our
market; the impact that a downturn or negative changes in the private security
and surveillance industry could have on our business and profitability; our
ability to simultaneously fund the implementation of our business plan and
invest in new projects; economic, political, regulatory, legal and foreign
exchange risks associated with international expansion; the loss of key members
of our senior management; or any of the factors and risks mentioned in the Risk
Factors sections of our Current Report on Form 8-K filed on October 1, 2009
with the Securities and Exchange Commission and subsequent SEC filings.

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 Certain Defined Terms

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

Overview of Our Business

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

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

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

21

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We have grown both organically and through acquisitions over
the past year through the acquisition of our operating subsidiaries, Skyrise
Technology and Skyrise Digital. Our revenues increased from nil in fiscal year
2007 to $4.1 million in fiscal year 2008, representing a compounded growth rate
of approximately 250%. We strive to provide customer-driven, one-stop services
to our clients and actively pursue acquisition prospects and other strategic
opportunities.

Third Quarter Financial Performance Highlights

Commencing in the second half of fiscal year 2008 and through
the period ended September 30, 2009, we have faced a slowdown in Chinas real
estate market. We have taken various steps to acquire new customers and retain
existing customers, including offering lower deal pricing for our products and
services. However, our efforts to continue providing excellent products and
services to our existing customers at reduced prices during the market decline,
as well as our extensive sales and marketing efforts during the period, has
resulted in higher costs of sales in connection with such products and services.

Although the series of measures adopted by the Chinese
government to promote economic growth (described more fully below) have achieved
some results, it is currently unclear whether and to what extent the economic
stimulus measures and other actions taken or contemplated by the Chinese
government and other governments throughout the world will mitigate the effects
of the crisis on the industries that affect our business. Furthermore,
deteriorating economic conditions, including business layoffs, downsizing,
industry slowdowns and other similar factors that affect our customers could
have further negative consequences on our business operations. For the
foreseeable future, we expect a continuation of weak demand and volatility in
the market for our products and services, and significantly adverse impacts on
our gross margin due to a decrease in sales. However, due to the quality of our
products, we believe that we will be able to keep quality customers and
negotiate new contracts with customers in the coming months.Moreover, we
anticipate that the ongoing conversion from analog to digital in the PRC
residential safety and video surveillance market will provide a significant
boost to our revenues in the second half of fiscal year 2009 through the next
few years. Total company backlog as of September 30, 2009 was $10.9 million.

The following are some financial highlights for the first
quarter:

- Net Sales: Our net sales was $3,998,618 in the nine months
  ended September 30, 2009, as compared to $2,998,045 in the same period in
  2008, representing a 33% increase period-over-period.
- Gross Margin: Gross margin was 26.70% for the nine months
  ended September 30, 2009, as compared to 58.41% for the same period last year.
- Net Income: Net income was $257,492 in the nine months ended
  September 30, 2009, a decrease of $837,844 from $1,095,336 in the same period
  in 2008.

Principal Factors Affecting Our Financial
Performance

Our operating results are primarily affected by the following
factors:

- Growth in the Chinese Economy. We operate our
  facilities in China and derive almost all of our revenues from sales to
  customers in China. Economic conditions in China, therefore, affect virtually
  all aspects of our operations, including the demand for our products, the
  availability and prices of our raw materials and our other expenses. China has
  experienced significant economic growth, achieving a compound annual growth
  rate (CAGR) of over 10% in gross domestic product from 1996 through 2008.
  China is expected to experience continued growth in all areas of investment
  and consumption, even in the face of a global economic recession. However,
  China is not entirely immune to the global economic slowdown and is
  experiencing a slowing of its growth rate.
- PRC Economic Stimulus Plans.The Chinese 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 Chinese central
  government is dedicating approximately $580 billion to stimulate domestic
  consumption. Companies that are either directly or indirectly related to
  construction, and to the manufacture and sale of building materials,
  electrical household appliances and telecommunication equipment, are expected to benefit. An executive order has been announced stating that
  the PRC central government will improve living standards in the countrys
  rural areas by subsidizing the purchase of any electric household appliance
  for every household in the rural area. In addition, the policy indicates a
  strong determination to improve telecommunication in all rural areas. We
  expect to indirectly benefit from the economic stimulus plan through an
  increase in orders from our customers which are real estate development
  companies.

22

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

Taxation

United States and Hong Kong

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

China

On March 16, 2007, the National Peoples Congress of China
passed a new Enterprise Income Tax Law, or the New EIT Law, and on November 28,
2007, the State Council of China passed the EIT Law Implementing Rules which
took effect on January 1, 2008. Before the implementation of the New EIT Law,
foreign invested enterprises, or FIEs, established in the PRC, unless granted
preferential tax treatments by the PRC government, were generally subject to an
enterprise income tax, or EIT, rate of 33.0%, which included a 30.0% state
income tax and a 3.0% local income tax. The EIT Law and Implementing Rules
impose a unified EIT of 25.0% on all domestic-invested enterprises and FIEs,
unless they qualify under certain limited exceptions. Despite these changes, the
EIT Law gives the 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,
or the Old 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. The discontinuation of any such
special or preferential tax treatment or other incentives would have an adverse
effect on any organizations business, fiscal condition and current operations
in China.

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

In addition to the changes to the current tax structure, under
the New EIT Law, an enterprise established outside of China with de facto
management bodies within China is considered a resident enterprise and will
normally be subject to an EIT of 25% on its global income. The Implementing
Rules define the term de facto management bodies as an establishment that
exercises, in substance, overall management and control over the production,
business, personnel, accounting, etc., of a Chinese enterprise. If the PRC tax authorities subsequently
determine that we should be classified as a resident enterprise, then our
organizations global income will be subject to PRC income tax of 25%.

23

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

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

Results of Operations

Comparison of Three Months Ended September 30, 2009 and
September 30, 2008

The following table sets forth key components of our results of
operations during the three month periods ended September 30, 2009 and 2008,
both in dollars and as a percentage of our net sales.

|                                                   |   | Three Months
      Ended |   |  | Three Months
      Ended |  
|-------------------------------------------------- | - | ------------------------ | - |  | ------------------------ | -
|                                                   |   | September 30, 2009       |   |  | September 30, 2008       |  
|                                                   |   |                          |   |  | As a                     |  
|                                                   |   |                          |   |  | percentage               |  
|                                                   |   | In Dollars               |   |  | of net sales             |  
|Net Sales                                          | $ | 2,363,104                |   |  | 100%                     |  
|Cost of Sales                                      |   | 1,985,879                |   |  | 84.04%                   |  
|Gross Profit                                       |   | 377,225                  |   |  | 15.96%                   |  
|Selling, General and Administrative
      Expenses |   | 385,418                  |   |  | 16.31%                   |  
|Operating Income (Loss)                            |   | (8,193                   | ) |  | (0.35%                   | )
|Interest
      Expenses                            |   | 4,785                    |   |  | 0.20%                    |  
|Other Income                                       |   | 72,118                   |   |  | 3.05%                    |  
|Income Before Income Taxes                         |   | 59,140                   |   |  | 2.50%                    |  
|Income Taxes                                       |   | (4,300                   | ) |  | (0.18%                   | )
|Net Income                                         | $ | 54,840                   |   |  | 2.32%                    |  

Net Sales. Our sales increased to $2,363,104 in the
three months ended September 30, 2009 from $1,050,886 in the same period in
2008, representing a 124% increase period-over-period. This increase was mainly
due to our extensive sales and marketing efforts to acquire new customers and
sustain existing customers.

Cost of Sales

Gross Profit and Gross Margin. Our gross profit
decreased $101,679 to $377,225 in the three months ended September 30, 2009 from
$478,904 in the same period in 2008. Gross profit as a percentage of net revenue
was 15.96% and 45.57% for the three months ended September 30, 2009 and 2008,
respectively. The decrease in the gross margin was primarily due to the decrease
in general deal pricing commenced in early 2009 due to the economic slowdown.

Selling, General and Administrative Expenses. Our
selling, general and administration expenses rose slightly to $385,418 in the
three months ended September 30, 2009 from $333,672 in the same period in 2008.
This increase was mainly due to expenses related to compensation paid to
laid-off employees in compliance with Chinas labor law. We expect selling,
general and administrative expenses to stay within the normal range as we plan
to increase the number of employees in anticipation of growing business demand.

24

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Interest Expense. Interest expense
decreased $11,172 to $4,785 in the three months ended September 30, 2009 from
$15,957 in the same period in 2008. Our debt obligations have decreased to zero
due to the maturity of our short term debt. We are applying for a new short debt
arrangement and expect to close the application in the fourth quarter of 2009.

Other Income.Other income decreased
$47,083 to $72,118 in the three months ended September 30, 2009 from $119,201 in
the same period in 2008. The decrease was primarily due to reduced government
grants in 2009.

Income Before Income Taxes. Our income before income
taxes decreased by $189,336 to $59,140 in the three months ended September 30,
2009 from $248,476 in the same period in 2008. The reason for such decrease was
mainly due to an increase in cost of sales, resulting from our extensive sales
and marketing efforts to acquire new customers and sustain existing customers
and the decrease in general deal pricing due to the economic slowdown.

Income Taxes. Our income tax increased to $4,300
in the three months ended September 30, 2009 from nil in the same period in
2008, when we qualified for zero income tax as a result of the preferential tax
treatment available to software companies. For more information, please see
Taxation above.

Net Income. In the three months ended September 30,
2009, we generated a net income of $54,840, a decrease of $193,636 from $248,476
in the same period in 2008. This decrease was primarily attributable to an
increase in cost of sales, resulting from our extensive sales and marketing
efforts to acquire new customers and sustain existing customers and the decrease
in general deal pricing due to the economic slowdown.

Comparison of Nine Months Ended September 30, 2009 and
September 30, 2008

The following table sets forth key components of our results of
operations during the nine month periods ended September 30, 2009 and 2008, both
in dollars and as a percentage of our net sales.

|                                                   |   | Nine Months
      Ended |   |  | Nine Months
      Ended |  
|-------------------------------------------------- | - | ----------------------- | - |  | ----------------------- | -
|                                                   |   | September 30, 2009      |   |  | September 30, 2008      |  
|                                                   |   |                         |   |  | As a                    |  
|                                                   |   |                         |   |  | percentage              |  
|                                                   |   | In Dollars              |   |  | of net sales            |  
|Net Sales                                          | $ | 3,998,618               |   |  | 100%                    |  
|Cost of Sales                                      |   | 2,931,042               |   |  | 73.30%                  |  
|Gross Profit                                       |   | 1,067,576               |   |  | 26.70%                  |  
|Selling, General and Administrative
      Expenses |   | 983,911                 |   |  | 24.61%                  |  
|Operating Income                                   |   | 83,665                  |   |  | 2.09%                   |  
|Interest
      Expenses                            |   | 16,478                  |   |  | 0.41%                   |  
|Other Income                                       |   | 194,605                 |   |  | 4.87%                   |  
|Income Before Income Taxes                         |   | 261,792                 |   |  | 6.55%                   |  
|Income Taxes                                       |   | (4,300                  | ) |  | (0.11%                  | )
|Net Income                                         | $ | 257,492                 |   |  | 6.44%                   |  

Net Sales. Our sales increased to $3,998,618 in
the nine months ended September 30, 2009 from $2,998,045 in the same period in
2008, representing a 33% increase period-over-period. This increase was mainly due
to our sales and marketing effort to acquire new customers and retains existing
customers.

Cost of Sales. Our cost of sales increased $1,684,079
to $2,931,042 in the nine months ended September 30, 2009 from $1,246,963 in the
same period in 2008. The cost of goods sold per sales ratio changed from 41.59%
in the nine months ended September 30, 2008 to 73.30% in the nine months ended
September 30, 2009, mainly due to the decrease in general deal pricing commenced
in early 2009 due to the economic slowdown.

Gross Profit and Gross Margin. Our gross profit
decreased $683,506 to $1,067,576 in the nine months ended September 30, 2009
from $

25

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Selling, General and Administrative Expenses. Our
selling, general and administration expenses rose slightly to $983,911 in the
nine months ended September 30, 2009 from $859,519 in the same period in 2008.
This increase was mainly due to expenses related to compensation paid to
laid-off employees in compliance with Chinas labor law. We expect selling,
general and administrative expenses to stay within the normal range as we plan
to increase the number of employees in anticipation of growing business demand.

Interest Expense. Interest expense decreased $13,155
to $16,478 in the nine months ended September 30, 2009 from $29,633 in the same
period in 2008. Our debt obligations have decreased to zero due to the maturity
of our short term debt. We are applying for a new short debt arrangement and
expect to close the application in the fourth quarter of 2009.

Other Income. Other income decreased $38,801 to
$194,605 in the nine months ended September 30, 2009 from $233,406 in the same
period in 2008. The decrease was primarily due to reduced government grants in
2009.

Income Before Income Taxes. Our income before income
taxes decreased by $833,544 to $261,792 in the nine months ended September 30,
2009 from $1,095,336 in the same period in 2008. The reason for such a decrease
was mainly due to an increase in cost of sales, resulting from our extensive
sales and marketing efforts to acquire new customers and sustain existing
customers and the decrease in general deal pricing due to the economic slowdown.

Income Taxes. Our income tax increase to $4,300 in
the nine months ended September 30, 2009 from zero in the same period in 2008
when we qualified for zero income tax as a result of the preferential tax
treatment available to software companies. For more information, please see
"Taxation" above.

Net Income. In the nine months ended September 30,
2009, we generated a net income of $257,492, a decrease of $837,844 from
$1,095,336 in the same period in 2008. This decrease was primarily attributable
to an increase in cost of sales, resulting from our extensive sales and
marketing efforts to acquire new customers and sustain existing customers and
the decrease in general deal pricing due to the economic slowdown.

Liquidity and Capital Resources

As of September 30, 2009, we had cash and cash equivalents of
$196,722, primarily consisting of cash on hand and demand deposits. The
following table provides detailed information about our net cash flow for all
financial statement periods presented in this report. To date, we have financed
our operations primarily through cash flows from operations, augmented by
short-term bank borrowings and equity contributions by our stockholders.

The following table sets forth a summary of our cash flows for
the periods indicated:

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

|                                                          |   | Nine Months Ended September 30 |  
|--------------------------------------------------------- | - | ------------------------------ | -
|                                                          |   | 2009                           |  
|Net cash provided by
      (used in) operating activities | $ | 547,093                        |  
|Net cash provided by (used in)
      investing activities |   | (239,546                       | )
|Net cash provided by
      (used in) financing activities |   | (619,369                       | )
|Effects of Exchange Rate Change in Cash                   |   | 272                            |  
|Net Increase in Cash
      and Cash Equivalents           |   | (311,550                       | )
|Cash and Cash Equivalent, Beginning                       |   | 508,272                        |  
|Cash and Cash
      Equivalent, End                       |   | 196,722                        |  

Operating activities

Net cash provided by operating activities was $547,073 for the
nine months ended September 30, 2009, as compared to $817,442 net cash used in
operating activities for the same period in 2008. The increase in net cash
provided by operating activities was mainly due to shorter payment periods
offered to customers and increased collection efforts.

26

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Investing activities

Net cash used in investing activities for the nine months ended
September 30, 2009 was $239,546, as compared to $573,405 net cash used in
investing activities during the same period of 2008. The decrease of net cash
used in investing activities was mainly attributable to a decrease in purchases
of intangible assets to conserve costs during the 2009 period.

Financing activities

Net cash used in financing activities for the nine months ended
September 30, 2009 was $619,369, as compared to $2,207,030 net cash provided by
financing activities the same period of 2008. The decrease of net cash provided
by financing activities was mainly attributable to increased payment in interest
and the repayment of a loan during the 2009 period. The loan was from Pingan
Bank and matured on September 10, 2008. We have repaid all principal and due
interest. As of September 30, 2009, we have zero short term debt outstanding. We
are in the process of applying for a new term of short term debt and expect to
close the application in the fourth quarter of 2009.

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

Obligations Under Material Contracts

Skyrise Technology has borrowed funds from Mr. Mingchun Zhou,
our Chief Executive Officer, at intervals commencing in fiscal year 2008. Until
July 10, 2009, these loans was unsecured, interest free and had no fixed
repayment term. On July 10, 2009, 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. Since July 10, 2009, the company has subsequently borrowed
additional funds under this agreement.  As of September 30, 2009, the total
outstanding balance of this loan is $658,156.   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. We intend to
repay this loan within the next fiscal year.

Inflation

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

Off Balance Sheet Arrangements

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

Seasonality

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

Critical Accounting Policies

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

27

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- Use of estimates.The preparation of the financial
  statements requires our management to make estimates and assumptions that
  affect the reported amounts of assets and liabilities, the disclosure of
  contingent liabilities at the date of the financial statements, and the
  reported amounts of revenue and expenses during the reporting period. Actual
  results could differ from these estimates.
- Trade accounts receivables.In the normal course of
  business, we extend credit to customers. Trade accounts receivables, less
  allowance for doubtful accounts, reflect the net realizable value of
  receivables, and approximate fair value. On a regular basis, we evaluate our
  trade accounts receivable and establish an allowance for doubtful accounts
  based on a combination of specific customer circumstances, credit conditions,
  and payment history. A receivable is considered past due if payments have not
  been received within the agreed upon invoice terms. Trade accounts receivables
  are charged off against the allowance after management determines the
  potential for recovery is remote.
- Impairment of long-lived assets.Long-lived assets, except
  goodwill and indefinite-lived intangible assets, are reviewed for impairment
  when circumstances indicate the carrying value of an asset may not be
  recoverable. Recoverability of assets to be held and used is measured by a
  comparison of the carrying amount of the assets to future net cash flows
  estimated by our management to be generated by such assets. If such assets are
  considered to be impaired, the impairment to be recognized is the amount by
  which the carrying amount of the assets exceeds the fair value of the assets.
  Assets to be disposed of by sale are recorded as held for sale at the lower of
  carrying value or estimated net realizable value.
- Property, plant and equipment, net.Property, plant and
  equipment are recorded at cost and are depreciated on a straight-line basis
  over the estimated useful lives of the assets. Maintenance and repairs are
  expensed as incurred. The principal depreciation rates are: office and
  computer equipment  20% to 331⁄3%; motor vehicles 25%.
- Revenue recognition.The Companys revenues are derived from
  the sales, installation and maintenance of digital residential safety and
  video surveillance products, and include (i) revenue reported at the
  difference between the selling price and the cost of the products and (ii)
  service fees collected from customers. The Companys revenue recognition
  policies are in compliance with Staff Accounting Bulletin 104. Sales revenue
  is recognized when all of the following have occurred: (i) persuasive evidence
  of an arrangement exists, (ii) delivery has occurred or services have been
  rendered, (iii) the price is fixed or determinable, and (iv) the ability to
  collect is reasonably assured. These criteria are generally satisfied at the
  time of shipment when risk of loss and title passes to the customer.
- Intangible assets.Intangible assets are stated in the
  balance sheet at cost less accumulated amortization. The costs of the
  intangible assets are amortized on a straight-line basis over their estimated
  useful lives at the annual rate of 20%. Development project in progress mainly
  represents the fee paid to a portal developer in respect of the Companys new
  online ticketing platform under development. All direct costs relating to the
  development of the new online ticketing platform are capitalized as
  development project in progress. No amortization is provided in respect of
  development project in progress.

Recent Accounting Pronouncements

In April 2008, the Financial Accounting Standards Board, or
FASB, issued FASB Staff Position, or FSP, FAS 142-3 Determination of the useful
life of Intangible Assets, which amends the factors a company should consider
when developing renewal assumptions used to determine the useful life of an
intangible asset under Statement of Financial Accounting Standards, or SFAS, No.
142. This FSP is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. SFAS No. 142 requires companies to consider whether renewal can be completed without substantial cost or
material modification of the existing terms and conditions associated with the
asset. FSP FAS 142-3 replaces the previous useful life criteria with a new
requirementthat an entity consider its own historical experience in renewing
similar arrangements. If historical experience does not exist, then the Company
would consider market participant assumptions regarding renewal including 1)
highest and best use of the asset by a market participant, and 2) adjustments
for other entity-specific factors included in SFAS 142. The adoption of FSP FAS
142-3 did not have a material impact on the Companys financial statements.

28

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In May 2008, the FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounting Principles. This Statement identifies the sources
of accounting principles and the framework for selecting the principles to be
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles in the
United States. SFAS No. 162 did not have any effect on the Companys financial
statements.

In October 2008, the FASB issued FSP FAS 157-3, Determining
the Fair Value of a Financial Asset in a Market That Is Not Active, which
clarifies the application of SFAS No. 157 when the market for a financial asset
is inactive. Specifically, FSP FAS 157-3 clarifies how (1) managements internal
assumptions should be considered in measuring fair value when observable data
are not present, (2) observable market information from an inactive market
should be taken into account, and (3) the use of broker quotes or pricing
services should be considered in assessing the relevance of observable and
unobservable data to measure fair value. The Company adopted the provisions of
FSP FAS 157-3, which did not impact Companys financial position or results of
operations.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly. FSP
FAS 157-4 amends SFAS No. 157 and provides additional guidance for estimating
fair value in accordance with SFAS No. 157 when the volume and level of activity
for the asset or liability have significantly decreased and also includes
guidance on identifying circumstances that indicate a transaction is not orderly
for fair value measurements. This FSP shall be applied prospectively with
retrospective application not permitted. This FSP shall be effective for interim
and annual periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. An entity early adopting this FSP must also
early adopt FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. Additionally, if an entity elects to early
adopt either FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments or FSP FAS 115-2 and FAS 124-2, it must also elect to
early adopt this FSP. The Companys is currently evaluating this new FSP but
does not believe that it will have a significant impact on the determination or
reporting of the Companys financial results.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2.
This FSP amends SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, SFAS No. 124, Accounting for Certain Investments Held by
Not-for-Profit Organizations, and EITF 99-20, Recognition of Interest Income
and Impairment on Purchased Beneficial Interests and Beneficial Interests That
Continue to Be Held by a Transferor in Securitized Financial Assets, to make
the other-than-temporary impairments guidance more operational and to improve
the presentation of other-than-temporary impairments in the financial
statements. This FSP will replace the existing requirement that the entitys
management assert it has both the intent and ability to hold an impaired debt
security until recovery with a requirement that management assert it does not
have the intent to sell the security, and it is more likely than not it will not
have to sell the security before recovery of its cost basis. This FSP provides
increased disclosure about the credit and noncredit components of impaired debt
securities that are not expected to be sold and also requires increased and more
frequent disclosures regarding expected cash flows, credit losses, and an aging
of securities with unrealized losses. Although this FSP does not result in a
change in the carrying amount of debt securities, it does require that the
portion of an other-than-temporary impairment not related to a credit loss for a
held-to-maturity security be recognized in a new category of other comprehensive
income and be amortized over the remaining life of the debt security as an
increase in the carrying value of the security. This FSP shall be effective for
interim and annual periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009. An entity may early adopt
this FSP only if it also elects to early adopt FSP FAS 157-4. Also, if an entity
elects to early adopt either FSP FAS 157-4 or FSP FAS 107-1 and APB 28-1, the
entity also is required to early adopt this FSP. The Company is currently
evaluating this new FSP but does not believe that it will have a significant
impact on the determination or reporting of the Companys financial results.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1. This
FSP amends SFAS No. 107, Disclosures about Fair Value of Financial
Instruments, to require disclosures about fair value of financial instruments
not measured on the balance sheet at fair value in interim financial statements
as well as in annual financial statements. Prior to this FSP, fair values for
these assets and liabilities were only disclosed annually. This FSP applies to
all financial instruments within the scope of SFAS 107 and requires all entities
to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments. This FSP shall be effective for
interim periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. An entity may early adopt this FSP only if
it also elects to early adopt FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2.
This FSP does not require disclosures for earlier periods presented for
comparative purposes at initial adoption. In periods after initial adoption,
this FSP requires comparative disclosures only for periods ending after initial
adoption. The Company is currently evaluating the disclosure requirements of
this new FSP.

29

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

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

As required by Rule 13a-15 under the Exchange Act, our
management, including our Chief Executive Officer, Mingchun Zhou, and our Chief
Financial Officer, Dongmei Wu, assessed the effectiveness of the design and
operation of our disclosure controls and procedures as of September 30, 2009.
Based on our assessment, Messrs. Zhou and Wu determined that, as of September
30, 2009, our internal control over financial reporting was effective based on
those criteria.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial
reporting identified in connection with the evaluation performed during the
fiscal quarter covered by this report that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

PART IIOTHER INFORMATION

ITEM 1. 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 1A. RISK FACTORS.

Not Applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

On September 25, 2009, Mr. Kin Keung Lai and Asia Regal
Holdings Limited, being the record holders of 11,379,800 and 1,000,000 shares of
our common stock, respectively, and collectively owning approximately 58.64% of
our issued and outstanding shares of common stock as of such date, executed
and delivered to the Company their written consent, in lieu of a stockholders
meeting, approving an amendment and restatement of our Articles of Incorporation
to, among other things, change our name from Getpokerrackback.com to China
Skyrise Digital Service Inc. We filed the Amended and Restated Articles of
Incorporation with the Secretary of State of the State of Nevada on September
25, 2009.

30

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ITEM 5. OTHER INFORMATION.

We have no information to include that was required to be but
was not disclosed in a report on Form 8-K during the period covered by this Form
10-Q. There have been no material changes to the procedures by which security
holders may recommend nominees to our board of directors.

ITEM 6. EXHIBITS.

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

|Exhibit No. | Description                                                                                                                                                                  
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1        | Certifications of Principal
      Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.                                                   
|            |                                                                                                                                                                              
|31.2        | Certifications of Principal
      Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.                                                   
|            |                                                                                                                                                                              
|32.1        | Certifications of Principal
      Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            |                                                                                                                                                                              
|32.2        | Certifications of Principal
      Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

31

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SIGNATURES

Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

|Date: November 19, 2009 | CHINA SKYRISE DIGITAL
      SERVICE INC.
|----------------------- | ----------------------------------------
|                        |                                         
|                        | By:                                     
|                        |                                         
|                        |                                         
|                        |                                         
|Date: November 19, 2009 | By:                                     
|                        |                                         
|                        |                                         
|                        |                                         

32

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EXHIBIT INDEX

|Exhibit No. | Description                                                                                                                                                                  
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1        | Certifications of Principal
      Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.                                                   
|            |                                                                                                                                                                              
|31.2        | Certifications of Principal
      Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.                                                   
|            |                                                                                                                                                                              
|32.1        | Certifications of Principal
      Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            |                                                                                                                                                                              
|32.2        | Certifications of Principal
      Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

33

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