----

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| 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                                        |
|   |
| OR     |
|   |
| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|   |
|   | For the transition period from _______ to _______                                        |

| Nevada                                                         | 98-0489800                                |
|----------------------------------------------------------------|-------------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

|   | Large accelerated filer o | Accelerated filer o         |
|--------|---------------------------|-----------------------------|
|   | Non-accelerated filer x   | Smaller reporting company o |

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|         |                                                                                                                                                                                                                                                                                    | PAGE   |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| PART I.      | FINANCIAL INFORMATION                                                                                                                                                                                                                                                                   | 3      |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 1.      | Financial Statements                                                                                                                                                                                                                                                                    | 3      |
|         |
|    | Condensed Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008                                                                                                                                                                                        | 3      |
|         |
|    | Condensed Consolidated Statements of Loss for the three and nine months ended September 30, 2009, three months ended September 30, 2008, April 4, 2008 (date of inception) through September 30, 2008 and from April 4, 2008 (date of inception) through September 30, 2009 (unaudited) | 4      |
|         |
|    | Condensed Consolidated Statement of Stockholders’ Deficit for the period from April 4, 2008 (date of inception) through September 30, 2009 (unaudited)                                                                                                                            | 5      |
|         |
|    | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2009, April 4, 2008 (date of inception) through September 30, 2008 and from April 4, 2008 (date of inception) through September 30, 2009 (unaudited)                                            | 7      |
|         |
|    | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                                                                                        | 8      |
|         |
| Item 2.      | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                             | 35     |
|         |
| Item 3.      | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                              | 42     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 4.      | Controls and Procedures                                                                                                                                                                                                                                                                 | 42     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 4(T).   | Controls and Procedures                                                                                                                                                                                                                                                                 | 43     |
|         |                                                                                                                                                                                                                                                                                    |   |
| PART II.     | OTHER INFORMATION                                                                                                                                                                                                                                                                       | 43     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 1.      | Legal Proceedings                                                                                                                                                                                                                                                                       | 43     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 1A.     | Risk Factors                                                                                                                                                                                                                                                                            | 44     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 2.      | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                             | 44     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 3.      | Defaults Upon Senior Securities                                                                                                                                                                                                                                                         | 44     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 4.      | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                     | 44     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 5.      | Other Information                                                                                                                                                                                                                                                                       | 44     |
|         |                                                                                                                                                                                                                                                                                    |   |
| Item 6.      | Exhibits                                                                                                                                                                                                                                                                                | 45     |

----

| CHINA TEL GROUP, INC.                                                                                                                                                                         |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (a development stage company)                                                                                                                                                                 |   |
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                         |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |
|                                                                                                                                                                                          |   | (RESTATED) |   |   |   |   |
|                                                                                                                                                                                          |   | September 30, |   |   | December 31, |   |
|                                                                                                                                                                                          |   | 2009 |   |   | 2008 |   |
|                                                                                                                                                                                          |   | (unaudited) |   |   |   |   |
| ASSETS                                                                                                                                                                                        |   |   |   |   |   |   |
| Current assets:                                                                                                                                                                               |   |   |   |   |   |   |
| Cash                                                                                                                                                                                          |   | $ | 18,121 |   |   | $ | 6,578 |   |
| Accounts receivable, net of provision for bad debts of $4,695                                                                                                                                 |   |   | 89,179 |   |   |   | - |   |
| Accounts receivable, other                                                                                                                                                                    |   |   | 8,742 |   |   |   | - |   |
| Inventory                                                                                                                                                                                     |   |   | 7,693 |   |   |   | - |   |
| Note receivable                                                                                                                                                                               |   |   | 2,915,016 |   |   |   | 3,039,123 |   |
| Prepaid expenses                                                                                                                                                                              |   |   | 163,946 |   |   |   | - |   |
| Deferred financing costs, net of accumulated amortization of $3,000,883 and $386,188, respectively                                                                                            |   |   | 870,919 |   |   |   | 3,203,608 |   |
| Total current assets                                                                                                                                                                          |   |   | 4,073,616 |   |   |   | 6,249,309 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Property, plant and equipment, net of accumulated depreciation of $1,278,598                                                                                                                  |   |   | 591,112 |   |   |   | - |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Other assets:                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Intangible assets, net of accumulated amortization of $142,536                                                                                                                                |   |   | 119,214 |   |   |   | - |   |
| Goodwill                                                                                                                                                                                      |   |   | 797,156 |   |   |   | - |   |
| Investments, at cost                                                                                                                                                                          |   |   | 5,000,000 |   |   |   | 5,000,000 |   |
| Total other assets                                                                                                                                                                            |   |   | 5,916,370 |   |   |   | 5,000,000 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Total assets                                                                                                                                                                                  |   | $ | 10,581,098 |   |   | $ | 11,249,309 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                         |   | $ | 52,494,760 |   |   | $ | 42,632,534 |   |
| Unearned revenue                                                                                                                                                                              |   |   | 23,040 |   |   |   | - |   |
| Line of credit                                                                                                                                                                                |   |   | 141,593 |   |   |   | - |   |
| Advances from shareholders                                                                                                                                                                    |   |   | 231,471 |   |   |   | - |   |
| Notes payable, related party                                                                                                                                                                  |   |   | 1,050,000 |   |   |   |   |   |
| Notes payable                                                                                                                                                                                 |   |   | 245,463 |   |   |   | - |   |
| Convertible debentures, net of unamortized discount of $1,570,128 and $12,568,303, respectively                                                                                               |   |   | 22,549,557 |   |   |   | 21,535,101 |   |
| Derivative liability                                                                                                                                                                          |   |   | 4,144,550 |   |   |   | 26,165,886 |   |
| Total current liabilities                                                                                                                                                                     |   |   | 80,880,434 |   |   |   | 90,333,521 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Long term debt                                                                                                                                                                                |   |   |   |   |   |   |   |   |
| Mandatory redeemable Series B common stock                                                                                                                                                    |   |   | 66,909 |   |   |   | 66,909 |   |
| Total liabilities                                                                                                                                                                             |   |   | 80,947,343 |   |   |   | 90,400,430 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Stockholders' deficit:                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Preferred stock, no par value, 25,000,000 shares authorized, no shares issued and outstanding                                                                                                 |   |   | - |   |   |   | - |   |
| Common stock:                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Series A common stock; $0.001 par value, 500,000,000 shares authorized, 163,497,600 and 89,458,947 shares issued and outstanding as of September 30, 2009 and December 31, 2008, respectively |   |   | 163,498 |   |   |   | 89,459 |   |
| Additional paid in capital                                                                                                                                                                    |   |   | 65,099,150 |   |   |   | 30,079,383 |   |
| Accumulated deficit                                                                                                                                                                           |   |   | (135,658,937 | ) |   |   | (109,319,963 | ) |
| Accumulated other comprehensive income                                                                                                                                                        |   |   | 30,044 |   |   |   | - |   |
| Total China Tel Group, Inc.'s stockholders' deficit                                                                                                                                           |   |   | (70,366,245 | ) |   |   | (79,151,121 | ) |
| Non controlling interest                                                                                                                                                                      |   |   | - |   |   |   | - |   |
| Total stockholder's deficit                                                                                                                                                                   |   |   | (70,366,245 | ) |   |   | (79,151,121 | ) |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' deficit                                                                                                                                                   |   | $ | 10,581,098 |   |   | $ | 11,249,309 |   |

----

| CHINA TEL GROUP, INC.                                                  |   |
|------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF LOSS                              |   |
| (a development stage company)                                          |   |
| (Unaudited)                                                            |   |
| (RESTATED)                                                             |   |
|                                                                   |   |   |   |   |   |   |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   | From April 4, 2008 |   |   | From April 4, 2008 |   |
|                                                                   |   | Three months |   |   | Three months |   |   | Nine months |   |   | (date of inception) |   |   | (date of inception) |   |
|                                                                   |   | ended |   |   | ended |   |   | ended |   |   | Through |   |   | Through |   |
|                                                                   |   | September 30, 2009 |   |   | September 30, 2008 |   |   | September 30, 2009 |   |   | September 30, 2008 |   |   | September 30, 2009 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REVENUE                                                                |   | $ | 258,528 |   |   | $ | - |   |   | $ | 457,766 |   |   | $ | - |   |   | $ | 457,766 |   |
| Cost of sales                                                          |   |   | 235,816 |   |   |   | - |   |   |   | 364,247 |   |   |   | - |   |   |   | 364,247 |   |
| Gross profit                                                           |   |   | 22,712 |   |   |   | - |   |   |   | 93,519 |   |   |   | - |   |   |   | 93,519 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses                           |   |   | 18,801,147 |   |   |   | 1,943,302 |   |   |   | 25,205,098 |   |   |   | 5,027,872 |   |   |   | 33,023,427 |   |
| Depreciation and amortization                                          |   |   | 41,476 |   |   |   | - |   |   |   | 58,880 |   |   |   | - |   |   |   | 58,880 |   |
| Research and development costs                                         |   |   | 30,000 |   |   |   | 11,016,074 |   |   |   | 9,757,038 |   |   |   | 44,012,899 |   |   |   | 61,585,210 |   |
| Total operating expenses                                               |   |   | 18,872,623 |   |   |   | 12,959,376 |   |   |   | 35,021,016 |   |   |   | 49,040,771 |   |   |   | 94,667,517 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss from operations                                               |   |   | (18,849,911 | ) |   |   | (12,959,376 | ) |   |   | (34,927,497 | ) |   |   | (49,040,771 | ) |   |   | (94,573,998 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSES):                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other (expenses)                                                       |   |   | (36,120 | ) |   |   | - |   |   |   | (36,907 | ) |   |   | - |   |   |   | (36,907 | ) |
| Gain on foreign currency transactions                                  |   |   | 25,967 |   |   |   |   |   |   |   | 25,967 |   |   |   |   |   |   |   | 25,967 |   |
| Loss on investments, related party                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6,636,410 | ) |
| Gain on change in fair value of debt derivative                        |   |   | 11,997,895 |   |   |   | - |   |   |   | 22,021,336 |   |   |   | - |   |   |   | 9,938,836 |   |
| Interest expense                                                       |   |   | (5,436,200 | ) |   |   | (2,213,106 | ) |   |   | (13,421,873 | ) |   |   | (28,279,301 | ) |   |   | (44,026,354 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss before provision for income taxes                             |   |   | (12,298,369 | ) |   |   | (15,172,482 | ) |   |   | (26,338,974 | ) |   |   | (77,320,072 | ) |   |   | (135,308,866 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income taxes                                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss)                                                             |   |   | (12,298,369 | ) |   |   | (15,172,482 | ) |   |   | (26,338,974 | ) |   |   | (77,320,072 | ) |   |   | (135,308,866 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non controlling interest                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO CHINA TEL GROUP, INC.                         |   | $ | (12,298,369 | ) |   | $ | (15,172,482 | ) |   | $ | (26,338,974 | ) |   | $ | (77,320,072 | ) |   | $ | (135,308,866 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per common share (basic and fully diluted)                    |   | $ | (0.10 | ) |   | $ | (0.17 | ) |   | $ | (0.25 | ) |   | $ | (1.04 | ) |   | $ | (1.46 | ) |
| Weighted average number of shares outstanding, basic and fully diluted |   |   | 125,166,675 |   |   |   | 87,439,040 |   |   |   | 105,894,140 |   |   |   | 74,428,713 |   |   |   | 92,565,014 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Loss:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                               |   | $ | (12,298,369 | ) |   | $ | (15,172,482 | ) |   | $ | (26,338,974 | ) |   | $ | (77,320,072 | ) |   | $ | (135,308,866 | ) |
| Foreign currency translation gain                                      |   |   | 30,044 |   |   |   | - |   |   |   | 30,044 |   |   |   | - |   |   |   | 30,044 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Loss:                                                    |   |   | (12,268,325 | ) |   |   | (15,172,482 | ) |   |   | (26,308,930 | ) |   |   | (77,320,072 | ) |   |   | (135,278,822 | ) |
| Comprehensive loss attributable to the non controlling interest        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Comprehensive loss attributable to China Tel Group, Inc.               |   | $ | (12,268,325 | ) |   | $ | (15,172,482 | ) |   | $ | (26,308,930 | ) |   | $ | (77,320,072 | ) |   | $ | (135,278,822 | ) |

----

| CHINA TEL GROUP, INC.                                                                                                           |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|
| (a development stage company)                                                                                                   |   |
| CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT                                                                       |   |
| FOR THE PERIOD FROM APRIL 4, 2008 (DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2009                                                |   |
| (Unaudited)                                                                                                                     |   |
| (RESTATED)                                                                                                                      |   |
|                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                            |   | CHINA TEL GROUP, INC. |   |   |   |   |   |   |   |
|                                                                                                                            |   | Preferred stock |   |   | Common stock |   |   | Additional |   |   | Other |   |   |   |   |   | Non |   |   | Total |   |
|                                                                                                                            |   |   |   |   |   |   |   | Series A |   |   | Paid in |   |   | Comprehensive |   |   | Accumulated |   |   |  controlling |   |   | Stockholders' |   |
|                                                                                                                            |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Capital |   |   | Income (Loss) |   |   | Deficit |   |   | Interest |   |   | Deficit |   |
| Balance, April 4, 2008 (date of inception)                                                                                      |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Effect of merger with China Tel Group, Inc. (formerly Morlock Ventures, Inc.) and assumption of liabilities as of April 4, 2008 |   |   | - |   |   |   | - |   |   |   | 86,117,088 |   |   |   | 86,117 |   |   |   | (153,026 | ) |   |   | - |   |   |   | (350,071 | ) |   |   | - |   |   |   | (416,980 | ) |
| Beneficial conversion feature relating to issuance of convertible debentures                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,060,987 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,060,987 |   |
| Issuance of Series A common stock in exchange for convertible debentures                                                        |   |   | - |   |   |   | - |   |   |   | 1,471,663 |   |   |   | 1,472 |   |   |   | 1,396,608 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,398,080 |   |
|                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of Series A common stock in settlement of debt                                                                         |   |   | - |   |   |   | - |   |   |   | 1,870,196 |   |   |   | 1,870 |   |   |   | 1,774,814 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,776,684 |   |
|                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                        |   |   |  - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (108,969,892 | ) |   |   | - |   |   |   | (108,969,892 | ) |
|                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008                                                                                                      |   |   | - |   |   |   | - |   |   |   | 89,458,947 |   |   |   | 89,459 |   |   |   | 30,079,383 |   |   |   | - |   |   |   | (109,319,963 | ) |   |   | - |   |   |   | (79,151,121 | ) |
| Issuance of Series A common stock in January 2009 in exchange for services rendered                                             |   |   | - |   |   |   | - |   |   |   | 1,000,000 |   |   |   | 1,000 |   |   |   | 479,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 480,000 |   |
| Issuance of Series A common stock in January 2009 in exchange for previously incurred debt                                      |   |   | - |   |   |   | - |   |   |   | 1,573,158 |   |   |   | 1,573 |   |   |   | 1,492,927 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,494,500 |   |
| Issuance of Series A common stock in February 2009 in exchange for services rendered                                            |   |   | - |   |   |   | - |   |   |   | 986,526 |   |   |   | 987 |   |   |   | 393,624 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 394,611 |   |
| Issuance of Series A common stock in February  2009 in exchange for previously incurred debt                          |   |   | - |   |   |   | - |   |   |   | 204,861 |   |   |   | 205 |   |   |   | 194,413 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 194,618 |   |
| Issuance of Series A common stock in March 2009 in exchange for services rendered                                               |   |   | - |   |   |   | - |   |   |   | 4,040,000 |   |   |   | 4,040 |   |   |   | 2,067,560 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,071,600 |   |
| Issuance of Series A common stock in March  2009 in exchange for previously incurred debt                             |   |   |  - |   |   |   | - |   |   |   | 406,113 |   |   |   | 406 |   |   |   | 385,401 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 385,807 |   |
|                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subtotal                                                                                                                        |   |   | - |   |   |   | - |   |   |   | 97,669,605 |   |   | $ | 97,670 |   |   | $ | 35,092,308 |   |   | $ | - |   |   | $ | (109,319,963 | ) |   | $ | - |   |   | $ | (74,129,985 | ) |

----

| CHINA TEL GROUP, INC.                                                                                           |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| (a development stage company)                                                                                   |   |
| CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT                                                       |   |
| FOR THE PERIOD FROM APRIL 4, 2008 (DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2009                                |   |
| (Unaudited)                                                                                                     |   |
| (RESTATED)                                                                                                      |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   | CHINA TEL GROUP, INC. |   |   |   |   |   |   |   |
|                                                                                                            |   | Preferred stock |   |   | Common stock |   |   | Additional |   |   | Other |   |   |   |   |   | Non |   |   | Total |   |
|                                                                                                            |   |   |   |   |   |   |   | Series A |   |   | Paid in |   |   | Comprehensive |   |   | Accumulated |   |   | controlling |   |   | Stockholders' |   |
|                                                                                                            |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Capital |   |   | Income (Loss) |   |   | Deficit |   |   | Interest |   |   | Deficit |   |
| Balance forward                                                                                                 |   |   | - |   |   |   | - |   |   |   | 97,669,605 |   |   | $ | 97,670 |   |   | $ | 35,092,308 |   |   | $ | - |   |   | $ | (109,319,963 | ) |   | $ | - |   |   | $ | (74,129,985 | ) |
| Issuance of Series A common stock in March 2009 as deposit toward purchase of an investment                     |   |   | - |   |   |   | - |   |   |   | 1,000,000 |   |   |   | 1,000 |   |   |   | 429,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 430,000 |   |
| Issuance of Series A common stock in May  2009 in exchange for previously incurred debt               |   |   | - |   |   |   | - |   |   |   | 211,500 |   |   |   | 211 |   |   |   | 200,713 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 200,924 |   |
| Issuance of Series A common stock in June  2009 in exchange for previously incurred debt              |   |   | - |   |   |   | - |   |   |   | 263,158 |   |   |   | 263 |   |   |   | 249,737 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 250,000 |   |
| Issuance of Series A common stock in June 2009 in exchange for services rendered                                |   |   | - |   |   |   | - |   |   |   | 2,900,000 |   |   |   | 2,900 |   |   |   | 1,075,100 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,078,000 |   |
| Issuance of Series A common stock in July 2009 in exchange for services rendered                                |   |   | - |   |   |   | - |   |   |   | 7,403,149 |   |   |   | 7,403 |   |   |   | 5,945,116 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,952,519 |   |
| Issuance of Series A common stock in August 2009 in exchange for services rendered                              |   |   | - |   |   |   | - |   |   |   | 8,153,115 |   |   |   | 8,153 |   |   |   | 6,094,339 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,102,492 |   |
| Issuance of Series A common stock in August 2009 in exchange for convertible debentures and related interest    |   |   | - |   |   |   | - |   |   |   | 23,991,144 |   |   |   | 23,991 |   |   |   | 7,247,020 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,271,011 |   |
| Issuance of Series A common stock in September 2009 in exchange for services rendered                           |   |   | - |   |   |   | - |   |   |   | 4,364,134 |   |   |   | 4,365 |   |   |   | 4,059,520 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,063,885 |   |
| Issuance of Series A common stock in September 2009 in exchange for convertible debentures and related interest |   |   | - |   |   |   | - |   |   |   | 14,541,795 |   |   |   | 14,542 |   |   |   | 4,198,720 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,213,262 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for services to be rendered                                                            |   |   | - |   |   |   | - |   |   |   | 3,000,000 |   |   |   | 3,000 |   |   |   | (3,000 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity based compensation                                                                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 510,577 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 510,577 |   |
| Foreign currency translation gain                                                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 30,044 |   |   |   | - |   |   |   | - |   |   |   | 30,044 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                        |   |   |  - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (26,338,974 | ) |   |   | - |   |   |   | (26,338,974 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, September 30, 2009                                                                                     |   |   |  - |   |   | $ | - |   |   |   | 163,497,600 |   |   | $ | 163,498 |   |   | $ | 65,099,150 |   |   | $ | 30,044 |   |   | $ | (135,658,937 | ) |   | $ | - |   |   | $ | (70,366,245 | ) |

----

| CHINA TEL GROUP, INC.                                                                    |   |
|------------------------------------------------------------------------------------------|--------|
| (a development stage company)                                                            |   |
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                                           |   |
| (unaudited)                                                                              |   |
| (RESTATED)                                                                               |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   |   |   | From April 4, 2008 |   |   | From April 4, 2008 |   |
|                                                                                     |   | Nine months |   |   | (date of inception) |   |   | (date of inception) |   |
|                                                                                     |   | Ended |   |   | Through |   |   | Through |   |
|                                                                                     |   | September 30, 2009 |   |   | September 30, 2008 |   |   | September 30, 2009 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                 |   | $ | (26,338,974 | ) |   | $ | (77,320,072 | ) |   | $ | (135,308,866 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities:          |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                            |   |   | 58,880 |   |   |   | - |   |   |   | 58,880 |   |
| Non controlling interest                                                                 |   |   | - |   |   |   | - |   |   |   | - |   |
| Amortization of financing costs                                                          |   |   | 2,614,695 |   |   |   | - |   |   |   | 3,000,883 |   |
| Accretion of convertible debt                                                            |   |   | 10,998,175 |   |   |   | - |   |   |   | 12,513,258 |   |
| Gain on change in fair value of debt derivative                                          |   |   | (22,021,336 | ) |   |   | - |   |   |   | (9,938,836 | ) |
| Common stock issued in exchange for services                                             |   |   | 20,653,684 |   |   |   | - |   |   |   | 20,653,684 |   |
| Beneficial conversion feature in conjunction with the issuance of convertible debentures |   |   | - |   |   |   | 27,060,987 |   |   |   | 27,060,987 |   |
| (Increase) decrease in:                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                      |   |   | 60,549 |   |   |   | - |   |   |   | 60,549 |   |
| Inventory                                                                                |   |   | (3,881 | ) |   |   | - |   |   |   | (3,881 | ) |
| Note receivable                                                                          |   |   | 124,107 |   |   |   |   |   |   |   | 124,107 |   |
| Prepaid expenses                                                                         |   |   | (27,110 | ) |   |   |   |   |   |   | (27,072 | ) |
| Increase (decrease) in:                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities                                                 |   |   | 12,921,505 |   |   |   | 27,358,464 |   |   |   | 57,204,804 |   |
| Unearned revenue                                                                         |   |   | (11,810 | ) |   |   | - |   |   |   | (11,810 | ) |
| Net cash used in operating activities                                                    |   |   | (971,516 | ) |   |   | (22,900,621 | ) |   |   | (24,613,313 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash from acquisition of Perusat S.A.                                                    |   |   | 19,419 |   |   |   | - |   |   |   | 19,419 |   |
| Proceeds received in connection with reverse merger                                      |   |   | - |   |   |   | - |   |   |   | 55,404 |   |
| Investment in Chinacomm                                                                  |   |   | - |   |   |   | (5,000,000 | ) |   |   | (5,000,000 | ) |
| Net cash provided by (used in) investing activities                                      |   |   | 19,419 |   |   |   | (5,000,000 | ) |   |   | (4,925,177 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from advances from shareholders                                                 |   |   | 231,471 |   |   |   | - |   |   |   | 231,471 |   |
| Payments made to notes payable                                                           |   |   | (41,902 | ) |   |   | - |   |   |   | (41,902 | ) |
| Proceeds from notes payable, related party                                               |   |   | 775,000 |   |   |   | - |   |   |   | 775,000 |   |
| Net proceeds from issuance of convertible debentures                                     |   |   | - |   |   |   | 28,198,938 |   |   |   | 28,592,971 |   |
| Net cash provided by financing activities                                                |   |   | 964,569 |   |   |   | 28,198,938 |   |   |   | 29,557,540 |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of currency rate change on cash                                                   |   |   | (929 | ) |   |   | - |   |   |   | (929 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase in cash and cash equivalents                                                |   |   | 11,543 |   |   |   | 298,317 |   |   |   | 18,121 |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of the period                                       |   |   | 6,578 |   |   |   | - |   |   |   | - |   |
| Cash and cash equivalents, end of the period                                             |   | $ | 18,121 |   |   | $ | 298,317 |   |   | $ | 18,121 |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                       |   |   |   |   |   |   |   |   |   |
| Cash paid during the period for interest                                                 |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Cash paid during the period for taxes                                                    |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| NON CASH INVESTING AND FINANCING ACTIVITIES                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in settlement of debt                                                |   | $ | 14,010,122 |   |   | $ | 4,322,844 |   |   | $ | 18,332,966 |   |
| Common stock issued for services rendered                                                |   | $ | 20,653,684 |   |   | $ | - |   |   | $ | 20,653,684 |   |

----

----

| Current Assets:         |   |   |       |   |
|-------------------------|--------|--------|------------|--------|
| Cash                    |   | $      | 55,404     |   |
| Other assets:           |   |   |       |   |
| Prepaid expenses        |   |   | 38         |   |
| Advances receivable     |   |   | 2,616,105  |   |
|                    |   |   |       |   |
| Current Liabilities:    |   |   |       |   |
| Accounts payable        |   |   | (125,919   | )      |
| Convertible debentures  |   |   | (2,395,699 | )      |
| Subscriptions received  |   |   | (500,000   | )      |
| Net liabilities assumed |   | $      | (350,071   | )      |

----

| Cash                               |   | $      | 19,419     |    |
|------------------------------------|--------|--------|------------|---------|
| Current assets acquired            |   |   | 352,566    |    |
| Property, plant and equipment, net |   |   | 612,893    |    |
| Software licenses, net             |   |   | 124,357    |    |
| Total assets:                      |   | $      | 1,109,235  |    |
| Less:                              |   |   |       |    |
| Liabilities assumed                |   |   | (1,201,391 | )       |
| Non controlling interest           |   |   | -          |    |
| Net:                               |   |   | (92,156    | )  |
| Goodwill acquired                  |   |   | 797,156    |    |
| Total purchase price               |   | $      | 705,000    |    |

----

| Buildings                             |   | 33 years      |   |
|---------------------------------------|--------|---------------|--------|
| Machinery and equipment               |   | 10 years      |   |
| Vehicles                              |   | 4 years  |   |
| Fur  Furniture and fixtures |   | 10 years |   |
| Computers                             |   | 4 years  |   |

----

----

----

----

----

| Prepaid insurance      |   | $      | 1,590   |   |
|------------------------|--------|--------|---------|--------|
| Prepaid payroll taxes  |   |   | 149,794 |   |
| Deferred charges       |   |   | 6,289   |   |
| Other prepaid expenses |   |   | 6,273   |   |
| Total prepaid expenses |   | $      | 163,946 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | GrossPrincipalAmount |        |   | Less:UnamortizedDiscount |   |       | Net    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-------------|--------|--------------------------|--------|------------|--------|--------|
| 10% convertible notes payable, unsecured are due December 31, 2008; accrued and unpaid interest due at maturity; convertible note holder has the option to convert note principal together with accrued and unpaid interest to the Company’s common stock at a rate of $0.95 per share. The Company is currently in default.                                                                                                                                                    |   | $                    | 13,721,442  |   |                     | $      | -          |   |   | $ | 13,721,442 |   |
| 10% amended and restated convertible notes payable are due December 31, 2009, with interest payable at maturity. The amended and restated convertible notes are convertible into the Company’s common stock at the lower of (a) $0.95 per share or (b) 80% of the volume weighted average of the closing bid price for the shares on the Over The Counter Bulletin Board Exchange for the ten (10) day period prior to the convertible note holder’s election to convert. |   | $                    | 10,398,243  |   |                     |   | 1,570,128  |   |   | $ | 8,828,115 |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                 | 24,119,685  |   |                     |   | 1,570,128  |   |   |   | 22,549,557 |   |
| Less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                 | (24,119,685 | )      |                     |   | (1,570,128 | )      |   |   | 22,549,557 | ) |
| Long term portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                    | -           |   |                     | $      | -          |   |   | $ | - |   |

----

| Note payable, due 9/15/2010, with monthly payments of $3,769 including interest, secured by financed equipment (currently in default) |   |   | 141,357  |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------|--------|
| Note payable, due 2/28/2010, with monthly payments of $940 including interest, secured by financed equipment                          |   |   | 7,463         |   |
| Note payable, due 1/22/2010, with monthly payments of $8,889 including interest at 14%, secured by equipment                          |   |   | 38,961        |   |
| Note payable, due 1/22/2010, with monthly payments of $10,901 including interest at 14%, secured by equipment                         |   |   | 57,682        |   |
| Total                                                                                                                                 |   |   | 191,245,463   |   |
| Less current portion:                                                                                                                 |   |   | (191,245,463  | )      |
| Long term portion:                                                                                                                    |   | $      | -             |   |

----

| Balance as of April 15, 2009 (date of acquisition) (negative)                                              |   | $      | - |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|---|--------|
| Period loss applicable to non controlling interest from the date of acquisition through September 30, 2009 |   |   | - |   |
| Adjustment to non controlling interest due to losses in excess of book value                               |   |   | - |   |
| Balance as of September 30, 2009                                                                           |   | $      | - |   |

----

| Note payable dated April 15, 2009, non interest bearing, due on demand; unsecured                                                  |   | $      | 275,000   |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
| Note payable dated June 27, 2009, 15% per annum interest,  originally due July 15, 2009; unsecured, currently in default |   |   | 375,000   |   |
| Note payable dated May 20, 2009, 8% per annum interest, due December 1, 2009; unsecured                                            |   |   | 200,000   |   |
| Note payable dated April 1, 2009, 8% per annum interest, due originally October 1, 2009; unsecured, currently in default           |   |   | 100,000   |   |
| Note payable due September 17, 2009, 8% per annum interest, due March 17, 2010                                                     |   |   | 100,000   |   |
| Total                                                                                                                              |   | $      | 1,050,000 |   |

----

----

|                     |   | Quoted Prices in Active Markets for Identical InstrumentsLevel 1 |    |   | Significant Other Observable InputsLevel 2 |    |    | Significant Unobservable InputsLevel 3 |   |   | Total      |   |
|--------------------------|--------|------------------------------------------------------------------|---------|--------|--------------------------------------------|---------|---------|----------------------------------------|--------|--------|------------|--------|
| Assets:                  |   |                                                             |    |   |                                       |    |    |                                   |   |   |       |   |
| Cash                     |   | $                                                                | 18,121  |   |                                       | $  | -       |                                   |   | $      |  -    |   |   | $  | 18,121 |   |
|                     |   |                                                             |    |   |                                       |    |    |                                   |   |   |       |   |   |   |   |   |
| Equity Based Investments |   |                                                             |  - |   |                                       |    | -       |                                   |   |   | 5,000,000  |   |   |   | 5,000,000 |   |
|                     |   |                                                             |    |   |                                       |    |    |                                   |   |   |       |   |   |   |   |   |
| Total assets             |   | $                                                           | 18,121  |   |                                       | $  |  - |                                   |   | $      | 5,000,000  |   |   | $  | 5,018,121 |   |
|                     |   |                                                             |    |   |                                       |    |    |                                   |   |   |       |   |   |   |   |   |
| Liabilities:             |   |                                                             |    |   |                                       |    |    |                                   |   |   |       |   |   |   |   |   |
| Debt Derivative          |   | $                                                           |  - |   |                                       | $  | -       |                                   |   | $      | (4,144,550 | )      |   | $  | (4,144,550 | ) |

----

| Operating Expenses:                 |   | As PreviouslyReported |        |   | Adjustment |   |        | Reference |   |    | As Restated |   |
|-------------------------------------|--------|----------------------------|-------------|--------|------------|--------|-------------|-----------|--------|---------|------------------|--------|
| Selling, General and Administrative |   | $                          | 1,943,302   |   |       |   |        |      | $      |    |             |   | $ | 1,943,302 |   |
| Research and Development            |   |                       | -           |   |       |   | 11,016,074  |      |   |    |             |   |   |   | 11,016,074 |   |
| Total Operating Expenses            |   |                       | 1,943,302   |   |       |   | 11,016,074  |      |   | (a)     |             |   |   | 12,959,576 |   |
| Net Loss from Operations            |   |                       | (1,943,302  | )      |       |   | (11,016,074 | )         |   |    |             |   |   |   | (12,959,576 |   |
| Interest Expense                    |   |                       | (9,561,638  | )      |       |   | 7,348,532   |      |   | (b)     |             |   |   | (2,213,106 | ) |
|                                |   |                       |        |   |       |   |        |      |   |    |             |   |   |   |   |   |
| Net Loss Before Income Taxes        |   |                       | (11,504,940 | )      |       |   | (3,667,542  | )         |   |    |             |   |   |   | (15,172,482 | ) |
|                                |   |                       |        |   |       |   |        |      |   |    |             |   |   |   |   |   |
| Provision for Income Taxes          |   |                       | -           |   |       |   | -           |      |   |    |             |   |   |   | - |   |
|                                |   |                       |        |   |       |   |        |      |   |    |             |   |   |   |   |   |
| Net Loss                            |   | $                          | (11,504,940 | )      |       | $      | (3,667,542  | )         |   | (a),(b) |             |   | $ | (15,172,482 | ) |

| Operating Expenses:                 |   | As PreviouslyReported |        |   | Adjustment |   |        | Reference |   |    | As Restated |   |
|-------------------------------------|--------|----------------------------|-------------|--------|------------|--------|-------------|-----------|--------|---------|------------------|--------|
| Selling, General and Administrative |   | $                          | 5,027,872   |   |       |   |        |      | $      |    |             |   | $ | 5,027,872 |   |
| Research and Development            |   |                       | -           |   |       |   | 44,012,899  |      |   |    |             |   |   |   | 44,012,899 |   |
| Total operating expenses            |   |                       | 5,027,872   |   |       |   | 44,012,899  |      |   | (a)     |             |   |   | 44,012,899 |   |
| Net Loss from Operations            |   |                       | (5,027,872  | )      |       |   | (44,012,899 | )         |   |    |             |   |   |   | (49,040,771 |   |
| Interest Expense                    |   |                       | (56,051,988 | )      |       |   | 27,772,687  |      |   | (b)     |             |   |   | (28,279,301 | ) |
|                                |   |                       |        |   |       |   |        |      |   |    |             |   |   |   |   |   |
| Net Loss Before Income Taxes        |   |                       | (61,079,860 | )      |       |   | (16,240,212 | )         |   |    |             |   |   |   | (77,320,072 | ) |
|                                |   |                       |        |   |       |   |        |      |   |    |             |   |   |   |   |   |
| Provision for Income Taxes          |   |                       | -           |   |       |   | -           |      |   |    |             |   |   |   | - |   |
|                                |   |                       |        |   |       |   |        |      |   |    |             |   |   |   |   |   |
| Net Loss                            |   | $                          | (61,079,860 | )      |       | $      | (16,240,212 | )         |   | (a),(b) |             |   | $ | (77,320,072 | ) |

----

|                                                                                     |   | As Previously |        |   |       |   |        |      |   |   |             |   |
|------------------------------------------------------------------------------------------|--------|--------------------|-------------|--------|------------|--------|-------------|-----------|--------|--------|------------------|--------|
|                                                                                     |   | Reported           |        |   | Adjustment |   |        | Reference |   |   | As Restated |   |
| Cash Flows from Operating Activities:                                                    |   |               |        |   |       |   |        |      |   |   |             |   |
| Net Loss for the Period                                                                  |   | $                  | (61,079,860 | )      |       | $      | (16,240,212 | )         |   |   | (a),(b)          |   |   | $ | (77,320,072 | ) |
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:              |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Beneficial Conversion Feature in Conjunction with the Issuance of Convertible Debentures |   |               | 46,406,344  |   |       |   | (19,345,357 | )         |   |   | (b)              |   |   |   | 27,060,987 |   |
| Amortization of Debt Discount                                                            |   |               | 8,427,330   |   |       |   | (8,427,330  | )         |   |   | (b)              |   |   |   |   |   |
| (Increase) Decrease in:                                                                  |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Construction in Process                                                                  |   |               | (44,012,899 | )      |       |   | 44,012,899  |      |   |   | (a)              |   |   |   | - |   |
| Increase (Decrease) in:                                                                  |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Accounts Payable and Other Current Liabilities                                           |   |               | 27,358,464  |   |       |   | -           |      |   |   |             |   |   |   | 27,358,464 |   |
| Net Cash used in Operating Activities                                                    |   |               | (22,900,621 | )      |       |   | -           |      |   |   |             |   |   |   | (22,900,621 | ) |
|                                                                                     |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                    |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Investment in Chinacomm                                                                  |   |               | (5,000,000  | )      |       |   |  -     |      |   |   |             |   |   |   | (5,000,000 | ) |
| Net Cash used in Investing Activities                                                    |   |               | (5,000,000  | )      |       |   | -           |      |   |   |             |   |   |   | (5,000,000 | ) |
|                                                                                     |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Cash Flows from Financing Activities:                                                    |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Net Proceeds from Issuance of Convertible Debentures                                     |   |               | 28,198,938  |   |       |   | -      |      |   |   |             |   |   |   | 28,198,938 |   |
| Net Cash Provided by Financing Activities                                                |   |               | 28,198,938  |   |       |   | -           |      |   |   |             |   |   |   | 28,198,938 |   |
|                                                                                     |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Net Increase in Cash                                                                     |   |               | 298,317     |   |       |   | -      |      |   |   |             |   |   |   | 298,317 |   |
| Cash at Beginning of Period                                                              |   |               | -           |   |       |   | -      |      |   |   |             |   |   |   | - |   |
|                                                                                     |   |               |        |   |       |   |        |      |   |   |             |   |   |   |   |   |
| Cash at End of Period                                                                    |   | $                  | 298,317     |   |       | $      | -           |      |   |   |             |   |   | $ | 298,317 |   |

|   | (a) | Correct classification of research and development costs from construction in process to a current period cost. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------|
|   | (b) | Correct calculation of beneficial conversion feature in connection with convertible debentures issued           |

----

|   | · | As of September 30, 2009, Condensed Consolidated Balance Sheet restatement is to: |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | Correct the recorded investment in ChinaComm Cayman |
|--------|--------|-----------------------------------------------------|

|   | · | Eliminate the recording of the option to acquire additional interest in ChinaComm Cayman as a note payable |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | Reverse the accrual on interest previously booked towards note payable |
|--------|--------|------------------------------------------------------------------------|

|                                                    |   | As previously |         |   |       |   |         |   |   |   |        |   |
|---------------------------------------------------------|--------|---------------|--------------|--------|------------|--------|--------------|--------|--------|--------|-------------|--------|
|                                                    |   | Reported      |         |   | Adjustment |   |         | Ref    |   |   | As restated |   |
| Cash                                                    |   | $             | 18,121       |   |       | $      |         |   |   |   |        | $      | 18,121 |   |
| Accounts receivable, net                                |   |          | 89,179       |   |       |   |         |   |   |   |        |   | 89,179 |   |
| Accounts receivable, other                              |   |          | 8,742        |   |       |   |         |   |   |   |        |   | 8,742 |   |
| Inventory                                               |   |          | 7,693        |   |       |   |         |   |   |   |        |   | 7,693 |   |
| Note receivable                                         |   |          | 2,915,016    |   |       |   |         |   |   |   |        |   | 2,915,016 |   |
| Prepaid expenses                                        |   |          | 163,946      |   |       |   |         |   |   |   |        |   | 163,946 |   |
| Deferred financing costs                                |   |          | 870,919      |   |       |   |         |   |   |   |        |   | 870,919 |   |
| Property, plant and equipment                           |   |          | 591,112      |   |       |   |         |   |   |   |        |   | 591,112 |   |
| Intangible assets                                       |   |          | 119,214      |   |       |   |         |   |   |   |        |   | 119,214 |   |
| Goodwill                                                |   |          | 797,156      |   |       |   |         |   |   |   |        |   | 797,156 |   |
| Investment, at cost                                     |   |          | 196,000,000  |   |       |   | (191,000,000 | )      |   |   | a           |   |   |   | 5,000,000 |   |
|   Total assets                                |   | $             | 201,581,098  |   |       | $      | (191,000,000 | )      |   |   |        |   |   | $ | 10,581,098 |   |
|                                                    |   |          |         |   |       |   |         |   |   |   |        |   |   |   |   |   |
| Accounts payable and accrued liabilities                |   | $             | 61,026,093   |   |       | $      | (8,531,333   | )      |   |   | b           |   |   | $ | 52,494,760 |   |
| Note payable                                            |   |          | 191,245,463  |   |       |   | (191,000,000 | )      |   |   | a           |   |   |   | 245,463 |   |
| Unearned revenue                                        |   |          | 23,040       |   |       |   |         |   |   |   |        |   |   |   | 23,040 |   |
| Line of credit                                          |   |          | 141,593      |   |       |   |         |   |   |   |        |   |   |   | 141,593 |   |
| Advances from shareholders                              |   |          | 231,471      |   |       |   |         |   |   |   |        |   |   |   | 231,471 |   |
| Notes payable, related party                            |   |          | 1,050,000    |   |       |   |         |   |   |   |        |   |   |   | 1,050,000 |   |
| Convertible debentures                                  |   |          | 22,549,557   |   |       |   |         |   |   |   |        |   |   |   | 22,549,557 |   |
| Derivative liability                                    |   |          | 4,144,550    |   |       |   |         |   |   |   |        |   |   |   | 4,144,550 |   |
| Mandatory redeemable common stock                       |   |          | 66,909       |   |       |   |         |   |   |   |        |   |   |   | 66,909 |   |
|   Total liabilities                           |   |          | 280,478,676  |   |       |   | (199,531,333 | )      |   |   |        |   |   |   | 80,947,343 |   |
|                                                    |   |          |         |   |       |   |         |   |   |   |        |   |   |   |   |   |
| Preferred stock                                         |   |          | -            |   |       |   |         |   |   |   |        |   |   |   |   |   |
| Common stock                                            |   |          | 163,498      |   |       |   |         |   |   |   |        |   |   |   | 163,498 |   |
| Additional paid in capital                              |   |          | 65,099,150   |   |       |   |         |   |   |   |        |   |   |   | 65,099,150 |   |
| Deficit                                                 |   |          | (144,190,270 | )      |       |   | 8,531,333    |   |   |   | b           |   |   |   | (135,658,937 | ) |
| Accumulated other comprehensive income                  |   |          | 30,044       |   |       |   |         |   |   |   |        |   |   |   | 30,044 |   |
|   Total stockholders' deficit                 |   |          | (78,897,578  | )      |       |   | 8,531,333    |   |   |   |        |   |   |   | (70,366,245 | ) |
|   Total liabilities and stockholders' deficit |   | $             | 201,581,098  |   |       | $      | (191,000,000 | )      |   |   |        |   |   | $ | 10,581,098 |   |

----

| ·   | Reverse the accrual on interest previously booked towards note payable |
|--------------------|------------------------------------------------------------------------|

|                                                                   |   | As previously |        |   |       |   |        |   |   |   |        |   |
|------------------------------------------------------------------------|--------|---------------|-------------|--------|------------|--------|-------------|--------|--------|--------|-------------|--------|
|                                                                   |   | Reported      |        |   | Adjustment |   |        | Ref    |   |   | As restated |   |
| REVENUE                                                                |   | $             | 258,528     |   |       | $      |        |   |   |   |        |   | $ | 258,528 |   |
| Cost of sales                                                          |   |          | 235,816     |   |       |   |        |   |   |   |        |   |   | 235,816 |   |
|   Gross profit                                               |   |          | 22,712      |   |       |   | -           |   |   |   |        |   |   |   | 22,712 |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OPERATING EXPENSES:                                                    |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Selling, general and administrative                                    |   |          | 18,801,147  |   |       |   |        |   |   |   |        |   |   |   | 18,801,147 |   |
| Depreciation and amortization                                          |   |          | 41,476      |   |       |   |        |   |   |   |        |   |   |   | 41,476 |   |
| Research and development                                               |   |          | 30,000      |   |       |   |        |   |   |   |        |   |   |   | - |   |
|   Total operating expenses                                   |   |          | 18,872,623  |   |       |   | -           |   |   |   |        |   |   |   | 18,842,623 |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss from operations                                               |   |          | (18,849,911 | )      |       |   | -           |   |   |   |        |   |   |   | (18,819,911 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OTHER INCOME (EXPENSES):                                               |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Other income (expense)                                                 |   |          | (36,120     | )      |       |   |        |   |   |   |        |   |   |   | (36,120 | ) |
| Gain on foreign currency transactions                                  |   |          | 25,967      |   |       |   |        |   |   |   |        |   |   |   | 25,967 |   |
| Gain on change in fair value of debt derivative                        |   |          | 11,997,895  |   |       |   |        |   |   |   |        |   |   |   | 11,997,895 |   |
| Interest expense                                                       |   |          | (9,256,200  | )      |       |   | 3,820,000   |   |   |   | b           |   |   |   | (5,436,200 | ) |
| Net loss before provision for income taxes                             |   |          | (16,118,369 | )      |       |   | 3,820,000   |   |   |   |        |   |   |   | (12,268,369 | ) |
| Income taxes                                                           |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net (loss)                                                             |   |          | (16,118,369 | )      |       |   | 3,820,000   |   |   |   |        |   |   |   | (12,268,369 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Non controlling interest                                               |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO CHINA TEL GROUP, INC.                         |   | $             | (16,118,369 | )      |       | $      | 3,820,000   |   |   |   |        |   |   | $ | (12,268,369 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss per common share (basic and fully diluted                     |   | $             | (0.13       | )      |       | $      | 0.03        |   |   |   |        |   |   | $ | (0.10 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Weighted average number of shares outstanding, basic and fully diluted |   |          | 125,166,675 |   |       |   | 125,166,675 |   |   |   |        |   |   |   | 125,166,675 |   |

----

| ·   | Reverse the accrual on interest previously booked towards note payable |
|--------------------|------------------------------------------------------------------------|

|                                                                   |   | As previously |              |   |       |   |        |   |   |   |        |   |
|------------------------------------------------------------------------|--------|---------------|-------------------|--------|------------|--------|-------------|--------|--------|--------|-------------|--------|
|                                                                   |   | Reported      |              |   | Adjustment |   |        | Ref    |   |   | As restated |   |
| REVENUE                                                                |   | $             | 457,766           |   |       | $      |        |   |   |   |        |   | $ | 457,766 |   |
| Cost of sales                                                          |   |          | 364,247           |   |       |   |        |   |   |   |        |   |   | 364,247 |   |
|   Gross profit                                               |   |          | 93,519            |   |       |   | -           |   |   |   |        |   |   |   | 93,519 |   |
|                                                                   |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OPERATING EXPENSES:                                                    |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Selling, general and administrative                                    |   |          | 25,205,098        |   |       |   |        |   |   |   |        |   |   |   | 25,205,098 |   |
| Depreciation and amortization                                          |   |          | 58,880            |   |       |   |        |   |   |   |        |   |   |   | 58,880 |   |
| Research and development                                               |   |          | 9,757,038         |   |       |   |        |   |   |   |        |   |   |   | 9,757,038 |   |
|   Total operating expenses                                   |   |          | 35,021,016        |   |       |   | -           |   |   |   |        |   |   |   | 35,021,016 |   |
|                                                                   |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss from operations                                               |   |          | (34,927,497       | )      |       |   | -           |   |   |   |        |   |   |   | (34,927,497 | ) |
|                                                                   |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OTHER INCOME (EXPENSES):                                               |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Other income (expense)                                                 |   |          | (36,907           | )      |       |   |        |   |   |   |        |   |   |   | (36,907 | ) |
| Gain on foreign currency transactions                                  |   |          | 25,967            |   |       |   |        |   |   |   |        |   |   |   | 25,967 |   |
| Gain on change in fair value of debt derivative                        |   |          | 22,021,336        |   |       |   |        |   |   |   |        |   |   |   | 22,021,336 |   |
| Interest expense                                                       |   |          | (21,953,206       | )      |       |   | 8,531,333   |   |   |   | b           |   |   |   | (13,421,873 | ) |
| Net loss before provision for income taxes                             |   |          | (34,870,307       | )      |       |   | 8,531,333   |   |   |   |        |   |   |   | (26,338,974 | ) |
| Income taxes                                                           |   |          | -                 |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net (loss)                                                             |   |          | (34,870,307       | )      |       |   | 8,531,333   |   |   |   |        |   |   |   | (26,338,974 | ) |
|                                                                   |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Non controlling interest                                               |   |          | -                 |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO CHINA TEL GROUP, INC.                         |   | $             | (34,870,307       | )      |       | $      | 8,531,333   |   |   |   |        |   |   | $ | (26,338,974 | ) |
|                                                                   |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss per common share (basic and fully diluted                     |   | $             | (0.33             | )      |       | $      | 0.08        |   |   |   |        |   |   | $ | (0.25 | ) |
|                                                                   |   |          |              |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Weighted average number of shares outstanding, basic and fully diluted |   |          |  105,894,140 |   |       |   | 105,894,140 |   |   |   |        |   |   |   | 105,894,140 |   |

----

| ·   | Properly record research and development expenditures as a current period expense |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Correct calculation of the beneficial conversion feature related to convertible debt |
|--------------------|--------------------------------------------------------------------------------------|

|                                                                   |   | As previously |        |   |       |   |        |   |   |   |        |   |
|------------------------------------------------------------------------|--------|---------------|-------------|--------|------------|--------|-------------|--------|--------|--------|-------------|--------|
|                                                                   |   | Reported      |        |   | Adjustment |   |        | Ref    |   |   | As restated |   |
| REVENUE                                                                |   | $             | -           |   |       | $      |        |   |   |   |        |   | $ | - |   |
| Cost of sales                                                          |   |          | -           |   |       |   |        |   |   |   |        |   |   | - |   |
|   Gross profit                                               |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OPERATING EXPENSES:                                                    |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Selling, general and administrative                                    |   |          | 1,943,302   |   |       |   |        |   |   |   |        |   |   |   | 1,943,302 |   |
| Depreciation and amortization                                          |   |          | -           |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Research and development                                               |   |          | -           |   |       |   | 11,016,074  |   |   |   | c           |   |   |   | 11,016,074 |   |
|   Total operating expenses                                   |   |          | 1,943,302   |   |       |   | 11,016,074  |   |   |   |        |   |   |   | 12,959,376 |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss from operations                                               |   |          | (1,943,302  | )      |       |   | (11,016,074 | )      |   |   |        |   |   |   | (12,959,376 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OTHER INCOME (EXPENSES):                                               |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Other income (expense)                                                 |   |          | -           |   |       |   |        |   |   |   |        |   |   |   | - |   |
| (Loss) gain on change in fair value of debt derivative                 |   |          | -           |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Interest expense                                                       |   |          | (9,561,638  | )      |       |   | 7,348,532   |   |   |   | d           |   |   |   | (2,213,106 | ) |
| Net loss before provision for income taxes                             |   |          | (11,504,940 | )      |       |   | (3,667,542  | )      |   |   |        |   |   |   | (15,172,482 | ) |
| Income taxes                                                           |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net (loss)                                                             |   |          | (11,504,940 | )      |       |   | (3,667,542  | )      |   |   |        |   |   |   | (15,172,482 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Non controlling interest                                               |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO CHINA TEL GROUP, INC.                         |   | $             | (11,504,940 | )      |       | $      | (3,667,542  | )      |   |   |        |   |   | $ | (15,172,482 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss per common share (basic and fully diluted                     |   | $             | (0.13       | )      |       | $      | (0.04       | )      |   |   |        |   |   | $ | (0.17 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Weighted average number of shares outstanding, basic and fully diluted |   |          | 87,439,040  |   |       |   | 87,439,040  |   |   |   |        |   |   |   | 87,439,040 |   |

----

| ·   | Properly record research and development expenditures as a current period expense |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Correct calculation of the beneficial conversion feature related to convertible debt |
|--------------------|--------------------------------------------------------------------------------------|

|                                                                   |   | As previously |        |   |       |   |        |   |   |   |        |   |
|------------------------------------------------------------------------|--------|---------------|-------------|--------|------------|--------|-------------|--------|--------|--------|-------------|--------|
|                                                                   |   | Reported      |        |   | Adjustment |   |        | Ref    |   |   | As restated |   |
| REVENUE                                                                |   | $             | -           |   |       | $      |        |   |   |   |        |   | $ | - |   |
| Cost of sales                                                          |   |          | -           |   |       |   |        |   |   |   |        |   |   | - |   |
|   Gross profit                                               |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OPERATING EXPENSES:                                                    |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Selling, general and administrative                                    |   |          | 5,027,872   |   |       |   |        |   |   |   |        |   |   |   | 5,027,872 |   |
| Depreciation and amortization                                          |   |          | -           |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Research and development                                               |   |          | -           |   |       |   | 44,012,899  |   |   |   | c           |   |   |   | 44,012,899 |   |
|   Total operating expenses                                   |   |          | 5,027,872   |   |       |   | 44,012,899  |   |   |   |        |   |   |   | 49,040,771 |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss from operations                                               |   |          | (5,027,872  | )      |       |   | (44,012,899 | )      |   |   |        |   |   |   | (49,040,771 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OTHER INCOME (EXPENSES):                                               |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Other income (expense)                                                 |   |          |        |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Gain on foreign currency transactions                                  |   |          |        |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Gain on change in fair value of debt derivative                        |   |          |        |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Interest expense                                                       |   |          | (56,051,988 | )      |       |   | 27,772,687  |   |   |   | d           |   |   |   | (28,279,301 | ) |
| Net loss before provision for income taxes                             |   |          | (61,079,860 | )      |       |   | (16,240,212 | )      |   |   |        |   |   |   | (77,320,072 | ) |
| Income taxes                                                           |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net (loss)                                                             |   |          | (61,079,860 | )      |       |   | (16,240,212 | )      |   |   |        |   |   |   | (77,320,072 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Non controlling interest                                               |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO CHINA TEL GROUP, INC.                         |   | $             | (61,079,860 | )      |       | $      | (16,240,212 | )      |   |   |        |   |   | $ | (77,320,072 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss per common share (basic and fully diluted                     |   | $             | (0.82       | )      |       | $      | (0.22       | )      |   |   |        |   |   | $ | (1.04 | ) |
|                                                                   |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Weighted average number of shares outstanding, basic and fully diluted |   |          | 74,428,713  |   |       |   | 74,428,713  |   |   |   |        |   |   |   | 74,428,713 |   |

----

| ·   | Reverse the accrual on interest previously booked towards note payable |
|--------------------|------------------------------------------------------------------------|

| ·   | Properly record research and development expenditures previously recorded as construction in process |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | Correct calculation of the beneficial conversion feature related to convertible debt |
|--------------------|--------------------------------------------------------------------------------------|

|                                                                   |   | As previously |         |   |       |   |        |   |   |   |        |   |
|------------------------------------------------------------------------|--------|---------------|--------------|--------|------------|--------|-------------|--------|--------|--------|-------------|--------|
|                                                                   |   | Reported      |         |   | Adjustment |   |        | Ref    |   |   | As restated |   |
| REVENUE                                                                |   | $             | 457,766      |   |       | $      |        |   |   |   |        |   | $ | 457,766 |   |
| Cost of sales                                                          |   |          | 364,247      |   |       |   |        |   |   |   |        |   |   | 364,247 |   |
|   Gross profit                                               |   |          | 93,519       |   |       |   | -           |   |   |   |        |   |   |   | 93,519 |   |
|                                                                   |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OPERATING EXPENSES:                                                    |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Selling, general and administrative                                    |   |          | 33,023,427   |   |       |   |        |   |   |   |        |   |   |   | 33,023,427 |   |
| Depreciation and amortization                                          |   |          | 58,880       |   |       |   |        |   |   |   |        |   |   |   | 58,880 |   |
| Research and development                                               |   |          | 17,572,311   |   |       |   | 44,012,899  |   |   |   | c           |   |   |   | 61,585,210 |   |
|   Total operating expenses                                   |   |          | 50,654,618   |   |       |   | 44,012,899  |   |   |   |        |   |   |   | 94,667,517 |   |
|                                                                   |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss from operations                                               |   |          | (50,561,099  | )      |       |   | (44,012,899 | )      |   |   |        |   |   |   | (94,573,998 | ) |
|                                                                   |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| OTHER INCOME (EXPENSES):                                               |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Other income (expense)                                                 |   |          | (36,907      | )      |       |   |        |   |   |   |        |   |   |   | (36,907 | ) |
| Gain on foreign currency transaction                                   |   |          | 25,967       |   |       |   |        |   |   |   |        |   |   |   | 25,967 |   |
| Loss on investments, related party                                     |   |          | (6,636,410   | )      |       |   |        |   |   |   |        |   |   |   | (6,636,410 | ) |
| Gain on change in fair value of debt derivative                        |   |          | 9,938,836    |   |       |   |        |   |   |   |        |   |   |   | 9,938,836 |   |
| Interest expense                                                       |   |          | (80,330,374  | )      |       |   | 36,304,020  |   |   |   | b,d         |   |   |   | (44,026,354 | ) |
| Net loss before provision for income taxes                             |   |          | (127,599,987 | )      |       |   | (7,708,879  | )      |   |   |        |   |   |   | (135,308,866 | ) |
| Income taxes                                                           |   |          | -            |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net (loss)                                                             |   |          | (127,599,987 | )      |       |   | (7,708,879  | )      |   |   |        |   |   |   | (135,308,866 | ) |
|                                                                   |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Non controlling interest                                               |   |          | -            |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                   |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO CHINA TEL GROUP, INC.                         |   | $             | (127,599,987 | )      |       | $      | (7,708,879  | )      |   |   |        |   |   | $ | (135,308,866 | ) |
|                                                                   |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net loss per common share (basic and fully diluted                     |   | $             | (1.38        | )      |       | $      | (0.08       | )      |   |   |        |   |   | $ | (1.46 | ) |
|                                                                   |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Weighted average number of shares outstanding, basic and fully diluted |   |          | 92,565,014   |   |       |   | 92,565,014  |   |   |   |        |   |   |   | 92,565,014 |   |

----

| ·   | Reverse the accrual on interest previously booked towards note payable |
|--------------------|------------------------------------------------------------------------|

|                                                                            |   | As previously |        |   |       |   |       |   |   |   |        |   |
|---------------------------------------------------------------------------------|--------|---------------|-------------|--------|------------|--------|------------|--------|--------|--------|-------------|--------|
|                                                                            |   | Reported      |        |   | Adjustment |   |       | Ref    |   |   | As restated |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                           |   |          |        |   |       |   |       |   |   |   |        |   |
| Net loss                                                                        |   | $             | (34,870,307 | )      |       |   | 8,531,333  |   |   |   | b           |   |   |   | (26,338,974 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |   |          |        |   |       |   |       |   |   |   |        |   |   |   | - |   |
| Depreciation and amortization                                                   |   |          | 58,880      |   |       |   |       |   |   |   |        |   |   |   | 58,880 |   |
| Non controlling interest                                                        |   |          | -           |   |       |   |       |   |   |   |        |   |   |   | - |   |
| Amortization of financing costs                                                 |   |          | 2,614,695   |   |       |   |       |   |   |   |        |   |   |   | 2,614,695 |   |
| Accretion of convertible debt                                                   |   |          | 10,998,175  |   |       |   |       |   |   |   |        |   |   |   | 10,998,175 |   |
| Gain on change in fair value of debt derivative                                 |   |          | (22,021,336 | )      |       |   |       |   |   |   |        |   |   |   | (22,021,336 | ) |
| Common stock issued in exchange for services                                    |   |          | 20,653,684  |   |       |   |       |   |   |   |        |   |   |   | 20,653,684 |   |
| (Increase) decrease in:                                                         |   |          |        |   |       |   |       |   |   |   |        |   |   |   | - |   |
| Accounts receivable                                                             |   |          | 60,549      |   |       |   |       |   |   |   |        |   |   |   | 60,549 |   |
| Inventory                                                                       |   |          | (3,881      | )      |       |   |       |   |   |   |        |   |   |   | (3,881 | ) |
| Note receivable                                                                 |   |          | 124,107     |   |       |   |       |   |   |   |        |   |   |   | 124,107 |   |
| Prepaid expenses                                                                |   |          | (27,110     | )      |       |   |       |   |   |   |        |   |   |   | (27,110 | ) |
| Increase (decrease) in:                                                         |   |          |        |   |       |   |       |   |   |   |        |   |   |   | - |   |
| Accounts payable and accrued liabilities                                        |   |          | 21,452,838  |   |       |   | (8,531,333 | )      |   |   | b           |   |   |   | 12,921,505 |   |
| Unearned revenue                                                                |   |          | (11,810     | )      |       |   | -          |   |   |   |        |   |   |   | (11,810 | ) |
| Net cash used in operating activities                                           |   |          | (971,516    | )      |       |   | -          |   |   |   |        |   |   |   | (971,516 | ) |
|                                                                            |   |          |        |   |       |   |       |   |   |   |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                           |   |          |        |   |       |   |       |   |   |   |        |   |   |   |   |   |
| Cash from acquisition of Perusat S.A.                                           |   |          | 19,419      |   |       |   |       |   |   |   |        |   |   |   | 19,419 |   |
| Proceeds received in connection with reverse merger                             |   |          | -           |   |       |   |       |   |   |   |        |   |   |   | - |   |
| Investment in Chinacomm                                                         |   |          | -           |   |       |   |       |   |   |   |        |   |   |   | - |   |
| Net cash provided by (used in) investing activities                             |   |          | 19,419      |   |       |   | -          |   |   |   |        |   |   |   | 19,419 |   |
|                                                                            |   |          |        |   |       |   |       |   |   |   |        |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                           |   |          |        |   |       |   |       |   |   |   |        |   |   |   |   |   |
| Proceeds from advances from shareholders                                        |   |          | 231,471     |   |       |   |       |   |   |   |        |   |   |   | 231,471 |   |
| Payments made to notes payable                                                  |   |          | (41,902     | )      |       |   |       |   |   |   |        |   |   |   | (41,902 | ) |
| Proceeds from notes payable, related party                                      |   |          | 775,000     |   |       |   |       |   |   |   |        |   |   |   | 775,000 |   |
| Net cash provided by financing activities                                       |   |          | 964,569     |   |       |   | -          |   |   |   |        |   |   |   | 964,569 |   |
|                                                                            |   |          |        |   |       |   |       |   |   |   |        |   |   |   |   |   |
| Effect of currency rate change on cash                                          |   |          | (929        | )      |       |   | -          |   |   |   |        |   |   |   | (929 | ) |
|                                                                            |   |          |        |   |       |   |       |   |   |   |        |   |   |   |   |   |
| Net increase in cash and cash equivalents                                       |   |          | 11,543      |   |       |   | -          |   |   |   |        |   |   |   | 11,543 |   |
|                                                                            |   |          |        |   |       |   |       |   |   |   |        |   |   |   |   |   |
| Cash and cash equivalents, beginning of the period                              |   |          | 6,578       |   |       |   | -          |   |   |   |        |   |   |   | 6,578 |   |
| Cash and cash equivalents, end of the period                                    |   | $             | 18,121      |   |       | $      | -          |   |   |   |        |   |   | $ | 18,121 |   |

----

| ·   | Properly record research and development expenditures as a current period expense |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Correct calculation of the beneficial conversion feature related to convertible debt |
|--------------------|--------------------------------------------------------------------------------------|

|                                                                                     |   | As previously |        |   |       |   |        |   |   |   |        |   |
|------------------------------------------------------------------------------------------|--------|---------------|-------------|--------|------------|--------|-------------|--------|--------|--------|-------------|--------|
|                                                                                     |   | Reported      |        |   | Adjustment |   |        | Ref    |   |   | As restated |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   |          |        |   |       |   |        |   |   |   |        |   |
| Net loss                                                                                 |   | $             | (61,079,860 | )      |       |   | (16,240,212 | )      |   |   | c,d         |   |   |   | (77,320,072 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities:          |   |          |        |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Accretion of convertible debt                                                            |   |          | 8,427,330   |   |       |   | (8,427,330  | )      |   |   | d           |   |   |   | - |   |
| Construction in progress                                                                 |   |          | (44,012,899 | )      |       |   | 44,012,899  |   |   |   | c           |   |   |   | - |   |
| Beneficial conversion feature in conjunction with the issuance of convertible debentures |   |          | 46,406,344  |   |       |   | (19,345,357 | )      |   |   | d           |   |   |   | 27,060,987 |   |
| Accounts payable and accrued liabilities                                                 |   |          | 27,358,464  |   |       |   |        |   |   |   |        |   |   |   | 27,358,464 |   |
| Net cash used in operating activities                                                    |   |          | (22,900,621 | )      |       |   | -           |   |   |   |        |   |   |   | (22,900,621 | ) |
|                                                                                     |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Cash from acquisition of Perusat S.A.                                                    |   |          |        |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Investment in Chinacomm                                                                  |   |          | (5,000,000  | )      |       |   | -           |   |   |   |        |   |   |   | (5,000,000 | ) |
| Net cash provided by (used in) investing activities                                      |   |          | (5,000,000  | )      |       |   | -           |   |   |   |        |   |   |   | (5,000,000 | ) |
|                                                                                     |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net proceeds from issuance of convertible debentures                                     |   |          | 28,198,938  |   |       |   |        |   |   |   |        |   |   |   | 28,198,938 |   |
| Net cash provided by financing activities                                                |   |          | 28,198,938  |   |       |   | -           |   |   |   |        |   |   |   | 28,198,938 |   |
|                                                                                     |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Effect of currency rate change on cash                                                   |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
|                                                                                     |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net increase in cash and cash equivalents                                                |   |          | 298,317     |   |       |   | -           |   |   |   |        |   |   |   | 298,317 |   |
|                                                                                     |   |          |        |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Cash and cash equivalents, beginning of the period                                       |   |          | -           |   |       |   | -           |   |   |   |        |   |   |   | - |   |
| Cash and cash equivalents, end of the period                                             |   | $             | 298,317     |   |       | $      | -           |   |   |   |        |   |   | $ | 298,317 |   |

----

| ·   | Reverse the accrual on interest previously booked towards note payable |
|--------------------|------------------------------------------------------------------------|

| ·   | Properly record research and development expenditures previously recorded as construction in process |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | Correct calculation of the beneficial conversion feature related to convertible debt |
|--------------------|--------------------------------------------------------------------------------------|

|                                                                                     |   | As previously |         |   |       |   |        |   |   |   |        |   |
|------------------------------------------------------------------------------------------|--------|---------------|--------------|--------|------------|--------|-------------|--------|--------|--------|-------------|--------|
|                                                                                     |   | Reported      |         |   | Adjustment |   |        | Ref    |   |   | As restated |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   |          |         |   |       |   |        |   |   |   |        |   |
| Net loss                                                                                 |   | $             | (136,131,320 | )      |       |   | (7,708,879  | )      |   |   | b,c,d       |   |   |   | (143,840,199 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities:          |   |          |         |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Depreciation and amortization                                                            |   |          | 58,880       |   |       |   |        |   |   |   |        |   |   |   | 58,880 |   |
| Amortization of financing costs                                                          |   |          | 3,000,883    |   |       |   |        |   |   |   |        |   |   |   | 3,000,883 |   |
| Accretion of convertible debt                                                            |   |          | 20,940,588   |   |       |   | (8,427,330  | )      |   |   | d           |   |   |   | 12,513,258 |   |
| Gain on change in fair value of debt derivative                                          |   |          | (9,938,836   | )      |       |   |        |   |   |   |        |   |   |   | (9,938,836 | ) |
| Common stock issued for services                                                         |   |          | 20,653,684   |   |       |   |        |   |   |   |        |   |   |   | 20,653,684 |   |
| Construction in progress                                                                 |   |          | (44,012,899  | )      |       |   | 44,012,899  |   |   |   |  c     |   |   |   | - |   |
| Beneficial conversion feature in conjunction with the issuance of convertible debentures |   |          | 46,406,344   |   |       |   | (19,345,357 | )      |   |   |  d     |   |   |   | 27,060,987 |   |
| (Increase) decrease in:                                                                  |   |          |         |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Accounts receivable                                                                      |   |          | 60,549       |   |       |   |        |   |   |   |        |   |   |   | 60,549 |   |
| Inventory                                                                                |   |          | (3,881       | )      |       |   |        |   |   |   |        |   |   |   | (3,881 | ) |
| Note receivable                                                                          |   |          | 124,107      |   |       |   |        |   |   |   |        |   |   |   | 124,107 |   |
| Prepaid expenses                                                                         |   |          | (27,072      | )      |       |   |        |   |   |   |        |   |   |   | (27,072 | ) |
| Increase (decrease) in:                                                                  |   |          |         |   |       |   |        |   |   |   |        |   |   |   | - |   |
| Accounts payable and accrued liabilities                                                 |   |          | 74,267,470   |   |       |   | (8,531,333  | )      |   |   | b           |   |   |   | 65,736,137 |   |
| Unearned revenue                                                                         |   |          | (11,810      | )      |       |   | -           |   |   |   |        |   |   |   | (11,810 | ) |
| Net cash used in operating activities                                                    |   |          | (24,613,313  | )      |       |   | -           |   |   |   |        |   |   |   | (24,613,313 | ) |
|                                                                                     |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Cash from acquisition of Perusat S.A.                                                    |   |          | 19,419       |   |       |   |        |   |   |   |        |   |   |   | 19,419 |   |
| Proceeds received in connection with reverse merger                                      |   |          | 55,404       |   |       |   |        |   |   |   |        |   |   |   | 55,404 |   |
| Investment in Chinacomm                                                                  |   |          | (5,000,000   | )      |       |   | -           |   |   |   |        |   |   |   | (5,000,000 | ) |
| Net cash provided by (used in) investing activities                                      |   |          | (4,925,177   | )      |       |   | -           |   |   |   |        |   |   |   | (4,925,177 | ) |
|                                                                                     |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Proceeds from advances from shareholders                                                 |   |          | 231,471      |   |       |   |        |   |   |   |        |   |   |   | 231,471 |   |
| Payments made to notes payable                                                           |   |          | (41,902      | )      |       |   |        |   |   |   |        |   |   |   | (41,902 | ) |
| Proceeds from notes payable, related party                                               |   |          | 775,000      |   |       |   |        |   |   |   |        |   |   |   | 775,000 |   |
| Net proceeds from issuance of convertible debentures                                     |   |          | 28,592,971   |   |       |   |        |   |   |   |        |   |   |   | 28,592,971 |   |
| Net cash provided by financing activities                                                |   |          | 29,557,540   |   |       |   | -           |   |   |   |        |   |   |   | 29,557,540 |   |
|                                                                                     |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Effect of currency rate change on cash                                                   |   |          | (929         | )      |       |   | -           |   |   |   |        |   |   |   | (929 | ) |
|                                                                                     |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Net increase in cash and cash equivalents                                                |   |          | 18,121       |   |       |   | -           |   |   |   |        |   |   |   | 18,121 |   |
|                                                                                     |   |          |         |   |       |   |        |   |   |   |        |   |   |   |   |   |
| Cash and cash equivalents, beginning of the period                                       |   |          | -            |   |       |   | -           |   |   |   |        |   |   |   | - |   |
| Cash and cash equivalents, end of the period                                             |   | $             | 18,121       |   |       | $      | -           |   |   |   |        |   |   | $ | 18,121 |   |

| (a)   | Reverse recording of option to purchase additional interest in ChinaComm Cayman as note payable |
|-----------------|-------------------------------------------------------------------------------------------------|

| (b)   | Reverse recording of accrued interest on option to purchase additional interest in ChinaComm Cayman |
|-----------------|-----------------------------------------------------------------------------------------------------|

| (c)   | Properly charge to current period operations research and development costs |
|-----------------|-----------------------------------------------------------------------------|

| (d)   | Correct determination of beneficial conversion feature relating to convertible debt. |
|-----------------|--------------------------------------------------------------------------------------|

----

----

|   | ● | Statements relating to the Company’s  future business and financial performance; |
|--------|---------|--------------------------------------------------------------------------------------------------|

|   | ● | The Company’s  competitive position; |
|--------|---------|------------------------------------------------------|

|   | ● | Growth of the telecommunications industry in China and Latin America; and |
|--------|---------|---------------------------------------------------------------------------|

|   | ● | Other material future developments that you may take into consideration. |
|--------|---------|--------------------------------------------------------------------------|

|   | ● | Competition in the industry in which we do business; |
|--------|---------|------------------------------------------------------|

|   | ● | Legislation or regulatory environments; |
|--------|---------|-----------------------------------------|

|   | ● | Requirements or changes adversely affecting the businesses in which we are engaged; and |
|--------|---------|-----------------------------------------------------------------------------------------|

|   | ● | General economic conditions. |
|--------|---------|------------------------------|

----

----

----

----

| September 30, 2009 |    |   | September 30, 2008 |   |
|--------------------|---------|--------|--------------------|--------|
| $                  | 258,528 |   |               | $      | - |   |

| September 30, 2009 |    |   | September 30, 2008 |   |
|--------------------|---------|--------|--------------------|--------|
| $                  | 235,816 |   |               | $      | - |   |

| September 30, 2009 |       |   | September 30, 2008 |   |
|--------------------|------------|--------|--------------------|--------|
| $                  | 18,801,147 |   |               | $      | 1,943,302 |   |

----

| September 30, 2009 |   |   | September 30, 2008 |   |
|--------------------|--------|--------|--------------------|--------|
| $                  | 30,000 |   |               | $      | 11,016,074 |   |

| September 30, 2009 |       |   | September 30, 2008 |   |
|--------------------|------------|--------|--------------------|--------|
| $                  | 11,997,895 |   |               | $      | - |   |

| September 30, 2009 |      |   | September 30, 2008 |   |
|--------------------|-----------|--------|--------------------|--------|
| $                  | 5,436,200 |   |               | $      | 2,213,106 |   |

| September 30, 2009 |       |   | September 30, 2008 |   |
|--------------------|------------|--------|------------------------------|--------|
| $                  | 12,298,369 |   |                         | $      | 15,172,482 |   |

| September 30, 2009 |    |   | September 30, 2008 |   |
|--------------------|---------|--------|--------------------|--------|
| $                  | 457,766 |   |               | $      | - |   |

----

| September 30, 2009 |    |   | September 30, 2008 |   |
|--------------------|---------|--------|--------------------|--------|
| $                  | 364,247 |   |               | $      | - |   |

| September 30, 2009 |       |   | September 30, 2008 |   |
|--------------------|------------|--------|--------------------|--------|
| $                  | 25,205,098 |   |               | $      | 5,027,872 |   |

| September 30, 2009 |      |   | September 30, 2008 |   |
|--------------------|-----------|--------|--------------------|--------|
| $                  | 9,757,038 |   |               | $      | 44,012,899 |   |

| September 30, 2009 |       |   | September 30, 2008 |   |
|--------------------|------------|--------|--------------------|--------|
| $                  | 22,021,336 |   |               | $      | - |   |

| September 30, 2009 |       |   | September 30, 2008 |   |
|--------------------|------------|--------|--------------------|--------|
| $                  | 13,421,873 |   |               | $      | 28,279,301 |   |

| September 30, 2009 |       |   | September 30, 2008 |   |
|--------------------|------------|--------|--------------------|--------|
| $                  | 26,338,974 |   |               | $      | 77,320,072 |   |

----

----

----

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| 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|----------------------------------------------------------------------------------------------------|
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2 | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

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| Dated:  April 15, 2010  | CHINA TEL GROUP, INC. |                    |
|-----------------------------------|-----------------------|-------------------------|
|                              |                  |                    |   |
|                              | By:                   | /s/ George Alvarez |   |
|                              |                  | George Alvarez          |   |
|                              |                  | Chief Executive Officer |   |

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