U. S. Securities and Exchange Commission

Washington, D. C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2010
	For the quarterly period ended March 31, 2011
[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____ to _____

For the transition period from _____ to _____

Commission File No. 0-25707

SMOOTH GLOBAL (CHINA) HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada	91-1948355
(State or Other Jurisdiction of	(I.R.S. Employer I.D. No.)
incorporation or organization)

Room 618, +17 Anyuan Road, Chaoyang District, Beijing, P.R. China 100029

(Address of Principal Executive Offices)

Issuer's Telephone Number: 86-10-6498-7788

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

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

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

Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer ___ ~~Small~~ Smaller reporting company X

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

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:

~~November~~May 1823, ~~2010~~2011

Common Stock: 38,381,375 shares

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
INDEX
	PAGE
CONSOLIDATED BALANCE SHEETS	2
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME	3
CONSOLIDATED STATEMENTS OF CASH FLOWS	4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	5-2219

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
	September 30,			December 31,
	March 31,			December 31,
	2010			2009
	2011			2010
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	6355,~~052~~148		$	9095,~~764~~261
Prepaid expense (Note 6)		7,465			7,313
Notes receivable		41,094			75,621
Total current assets		70,517			98,077
Accounts receivable, net (Note 4)		1,360,656			1,176,039
Property, Plant, and Equipment, net (Note 7)		63,863			130,687
Advance to suppliers		16,243			21,943
Contract Security Deposit (Note 8)		234,395			229,626
Inventories (Note 5)		371,160			312,996
Total Assets	$	368,775		$	458,390
Total current assets		1,844,301			1,681,860
Property, Plant, and Equipment, net (Note 6)		98,087			102,770
Intangible Asset-Patent, net		696			-
Lease Security Deposit		15,935			15,835
Total Assets	$	1,959,019		$	1,800,465
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued expenses (Note 9)		26,802			54,838
Accounts payable		562,986			517,255
Taxes payable		139			704
Accrued expenses		162,532			88,640
Due to officers (Note 11)		180,713			113,704
Advance from customers		83,136			39,035
Total Current Liabilities		207,654			169,246
VAT and other taxes payable		419,753			413,334
Commitments and Contingencies (Note 14)		-			-
Corporate taxes payable		165,775			165,116
Due to a related party (Note 7)		112,032			106,807
Total Current Liabilities		1,506,214			1,330,187
Commitments and Contingencies (Note 9)		-			-
Stockholders' Equity:
Common stock, $0.001 par value, 200,000,000 shares authorized;
38,381,375 shares issued and outstanding as of
September 30, 2010 and December 31, 2009		38,381			38,381
March 31, 2011 and December 31, 2010		38,381			38,381
Additional paid-in capital		~~799~~(92,~~255~~631	)		~~799~~(92,~~255~~631	)
Statutory reserves		236,875			236,875
Retained earnings		451,120			471,545
Accumulated deficit		(1,082,657	)		(949,252	)
Accumulated other comprehensive income		55,935			52,983
Accumulated other comprehensive income		169,267			163,885
Stockholders' Equity		452,805			470,278
Stockholders' Equity		161,121			289,144
Total Liabilities and Stockholders' Equity	$	1,959,019		$	1,800,465
Total Liabilities and Stockholders' Equity	$	368,775		$	458,390

See Notes to Consolidated Financial Statements

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
		For the Three Months Ended	~~For the Three Months Ended~~							~~For the Nine Months Ended~~
			September 30,							September 30,
		March 31,
			2010				2009			2010			2009
		2011				2010
		(unaudited)	~~(unaudited)~~			(unaudited)	~~(unaudited)~~			~~(unaudited)~~			~~(unaudited)~~
Revenues
(a) GRT public telephone service			$	-			$	-		$	-		$	1,600
Sales		$	728,767			$	806,952
(b) GRT VoIP call time distribution				1,911				16,595			20,986			57,647
Costs of Sales			650,914				635,531
	Total Revenue			1,911				16,595			20,986			59,247
Gross Profit			77,853				171,421
Costs of Revenue
Operating Expenses
(a) GRT public telephone service				-				1,219			-			5,115
Selling expenses			46,410				8,591
(b) GRT VoIP call time distribution				1,341				11,694			14,392			39,266
Payroll			16,384				10,161
	Total Costs of Revenue			1,341				12,913			14,392			44,381
Pension and employee benefit			22,408				2,818
Gross Profit				570				3,682			6,594			14,866
Depreciation expenses			3,189				774
Operating Expenses
Office rent			4,553				2,063
Payroll and employee benefit				7,694				7,028			22,194			21,599
Office expenses			6,419				2,078
Depreciation expenses				18,126				21,655			68,328			65,025
Total Operating Expenses			99,363				26,485
Office expenses				5,171				9,323			27,234			35,043
Income (Loss) from Operations			(21,510	)			144,936
Professional fees				4,643				(1,691	)		20,484			15,983
Other Income
Consultant fees (Note 10)				-				7,333			-			29,333
Interest income			47				27
Travel and entertainment				557				8,672			1,134			11,587
Other income			1,038				-
Other general and administrative expenses				403				269			770			2,141
Total other income			1,085				27
Total Operating Expenses				36,594				52,589			140,144			180,711
Income (Loss) before provision
Income (Loss) from Operations				(36,024	)			(48,907	)		(133,550	)		(165,845	)
for Income Tax			(20,425	)			144,963
Other Income
Provision for Income Tax			-				(34,426	)
Interest income				48				3			145			42
Net Income (Loss)			(20,425	)			110,537
Total other income				48				3			145			42
Other Comprehensive Income (Loss)
Income (Loss) before provision
Effects of Foreign Currency Conversion			2,952				5
for Income Tax				(35,976	)			(48,904	)		(133,405	)		(165,803	)
Comprehensive Income (Loss)		$	(17,473	)		$	110,542
Provision for Income Tax				-				-			-			-
Basic and fully diluted earnings (loss) per share		$	(0.00	)		$	0.01
Net Income (Loss)				(35,976	)			(48,904	)		(133,405	)		(165,803	)
Weighted average shares outstanding			38,381,375				20,000,000
Other Comprehensive Income (Loss)
Effects of Foreign Currency Conversion				4,333				(7,490	)		5,382			(6,670	)
Comprehensive Income (Loss)			$	(31,643	)		$	(56,394	)	$	(128,023	)	$	(172,473	)
Basic and fully diluted earnings (loss) per share			$	(0.00	)		$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted average shares outstanding				38,381,375				38,381,375			38,381,375			38,381,375

See Notes to Consolidated Financial Statements

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Nine Months Ended
	For the Three Months Ended
	September 30,
	March 31,
	2010			2009
	2011			2010
	(unaudited)			(unaudited)
Operating Activities
Net income (loss)	$	(~~133~~20,~~405~~425	)	$	~~(165~~110,~~803~~537	)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation		683,~~328~~189			~~65,025~~774
Deferred consultant compensation		-			29,333
Changes in operating assets and liabilities:
(Increase)/Decrease in prepaid expenses		-			9,061
(Increase)/Decrease in accounts receivable		(176,634	)		(247,425	)
Increase/(Decrease) in accounts payable and accrued expenses		(28,045	)		(20,731	)
(Increase)/notes receivable		34,904			(65,828	)
Increase/(Decrease) in deferred revenue		-			(1,682	)
(Increase)/Decrease in advance to suppliers		5,823			(77,586	)
Increase/(Decrease) in taxes payable		(565	)		939
(Increase)/Decrease in inventories		(56,013	)		(223,032	)
Net cash provided (used) by operating activities		(93,687	)		(83,858	)
(Increase)/Decrease in contract security deposit		-			(14,629	)
Increase/(Decrease) in accounts payable		42,324			313,562
Increase/(Decrease) in accrued expenses		73,307			-
Increase/(Decrease) in advance from customers		43,532			71,047
Increase/(Decrease) in VAT and other taxes payable		3,784			107,524
Increase/(Decrease) in corporate taxes payable		(388	)		34,425
Net cash provided (used) by operating activities		(46,597	)		9,369
Investing Activities
Purchase of fixed assets		-			(1,330	)
Addition to intangible assets-Patent		(694	)		-
Net cash provided (used) by investing activities		-			(1,330	)
Purchase of fixed assets		-			(6,330	)
Net cash provided (used) by investing activities		(694	)		(6,330	)
Financing Activities
Loans from shareholders		66,991			76,669
Proceeds from related parties		4,534			-
Net cash provided (used) by financing activities		664,~~991~~534			~~76,669~~-
Increase (decrease) in cash		(2642,~~696~~757	)		(83,~~519~~039	)
Effects of exchange rates on cash		(12,~~016~~644	)		~~(7,702~~4	)
Cash at beginning of the period		9095,~~764~~261			3335,~~415~~447
Cash at end of the period	$	6355,~~052~~148		$	1738,~~194~~490
Supplemental Disclosures of Cash Flow Information:
Cash paid (received) during year for:
Interest	$	-		$	-
Income taxes	$	-		$	-

See Notes to Consolidated Financial Statements

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1-	BASIS OF PRESENTATION
	The consolidated financial statements of Smooth Global (China) Holdings, Inc. and subsidiaries ( the "Company"), included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission. In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company as included in the Company's Form 10-K for the year ended December 31, 2009.
Note 2-	ORGANIZATION AND OPERATIONS
	Organization and Business Background
	The Bralorne Mining Company ("Bralorne") was incorporated under the laws of the State of Nevada on December 2, 1998 with authorized common stock of 200,000,000 shares at $0.001 par value. Currently, the Company principally engages in the business to provide telecommunication services in the People's Republic of China ("PRC'), through its wholly-owned subsidiaries, Gold Profit (Asia) Group Limited ("Gold Profit") and Smooth Global Services Limited ("Smooth Global"). On July 31, 2007, Bralorne changed its name to Smooth Global (China) Holdings, Inc. ("Smooth Global (China)" or the "Company").
	On November 2, 2006, Bralorne entered into a Share Exchange Agreement (“the Agreement") with the sole shareholder of Gold Profit to exchange 1,333,334 shares (40,000,000 shares prior to reverse stock split on July 31, 2007) of common stock of Bralorne for 100% of the outstanding stock of Gold Profit. Upon the execution of the Agreement, Gold Profit became a wholly-owned subsidiary of Bralorne.
	Gold Profit was incorporated as a limited liability company in the British Virgin Islands (“BVI”) under the BVI Business Companies Act on July 28, 2006, for the purpose of seeking and consummating a merger or acquisition with a business entity organized as a private corporation, partnership, or sole proprietorship.
	On September 8, 2006, Gold Profit entered into a Share Purchase Agreement with all the shareholders of Beijing Quan Tong Chang Information Service Limited a/k/a Beijing Smooth Global Information Services Ltd. (”QTC') to acquire 100% of QTC's registered capital for RMB500,000 (equivalent to US$60,386). Upon completion of this transaction, QTC became a wholly-owned subsidiary of Gold Profit.
	Under the Company Law of PRC, QTC was incorporated in Beijing City, PRC on August 2, 2003 with a registered capital of RMB500,000 (equivalent to US$60,386). QTC is engaged in the business of providing telecommunication services in PRC.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1-	BASIS OF PRESENTATION

	The accompanying unaudited financial statements of Smooth Global (China) Holdings, Inc. and subsidiaries, (the “Company” or "Smooth Global (China)") were prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Management of the Company (“Management”) believes that the following disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited financial statements and the notes for the year ended December 31, 2010.

	These unaudited financial statements reflect all adjustments, consisting only of normal recurring adjustments that, in the opinion of Management, are necessary to present fairly the financial position and results of operations of the Company for the periods presented. Operating results for the three months ended March 31, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

Note 2-	ORGANIZATION AND OPERATIONS

	Smooth Global (China) Holdings, Inc. ("Smooth Global (China)" or the "Company") was incorporated under the laws of the State of Nevada on December 2, 1998 with authorized common stock of 200,000,000 shares at $0.001 par value. Currently, the Company principally engages in the business of design, manufacture and distribution of rechargeable polymer lithium-ion batteries in the People's Republic of China ("PRC'), through its wholly-owned subsidiaries, Smooth Global Services Limited ("Smooth Global"), a limited liability company incorporated on January 25, 2006 in the British Virgin Island ("BVI") .

	On June 28, 2007, Smooth Global established a wholly owned subsidiary, Smooth Global (Beijing) Telecom Science Limited ("Beijing Telecom") in the Beijing City, PRC. Beijing Telecom was incorporated under the Company Law of PRC as a limited liability company with registered capital of $100,000. Beijing Telecom was formed for the purpose of seeking and consummating a merger or acquisition with a business entity organized in PRC.

	On December 16, 2010, Beijing Telecom finished the acquisition of 100% of the registered capital of Beijing Yupeng Hengli Technology Co., Ltd. ("Yupeng Hengli"). In connection with the acquisition, the Company issued 20,000,000 shares of its treasury stock to the two prior registered owners of Yupeng hengli, Ms. Wang, Xiaoping and Mr. Zhu, Chenyu, and their assignees, all of whom are PRC citizens. Upon completion of this transaction, Yupeng Hengli became a wholly-owned subsidiary of Beijing Telecom.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2-	ORGANIZATION AND OPERATIONS (continued)
	Organization and Business Background (continued)
	On October 24, 2007 Smooth Global (China) completed the acquisition of all the registered capital stock of Smooth Global. In exchange for the capital stock of Smooth Global, Smooth Global (China) issued 33,000,000 shares of its common stock to the prior owners of Smooth Global. The prior registered owners were Christina Nelson and Shannon Lee Alsop. They held the shares, however, as nominees for nine residents of PRC. Accordingly, upon closing of the acquisition, Ms. Nelson and Ms. Alsop assigned the 33,000,000 shares to those nine beneficiaries. 20,000,000 of the shares were assigned to Ms. Zheng Shuying. Ms. Zheng is the Chief Executive Officer of Smooth Global (China). Also, Smooth Global became a wholly-owned subsidiary of Smooth Global (China) upon completion of the acquisition.
	Smooth Global was incorporated on January 25, 2006 in the British Virgin Island ("BVI") under the BVI Business Companies Act, 2004, as a BVI Business Company. The Company was formed for the purpose of seeking and consummating a merger or acquisition with a business entity organized as a private corporation, partnership, or sole proprietorship.
	On June 28, 2007, Smooth Global established a wholly owned subsidiary, Smooth Global (Beijing) Telecom Science Limited ("Beijing Telecom") in the Beijing City, PRC. Beijing Telecom was incorporated under the Company Law of PRC as a limited liability company with registered capital of $100,000. Beijing Telecom was formed for the purpose of seeking and consummating a merger or acquisition with a business entity organized in PRC and engaged in the business of providing telecommunication services.
	On September 20, 2007, Ms. Yianfang Jin and Ms. Yianxia Wang (collectively the "Trustees"), both of whom are citizens of PRC and own a 100% equity ownership interest in Beijing GRT Information Services Limited ( "GRT" ), executed Trust and Indemnity Agreements ("Agreements") with Beijing Telecom, pursuant to which the Trustees assigned to Beijing Telecom all of the beneficial interest in the Trustee's equity ownership interest in GRT. The Agreements provided for effective control of GRT to be transferred to Beijing Telecom at September 20, 2007.
	Through the Agreements described in the preceding paragraph Beijing Telecom is deemed a 100% beneficiary of GRT resulting in GRT being deemed a subsidiary of Beijing Telecom under the requirements of FASB ASC 810-10 "Consolidation". Accordingly, the consolidated financial statements of Smooth Global and its wholly owned subsidiary, Beijing Telecom, will be prepared by including the financial statements of GRT through September 20, 2007 and thereafter.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2-	ORGANIZATION AND OPERATIONS (continued)

	The acquisition of Yupeng Hengli resulted in a capital transaction accounted for as a reverse merger. The transaction was treated for accounting purposes as a recapitalization of the accounting acquirer (Yupeng Hengli) and a reorganization of the accounting acquiree (Beijing Telecom). Accordingly, the historical financial statements presented prior to the merger are the historical financial statements of Yupeng Hengli.

	Under the Company Law of PRC, Yupeng Hengli was incorporated on December 23, 2008 in Beijing City, PRC , as a limited liability company with a registered capital of RMB 500,000 (equivalent to US$72,948). Yupeng Hengli started its operation with distribution of rechargeable polymer lithium-ion batteries in PRC in 2009. Beginning from January 2010, Beijing Yupeng is engaged in the business of design, manufacture, and distribution of rechargeable polymer lithium-ion batteries in PRC.

	Smooth Global (China) also wholly owns Gold Profit (Asia) Group Limited ("Gold Profit"), a limited liability company incorporated in the BVI on July 28, 2006, which in turn wholly own Beijing Quan Tong Chang Information Service Limited a/k/a Beijing Smooth Global Information Services Ltd. (”QTC”), a limited liability company incorporated in Beijing City, PRC on August 2, 2003. Currently, QTC is engaged to provide business information consultant services.

	Yupeng Hengli and QTC are the two of these affiliated companies that are engaged in business operations. Smooth Global (China), Gold Profit, Smooth Global, and Beijing Telecom are all holding companies, whose business is to hold an equity ownership interest in Yupeng Hengli and QTC. All these affiliated companies are hereafter referred to as the "Company", whose structure is outlined as following:

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2-	ORGANIZATION AND OPERATIONS (continued)
	Organization and Business Background (continued)
	GRT and QTC are the two of these affiliated companies that are engaged in business operations. Smooth Global (China), Gold Profit, Smooth Global, and Beijing Telecom are all holding companies, whose business is to hold an equity ownership interest in QTC and a beneficial interest in GRT. All these affiliated companies are hereafter referred to as the "Company", whose structure is outlined as following:

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Operations (a) GRT Public Telephone Service GRT provides public phone users with access to the network of China Unicom (Beijing) Limited (“CUBJ”) F/K/A China United Telecommunications (Beijing) Corporation Limited, via paid phones installed in outlets located in universities, convenience shops and street corners. These outlets are managed but not necessary owned by GRT. GRT signed non-exclusive distribution agreement with CUBJ to distribute its traditional fixed line call time in Beijing City, PRC. CUBJ is a subsidiary of China Unicom (Hong Kong) Limited ("CUHK") F/A/K China United Telecommunications Corporation Limited. On January 6, 2009, China United Telecommunications Corporation Limited merged with China Netcom (Group) Corporation Limited and changed its name to China Unicom (Hong Kong) Limited. CUHK is one of the largest telecommunications carriers in PRC.

Note 3-	SIGNIFICANT ACCOUNTING POLICIES

	Basis of Consolidation

	The consolidated financial statements include the accounts of the Company and all its majority-owned subsidiaries which require consolidation. Inter-company transactions have been eliminated in consolidation.

	The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). This basis of accounting differs from that used in the statutory accounts of the Company, which are prepared in accordance with the "Accounting Principles of China " ("PRC GAAP"). Certain accounting principles, which are stipulated by US GAAP, are not applicable in the PRC GAAP. The difference between PRC GAAP accounts of the Company and its US GAAP financial statements is immaterial.

	Certain amounts in the prior year's consolidated financial statements and notes have been revised to conform to the current year presentation.

	Subsequent Events

	The Company evaluated subsequent events through the date of issuance of these financial statements. We are not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our financial statements, or all such material events have been fully disclosed.

	Use of Estimates

	The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2-	ORGANIZATION AND OPERATIONS (continued)
	Business Operations (continued)
	(b) GRT VoIP Call Time Distribution
	Beginning from January 2008, GRT provides enterprise phone users and public phone users with access to the network of China Unicom (Shaoxing) Limited (“CUSX”) F/K/A China Netcom (Shaoxing) Corporation Limited and China Unicom (Shanghai) Limited (“CUSH”) F/A/K China Netcom (Shanghai) Corporation Limited, via phones connected to GRT's telecommunication server. Both CUSX and CUGD are subsidiaries of China Unicom (Hong Kong) Limited F/A/K China Netcom (Group) Company Limited. GRT signed non-exclusive distribution agreement with CUSX and CUGD to distribute their Voice Over Internet Protocol (“VoIP”) call time in the PRC.
Note 3-	GOING CONCERN
	As reflected in the accompanying consolidated financial statements, the Company incurred losses of $133,405 for the nine months ended September 30, 2010, and $295,441 for the year ended December 31, 2009. These amounts are significant compared with the Company's shareholders' equity. The revenue for the nine months ended September 30, 2010 dropped by $38,261, or approximately 65%, from the nine months ended September 30, 2009, and the revenue for the year ended December 31, 2009 dropped by $373,818, or approximately 84%, from the year ended December 31, 2008. In addition, the Company had a working capital deficiency of $137,137 and $71,169 at September 30, 2010 and December 31, 2009, respectively. These factors raise substantial doubt about the Company's ability to continue as a going concern. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
	Management has taken the steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursuing additional funding and a potential merger or acquisition candidate and strategic partners, which would enhance stockholders' investment. The Company is also developing new business lines. Management believes that these actions will allow the Company to continue operations through the next fiscal year.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3-	SIGNIFICANT ACCOUNTING POLICIES (continued)

	Foreign Currencies Translation

	The Company maintains its books and accounting records in PRC currency "Renminbi" ("RMB"), which is determined as the functional currency. Transactions denominated in currencies other than RMB are translated into RMB at the exchange rates quoted by the People’s Bank of China (“PBOC”) prevailing at the date of the transactions. Monetary assets and liabilities denominated in currencies other than RMB are translated into RMB using the applicable exchange rates quoted by the PBOC at the balance sheet dates. Exchange differences are included in the statements of changes in owners' equity. Gain and losses resulting from foreign currency transactions are included in operations.

	The Company’s financial statements are translated into the reporting currency, the United States Dollar (“US$”). Assets and liabilities of the Company are translated at the prevailing exchange rate at each reporting period end. Contributed capital accounts are translated using the historical rate of exchange when capital is injected. Income and expense accounts are translated at the average rate of exchange during the reporting period. Translation adjustments resulting from translation of these financial statements are reflected as accumulated other comprehensive income (loss) in the owners’ equity.

	The exchange rates used for foreign currency translation were as follows (USD$1 = RMB):

Period Covered	Balance Sheet Date Rates	Average Rates

Three months ended March 31, 2011	6.57010	6.58940
Three months ended March 31, 2010	6.83610	6.83603
Year ended December 31, 2010	6.61180	6.66103
Year ended December 31, 2009	6.83720	6.84088

	Statement of Cash Flows

	In accordance with ASC 830-230, “Statement of Cash Flows”, cash flows from the Company’s operations is calculated based upon the functional currency. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

	Cash and Cash Equivalents

	Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4-	CONTROL BY PRINCIPAL STOCKHOLDERS
	The chief executive officer owns beneficially and in the aggregate, the majority of the voting power of the Company. Accordingly, the chief executive officer has the ability to control the approval of most corporate actions, including approving significant expenses, increasing the authorized capital stock and the dissolution, merger or sale of the Company's assets.
Note 5-	SIGNIFICANT ACCOUNTING POLICIES
	Basis of Consolidation
	The consolidated financial statements include the accounts of the Company and all its majority-owned subsidiaries which require consolidation. Inter-company transactions have been eliminated in consolidation.
	The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). This basis of accounting differs from that used in the statutory accounts of the Company, which are prepared in accordance with the "Accounting Principles of China " ("PRC GAAP"). Certain accounting principles, which are stipulated by US GAAP, are not applicable in the PRC GAAP. The difference between PRC GAAP accounts of the Company and its US GAAP financial statements is immaterial.
	Certain amounts in the prior year's consolidated financial statements and notes have been revised to conform to the current year presentation.
	Subsequent Events
	The Company evaluated subsequent events through the date of issuance of these financial statements. We are not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our consolidated financial statements.
	Use of Estimates
	The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.
	Revenue Recognition
	The Company recognizes its revenues net of sales taxes and sales-related taxes. In accordance with FASB ASC 605, "Revenue Recognition", the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title and the risks and rewards of ownership have occurred or services have been rendered and accepted, the selling price is fixed or determinable and collectability is reasonably assured.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3-	SIGNIFICANT ACCOUNTING POLICIES (continued)

	Revenue Recognition

	The Company recognizes its revenues net of sales taxes and sales-related taxes. In accordance with FASB ASC 605, "Revenue Recognition", the Company recognizes revenue when the earnings process is complete. This generally occurs when services have been rendered and accepted or products are shipped to unaffiliated customers or picked up by unaffiliated customers in the Company's warehouse, title and risk of loss have been transferred, collectability is reasonably assured and pricing is fixed or determinable. The corresponding shipping and handling costs are included in the selling expenses.

	The Company warrants the product only in the event of defects for one year from the date of shipment. Historically, the Company has not experienced significant defects, and replacements for defects have been minimal. For the three months ended March 31, 2011 and 2010, no such returns and allowances have been recorded. Should returns increase in the future it would be necessary to adjust estimates, in which case recognition of revenues could be delayed. Payments received prior to satisfying the Company’s revenue recognition criteria are recorded as advance from customers.

	Product warranty

	The Company provides product warranties to its customers that all equipment manufactured by it will be free from defects in materials and workmanship under normal use for a period of one year from the date of shipment. The Company's costs and expenses in connection with such warranties has been immaterial and as of March 31, 2011 and December 31, 2010, no product warranty reserve was considered necessary.

	Accounts Receivable

	Accounts receivable are recorded at the invoiced amount and do not bear interest. Any allowance for doubtful accounts is established based on the management’s assessment of the recoverability of accounts and other receivables. Management regularly reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the collectability of accounts receivable and the adequacy of the allowance. In circumstances in which we receive payment for accounts receivable which have previously been written off, we reverse the allowance and bad debt expenses.

	Inventory

	Inventories are stated at the lower of cost, as determined on a weighted average basis, or market. Costs of inventories include purchase and related costs incurred in bringing the products to their present location and condition. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. Management writes down the inventories to market value if they are below cost. Management regularly evaluates the composition of the Company’s inventories to identify slow-moving and obsolete inventories to determine if a valuation allowance is required.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5-	SIGNIFICANT ACCOUNTING POLICIES (continued)
	Revenue Recognition (continued)
	(a) GRT Public Telephone Service
	GRT sets up outlets through CUBJ's network to provide public telephone service to end users. GRT buys call time from CUBJ in advance and then distribute to end users via these outlets. GRT recognizes revenue when the tariff is collected after an end user places a telephone call. GRT records revenue from outlets after netting outlets' operating expenses since such expenses are instable.
	Pursuant to the distribution agreement with CUBJ, GRT is entitled to refund a certain percentage of call time cost and the percentage varies based on the volume of call time which GRT distributes monthly. GRT records these refunds as revenue because GRT has to issue sales invoices to CUBJ for the refunds.
	(b) GRT VoIP Call Time Distribution
	Beginning from January 2008, GRT contracted with CUSX and CUSH for the distribution of their VoIP call time. VoIP call time distribution revenue is generally recognized when the end user makes a call through the phone connected to GRT's telecommunication server.
	Pursuant to the contracts with CUSX and CUSH, GRT pays tariff to the telecommunication carriers in advance and connects its telecommunication server to the carriers' network. Then, GRT distributes the VoIP call time to its customers who connect their phones to GRT’s server. The customers also pay tariff to GRT in advance. Monthly, the telecommunication carriers bill GRT for the VoIP call time that it distributes. In turn, GRT bills its customers for the VoIP call time which the customers consume, based on the records provided by its own server.
	Deferred Revenue
	Payments received prior to satisfying the Company’s revenue recognition criteria are recorded as deferred revenue.
	Cost of Revenue
	(a) GRT Public Telephone Service
	Costs of public telephone service mainly include costs to buy call time from CUBJ.
	(b) GRT VoIP Call Time Distribution
	Costs of VoIP call time distribution principally include the costs of VoIP call time purchased from CUSX and CUSH.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3-	SIGNIFICANT ACCOUNTING POLICIES (continued)

	Property, Plant and Equipment

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

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

	Valuation of Long-Lived assets

	In accordance with Impairment or Disposal of Long-Lived Assets Subsections of ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, long-lived assets, such as property, plant and equipment, and purchased intangible asset subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment of long-lived assets was recognized as of March 31, 2011 and December 31, 2010, respectively.

	Research and Development Costs

	The Company charges research and development costs to expense when incurred in accordance with the FASB ASC 730, “Research and Development”. Research and development costs were immaterial for the three months ended March 31, 2011 and 2010, respectively.

	Advertising Costs

	The Company expenses advertising costs as incurred or the first time the advertising takes place, whichever is earlier, in accordance with the FASB ASC 720-35, “Advertising Costs”. Advertising expenses were included in selling expenses. Advertising expenses were immaterial for the three months ended March 31, 2011 and 2010, respectively.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5-	SIGNIFICANT ACCOUNTING POLICIES (continued)
	Cash and Cash Equivalents
	Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
	Accounts Receivable
	Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Management’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience. The Company reviews its allowance for doubtful accounts on a regular basis. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by industry. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. If actual collections experience changes, revisions to the allowance may be required.
	Concentrations of Credit Risk
	Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-quality institutions. While deposits held with banks are not insurance in PRC, these deposits generally may be redeemed upon demand and therefore bear minimal risk.
	Fair Value of Financial Instruments
	The carrying value of the Company’s financial instruments, which include cash and cash equivalents, accounts receivables and payables, and amounts due from/to shareholders, approximate fair value due to the short maturities of those instruments.
	Impairment of Long-life Assets
	Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3-	SIGNIFICANT ACCOUNTING POLICIES (continued)

	Value-added Tax ("VAT") and other taxes

	Sales revenue represents the invoiced value of goods, net of a value-added tax (VAT). The VAT collected on sales is netted against the taxes paid for purchases of cost of goods sold to determine the amounts payable and refundable. The Company presents VAT on a net basis.

	The Company is subject to various taxes such as City Development Tax, and Education tax to the local government tax authorities. The City Development Tax and Education Tax are generally collected on a certain percentage of VAT.

	Comprehensive Income

	ASC 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as presented in the accompanying statement of changes in shareholders' equity consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

	Segment Reporting

	ASC 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company operated in one business segment for the three months ended March 31, 2011 and 2010, respectively.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5-	SIGNIFICANT ACCOUNTING POLICIES (continued)
	Property and Equipment
	Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Depreciable	Residual
Note 3-	SIGNIFICANT ACCOUNTING POLICIES (continued)
	Life	Value
	Related parties
Network and office equipment	5 years	4%
	For the purposes of these financial statements, parties are considered to be related if one party has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.
Leasehold Improvements	5 years (Lease duration)	0%
	China Contribution Plan
	Full time employees of the PRC entities participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to pay to the local labor bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The relevant local labor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly contribution.
	The Company made the provisions based on the number of qualified employees and the rate and base regulated by the government. However, the Company did not make full monthly contribution to these funds. In the event that any current or former employee files a complaint with the PRC government, the Company may be subject to administrative fines. The Company believes that these fines would be minimal, and accrual for such fines has been made in this regard.
	Statutory Reserves
	Pursuant to the applicable laws in the PRC, PRC entities are required to make appropriations to three non-distributable reserve funds, the statutory surplus reserve, statutory public welfare fund, and discretionary surplus reserve, based on after-tax net earnings as determined in accordance with the PRC GAAP, after offsetting any prior years’ losses. Appropriation to the statutory surplus reserve should be at least 10% of the after-tax net earnings until the reserve is equal to 50% of the Company's registered capital. Appropriation to the statutory public welfare fund is 5% to 10% of the after-tax net earnings. The statutory public welfare fund is established for the purpose of providing employee facilities and other collective benefits to the employees and is non-distributable other than in liquidation. Beginning from January 1, 2006, enterprise is no longer required to make appropriation to the statutory public welfare fund. No appropriations to the discretionary surplus reserve have been made.

Expenditure for maintenance and repairs is expended as incurred. Research and Development Costs The Company charges research and development costs to expense when incurred in accordance with the FASB ASC 730, “Research and Development”. Research and development costs were immaterial for the three and nine months ended September 30, 2010 and 2009, respectively. Advertising Costs The Company expenses advertising costs as incurred or the first time the advertising takes place in accordance with the FASB ASC 720-35, “Advertising Costs”. Advertising expenses were immaterial for the three and nine months ended September 30, 2010 and 2009, respectively. Segment Reporting FASB ASC 820, “Segments Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. Related Parties For the purposes of these financial statements, parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5-	SIGNIFICANT ACCOUNTING POLICIES (continued)
	Foreign Currencies Translation
	The functional currency of the Company is Renminbi (“RMB”). Transactions denominated in currencies other than RMB are translated into RMB at the exchange rates quoted by the People’s Bank of China (“PBOC”) prevailing at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into RMB using the applicable exchange rates quoted by the PBOC at the balance sheet dates. Exchange differences are included in the statements of changes in shareholders' equity. Gain and losses resulting from foreign currency transactions are included in operations.
	The Company’s financial statements are translated into the reporting currency, the United States Dollar (“US$”), using exchange rates in effect at each year end for assets and liabilities and average exchange rates during each reporting year for the consolidated statements of operations. Contributed capital accounts are translated using the historical rate of exchange when capital is injected. Translation adjustments resulting from translation of these consolidated financial statements are reflected as accumulated other comprehensive income in the shareholders’ equity.
	Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss) in the consolidated statement of changes in shareholders’ equity and amounted to $169,267 and $163,885 as of September 30, 2010 and December 31, 2009, respectively. The balance sheet amounts with the exception of equity at September 30, 2010 were translated at 6.698 RMB to $1.00 USD as compared to 6.837 RMB at December 31, 2009. The equity accounts were stated at their historical rate. The average translation rates applied to income statement accounts for the nine months ended September 30, 2010 and 2009 were 6.816 RMB and 6.842 RMB, respectively.
	Statement of Cash Flows
	In accordance with FASB ASC 830-230, “Statement of Cash Flows”, cash flows from the Company’s operations is calculated based upon the functional currency. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.
	Comprehensive Income
	FASB ASC 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as presented in the accompanying statement of changes in shareholders' equity consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3-	SIGNIFICANT ACCOUNTING POLICIES (continued)

	Income Taxes

	The Company accounts for income tax in accordance with FASB ASC 740,"Income Taxes", which requires the asset and liability approach for financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

	Although the PRC Income Tax Law allows the enterprises to offset their future net income with operating losses carried forward, an enterprise need approval from the local tax authority before it can claim such tax benefit, and the outcome of the application is generally uncertain. Therefore, the Management established a 100% valuation allowance for the operation losses carried forward and no deferred tax assets have been recorded.

	The Company adopted a new FASB guidance, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The new FASB guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The new FASB guidance also provides guidance on de-recognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition. In accordance with the new FASB guidance, the Company performed a self-assessment and concluded that there were no significant uncertain tax positions requiring recognition in its consolidated financial statements.

	The Company accounts for income taxes in interim periods in accordance with FASB ASC 740-270, "Interim Reporting". The Company has determined an estimated annual effective tax rate. The rate will be revised, if necessary, as of the end of each successive interim period during the Company's fiscal year to its best current estimate. The estimated annual effective tax rate is applied to the year-to-date ordinary income (or loss) at the end of the interim period.

	Earnings (Loss) Per Share

	The Company reports earnings per share in accordance with FASB ASC 260, “Earnings Per Share” , which requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There are no potentially dilutive securities outstanding (options and warrants) for the three months ended March 31, 2011 and 2010, respectively.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5-	SIGNIFICANT ACCOUNTING POLICIES (continued)
	Income Taxes
	The Company accounts for income tax in accordance with FASB ASC 740,"Income Taxes", which requires the asset and liability approach for financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
	Although the PRC Income Tax Law allows the enterprises to offset their future net income with operating losses carried forward, enterprise need approval from local tax authority before they can claim such tax benefit, and the outcome of the application is generally uncertain. Therefore, the Managements established a 100% valuation allowance for the operation losses carried forward and no deferred tax assets have been recorded.
	Effective January 1, 2007, the Company adopted a new FASB guidance, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The new FASB guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The new FASB guidance also provides guidance on de-recognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition. In accordance with the new FASB guidance, the Company performed a self-assessment and concluded that there were no significant uncertain tax positions requiring recognition in its consolidated financial statements.
	The Company accounts for income taxes in interim periods in accordance with FASB ASC 740-270, "Interim Reporting". The Company has determined an estimated annual effect tax rate. The rate will be revised, if necessary, as of the end of each successive interim period during the Company's fiscal year to its best current estimate. The estimated annual effective tax rate is applied to the year-to-date ordinary income (or loss) at the end of the interim period.
	Earnings (Loss) Per Share
	The Company reports earnings per share in accordance with FASB ASC 260, “Earnings Per Share”, which requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There are no potentially dilutive securities outstanding (options and warrants) for the three and nine months ended September 30, 2010 and 2009, respectively.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	Recent Accounting Pronouncements

	In January 2011, the FASB temporarily deferred the disclosures regarding troubled debt restructurings which were included in the disclosure requirements about the credit quality of financing receivables and the allowance for credit losses which was issued in July 2010. In April 2011, the FASB issued additional guidance and clarifications to help creditors in determining whether a creditor has granted a concession, and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The new guidance and the previously deferred disclosures are effective July 1, 2011 applied retrospectively to January 1, 2011. Prospective application is required for any new impairments identified as a result of this guidance. The Management does not expect the adoption of this new guidance will have a material effect on the Company’s financial position and results of operations.

	In December 2010, FASB issued an amendment to the disclosure of supplementary pro forma information for business combinations. The amendments in this ASU specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations.

	In December 2010, FASB issued an amendment to goodwill impairment test. The amendments modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5-	SIGNIFICANT ACCOUNTING POLICIES (continued)
	Statutory Reserves
	Pursuant to the applicable laws in PRC, PRC entities are required to make appropriations to three non-distributable reserve funds, the statutory surplus reserve, statutory public welfare fund, and discretionary surplus reserve, based on after-tax net earnings as determined in accordance with the PRC GAAP, after offsetting any prior years’ losses. Appropriation to the statutory surplus reserve should be at least 10% of the after-tax net earnings until the reserve is equal to 50% of the Company's registered capital. Appropriation to the statutory public welfare fund is 5% to 10% of the after-tax net earnings. The statutory public welfare fund is established for the purpose of providing employee facilities and other collective benefits to the employees and is non-distributable other than in liquidation. Beginning from January 1, 2006, enterprise is no more required to make appropriation to the statutory public welfare fund. No appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors.
	As of December 31, 2007, Both GRT and QTC had made appropriation to the statutory surplus reserve fund up to 50% of their registered capital. Therefore, GRT and QTC are not required to make further appropriation to the statutory surplus reserve fund any more.
	Fair Value of Measurements
	Accounting principles generally accepted in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
	Level 1:	Unadjusted quoted prices in active markets for identical assets or liabilities
	Level 2:	Input other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company.
	Level 3:	Unobservable inputs. Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability.
	An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	Recent Accounting Pronouncements (continued)

	In April 2010, FASB issued an amendment to Stock Compensation. The amendment clarifies that an employee stock-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity shares trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations.

	In January 2010, the FASB issued additional disclosure requirements for fair value measurements. The guidance requires previous fair value hierarchy disclosures to be further disaggregated by class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. In addition, significant transfers between Levels 1 and 2 of the fair value hierarchy are required to be disclosed. These additional requirements became effective January 1, 2010 for quarterly and annual reporting. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations. In addition, the fair value disclosure amendments also require more detailed disclosures of the changes in Level 3 instruments. These changes are effective beginning January 1, 2011.The adoption of these new guidances did not have a material effect on the Company’s financial position and results of operations.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
	Recent Accounting Pronouncements
	In July 2010, the Financial Accounting Standards Board ("FASB") issued amendments to the disclosure requirements about the credit quality of financing receivables and the allowance for credit losses. The purpose of the additional disclosures is to enable users of financial statements to better understand the nature of credit risk inherent in an entity’s portfolio of financing receivables and how that risk is analyzed. For end of period balances, the new disclosures are required to be made in all interim and annual periods ending on or after December 15, 2010. For activity during a reporting period, the disclosures are required to be made in all interim and annual periods after January 1, 2011. The Management does not expect these changes will have a material impact on the Company’s financial position and results of operations as this guidance only relates to additional disclosures.
	In January 2010, the FASB issued additional disclosure requirements for fair value measurements. The guidance requires previous fair value hierarchy disclosures to be further disaggregated by class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. In addition, significant transfers between Levels 1 and 2 of the fair value hierarchy are required to be disclosed. These additional requirements became effective January 1, 2010 for quarterly and annual reporting. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations. In addition, the fair value disclosure amendments also require more detailed disclosures of the changes in Level 3 instruments. These changes will be effective January 1, 2011 and the Management does not expect the adoption of this new guidance will have a material effect on the Company’s financial position and results of operations.
	In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions. The ASU is effective beginning January 1, 2011. The Management does not expect the adoption of this new guidance will have a material effect on the Company’s financial position and results of operations.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4-	ACCOUNTS RECEIVABLE

	Accounts receivable consists of the following:

	March 31,			December 31,
	2011			2010
	(unaudited)

Accounts receivable	$	1,362,512		$	1,177,895
Less: Allowance for doubtful accounts		(1,856	)		(1,856	)
Accounts receivable, net	$	1,360,656		$	1,176,039

	Bad debt expense charged to operations was $0 and $0 for the three months ended March 31, 2011 and 2010, respectively.

Note 5-	INVENTORIES

	Inventories consist of following:

	March 31,		December 31,
	2011		2010
	(unaudited)

Finished goods	$	247,337	$	199,775
Work-in-progress		64,567		54,059
Raw materials		59,256		59,162
Total	$	371,160	$	312,996

Note 6-	PROPERTY AND EQUIPMENT, NET

	The following is a summary of property, plant and equipment-at cost, less accumulated depreciation:

	March 31,			December 31,
	2011			2010
	(unaudited)

Machinery and equipment	$	16,666		$	16,562
Office equipment and furniture		16,192			16,089
Motor vehicles		87,915			87,360
		120,773			120,011

Less: Accumulated depreciation		(22,686	)		(17,241	)

Total	$	98,087		$	102,770

Depreciation expense charged to operations was $3,189 and $774 for the three months ended March 31, 2011 and 2010, respectively.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
	Recent Accounting Pronouncements (continued)
	In October 2009, the FASB issued ASU No. 2009-14, Certain Revenue Arrangements That Include Software Elements—a consensus of the FASB Emerging Issues Task Force, that reduces the types of transactions that fall within the current scope of software revenue recognition guidance. Existing software revenue recognition guidance requires that its provisions be applied to an entire arrangement when the sale of any products or services containing or utilizing software when the software is considered more than incidental to the product or service. As a result of the amendments included in ASU No. 2009-14, many tangible products and services that rely on software will be accounted for under the multiple-element arrangements revenue recognition guidance rather than under the software revenue recognition guidance. Under the ASU, the following components would be excluded from the scope of software revenue recognition guidance: the tangible element of the product, software products bundled with tangible products where the software components and non-software components function together to deliver the product’s essential functionality, and undelivered components that relate to software that is essential to the tangible product’s functionality. The ASU also provides guidance on how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). The ASU is effective beginning January 1, 2011. The Management does not expect the adoption of this new guidance will have a material effect on the Company’s financial position and results of operations.
	In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, a entity may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value. This ASU is effective October 1, 2009. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations.
	In June 2009, the FASB amended its guidance on accounting for variable interest entities ("VIE"). Among other things, the new guidance requires a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE; requires continuous assessments of whether an enterprise is the primary beneficiary of a VIE; enhances disclosures about an enterprise's involvement with a VIE; and amends certain guidance for determining whether an entity is a VIE. Under the new guidance, a VIE must be consolidated if the enterprise has both (a) the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and (b) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. This new guidance will be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, and for interim periods within that first annual reporting period. Earlier application is prohibited. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations.
	In May 2009, the FASB issued new accounting and disclosure guidance for recognized and non-recognized subsequent events that occur after the balance sheet date but before financial statements are issued. The new guidance also requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. The new accounting guidance was effective for our Company beginning with our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2009, and is being applied prospectively. This change in accounting policy had no material impact on our financial statements.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7-	DUE TO A RELATED PARTY

	Due to a related party represents loans from Ms. Shuying Zheng who was the CEO and the majority shareholder of the Company when the loans were made, to finance the operations of QTC and Beijing Telecom due to lack of cash resources. These loans are unsecured, non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. Cash flows from these activities are classified as cash flows from financing activities.

Note 8-	CONCENTRATIONS AND CREDIT RISKS

	The Company maintains its cash and cash equivalents with various financial institutions in the PRC which do not provide insurance for amounts on deposit. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.

	The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.

	Major Customer

	For the three months ended March 31, 2011 and 2010, no customer had net sales exceeding 10% of the Company’s total net sales for the respective period.

	Major Suppliers

	For the three months ended March 31, 2011 and 2010, the Company’s one largest supplier accounted for 44.3% and 98.7%, respectively, of the Company’s total purchases. The account payable balances for the Company’s largest supplier was $164,823 and $209,259 as of March 31, 2011 and 2010, respectively.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6-	PREPAID EXPENSES
	Prepaid expenses consists of the following:

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		September 30,		December 31,
Note 9-	COMMITMENTS AND CONTINGENCIES
		2010		2009
	Minimum Lease Payments on Operating Lease
		(unaudited)
	The Company rents a production facility and significant production equipment from a third party for a three-year period ended December 31, 2012. Rent expense amounted to $233,671 and $nil for the year ended December 31, 2010 and 2009, respectively. As of December 31, 2010, the future minimum lease payments for the lease are as following:
Advance to telecommunication carriers		$	7,465	$	7,313
		$	7,465	$	7,313

Note 7- PROPERTY AND EQUIPMENT, NET The following is a summary of property, plant and equipment-at cost, less accumulated depreciation:

Year ending	Lease
December 31,	Payment

2011		231,674
2012		231,674
	$	463,348

	September 30,			December 31,
	2010			2009
	(unaudited)
Network and office equipment	$	125,854		$	123,296
Leasehold Improvements		332,167			325,409
		458,021			448,705
Less: Accumulated depreciation		(394,158	)		(318,018	)
Total	$	63,863		$	130,687

	Lack of Insurance

	The Company does not carry any business interruption insurance, products liability insurance or any other insurance policy. As a result, the Company may incur uninsured losses, increasing the possibility that the investors would lose their entire investment in the Company.

	The Company could be exposed to liabilities or other claims for which the Company has no insurance protection. The Company does not currently maintain any business interruption insurance, products liability insurance, or any other comprehensive insurance policy. As a result, the Company may incur uninsured liabilities and losses as a result of the conduct of its business. There can be no guarantee that the Company will be able to obtain insurance coverage in the future, and even if it can obtain coverage, the Company may not carry sufficient insurance coverage to satisfy potential claims. Should uninsured losses occur, any purchasers of the Company’s common stock could lose their entire investment.

	Because the Company does not carry products liability insurance, a failure of any of the products marketed by the Company may subject the Company to the risk of product liability claims and litigation arising from injuries allegedly caused by the unqualified composition or quality of its products. The Company cannot assure that it will have enough funds to defend or pay for liabilities arising out of a products liability claim. To the extent the Company incurs any product liability or other litigation losses, its expenses could materially increase. There can be no assurance that the Company will have sufficient funds to pay for such expenses, which could end its operations and the investors would lose their entire investment.

	Environmental

	In the ordinary course of its business, the Company is subject to numerous environmental laws and regulations covering compliance matters or imposing liability for the costs of, and damages resulting from, cleaning up sites, past spills, disposals and other releases of hazardous substances. Currently, our environmental compliance costs are immaterial to our operating costs. However, changes in these laws and regulations may significantly increase our environmental compliance costs and therefore have a material adverse effect on the Company’s financial position and results of operations. Also, any failure by the Company to adequately comply with such laws and regulations could subject the Company to significant future liabilities.

Depreciation expense charged to operations was $68,328 and $65,025 for the nine months ended September 30, 2010 and 2009, respectively.

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8-	CONTRACT SECURITY DEPOSIT
	Contract security deposit consists of the following:

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		September 30,		December 31,
Note 9-	COMMITMENTS AND CONTINGENCIES (continued)
		2010		2009
	Risks of losses
		(unaudited)
	The Company is potentially exposed to risks of losses that may result from business interruptions, injury to others (including employees) and damage to property. These losses may be uninsured, especially due to the fact that the Company’s operations are in China, where business insurance is not readily available. If: (i) information is available before the Company’s financial statements are issued or are available to be issued indicates that such loss is probable and (ii) the amount of the loss can be reasonably estimated, an estimated loss will be accrued by a charge to income. If such loss is probable but the amount of loss cannot be reasonably estimated, the loss shall be charged to the income of the period in which the loss can be reasonably estimated and shall not be charged retroactively to an earlier period. As of March 31, 2011 and December 31, 2010, the Company has not experienced any uninsured losses from injury to others or other losses.
Security deposit for GRT and Beijing Telecom'
	PRC's political and economic system
Trust and Indemnity Agreement with Ms. Yianfang Jin *		$	89,578	$	87,755
	The Company faces a number of risks and challenges not typically associated with companies in North America and Western Europe, since its assets exist solely in the PRC, and its revenues are derived from its operations therein. The PRC is a developing country with an early stage market economic system, overshadowed by the state. Its political and economic systems are very different from the more developed countries and are in a state of change. The PRC also faces many social, economic and political challenges that may produce major shocks and instabilities and even crises, in both its domestic arena and in its relationships with other countries, including the United States. Such shocks, instabilities and crises may in turn significantly and negatively affect the Company's performance.
Security deposit for Yurui Changtong Science Technology Co., Ltd.**			144,817		141,871
	Governmental control of currency conversion
		$	234,395	$	229,626
	The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The Company receives all of its revenues in Renminbi, which is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict the Company’s ability to remit sufficient foreign currency to satisfy foreign currency denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.
	The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents the Company from obtaining sufficient foreign currency to satisfy its currency demands, the Company may not be able to pay certain of its expenses as they come due.

	*On September 20, 2007, Ms. Yianfang Jin who owns a 98% equity ownership interest in GRT executed a Trust and Indemnity Agreements, pursuant to which Ms. Jin assigned to Beijing Telecom all of the beneficial interest in her equity ownership interest in GRT, as more fully disclosed in Note 2.
	**On November 16, 2009, GRT executed an agency agreement with Yurui Changtong Science Technology Co., Ltd ("Yurui") to run a new business project named "Wireless Public Phone". Pursuant to the agreement, GRT wired cash of $144,817 (RMB 970,000) to Yurui as a security deposit for the project. The project intended to begin to provide service on May 1, 2010. Since the testing of Yurui's telecommunication equipment was behind the schedule, the project changed its plan to begin to provide service in the beginning of 2011.
Note 9-	ACCRUED EXPENSES
	Accrued expenses consist of the following:

	September 30,		December 31,
	2010		2009
	(unaudited)
Employee pension and benefit payable	$	18,180	$	19,709
Accrued professional fees		8,622		35,129
	$	26,802	$	54,838

Note 10- CONSULTANT FEES Consultant fees consist of the following:

	For the nine months ended
	September 30,
	2010		2009
	(unaudited)
Compensation of consultant services by common stock	$	-	$	29,333
	$	-	$	29,333

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11-	RELATED PARTIES TRANSACTIONS
	Due to officers consists of the following:

			September 30,		December 31,
			2010		2009
			(unaudited)
(1	)	Due to Ms. Shuying Zheng, CEO	$	121,602	$	78,163
(2	)	GRT Office rent due to Mr. Guoqing Xu		27,759		17,990
(3	)	QTC Office rent due to Ms. Shuying Zheng		31,352		17,551
			$	180,713	$	113,704

(1	)	Due to Ms. Shuying Zheng
		Due to Ms. Shuying Zheng, CEO of the Company, represents loans from Ms. Zheng to finance the Company's operations due to lack of cash resources. These loans are unsecured, non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. Cash flows from these activities are classified as cash flows from financing activities.
(2	)	GRT Lease
		GRT rents office premise at the market rate from Mr. Guoqing Xu, President of QTC. The lease is non-cancelable and expired in June 2010. Rent expense amounted to $9,657 and $12,504 for the nine months ended September 30, 2010 and 2009, respectively. As of September 30, 2010, there was an outstanding balance of $27,759 due to Mr. Xu. Currently, QTC allows GRT to share its office for free.
(3	)	QTC Lease
		QTC rents office premise at the market rate from Ms. Shuying Zheng, CEO. The lease is non-cancelable and will expire in December 2010. Rent expense amounted to $13,203 and $13,163 for the nine months ended September 30, 2010 and 2009, respectively. As of September 30, 2010, there was an outstanding balance of $31,352 due to Ms. Zheng. The future minimum lease payments for the leases are as follows at September 30, 2010:

The Three Months Ending December 31, 2010 $ 4,479

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12-	SEGMENT REPORTING
	GRT Operation
	GRT operated in two reportable business segments that are determined based upon differences in products and services. GRT does not allocate any operating expenses or assets to its two business segments as management does not use this information to measure the performance of the operating segments. Certain costs of revenues are shared between business segments. Also, no measures of assets by segment are reported and used by the chief operating decision maker. Hence, GRT has not made disclosure of total assets by reportable segments.
	Summarized information by business segment for the nine months ended September 30, 2010 and 2009 is as follows:

	For the three months ended					For the nine months ended
	September 30,					September 30,
	2010		2009			2010		2009
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
REVENUE
GRT public telephone service	$	-	$	-		$	-	$	1,600
GRT VoIP call time distribution		1,911		16,595			20,986		57,647
COST OF SALES
GRT public telephone service	$	-	$	1,219		$	-	$	5,115
GRT VoIP call time distribution		1,341		11,694			14,392		39,266
GROSS PROFITS
GRT public telephone service	$	-	$	(1,219	)	$	-	$	(3,515	)
GRT VoIP call time distribution		570		4,901			6,594		18,381
						September 30,		December 31,
							2010		2009
						(unaudited)
TOTAL ASSETS OF GRT						$	214,931	$	245,681

SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13-	CONCENTRATIONS AND RISKS
	(a) Major Suppliers
	GRT signed non-exclusive agreements with CUSH and CUSX to distribute VoIP call time purchased from the carriers. If the strategic relationship with either CUSH and CUSX is terminated or scaled-back, or if CUSH and CUSX alter the co-operative arrangements, GRT’s revenue from VoIP call time distribution might be adversely affected.
	(b) Major Customer
	GRT had a diversified customer basis for VoIP call time distribution. None of the customers accounted for 5% or more of the total revenue from VoIP call time distribution in the three and nine months ended September 31, 2010 and 2009, respectively.
Note 14-	COMMITMENTS AND CONTINGENCIES
	PRC's political and economic system
	The Company faces a number of risks and challenges not typically associated with companies in North America and Western Europe, since its assets exist solely in the PRC, and its revenues are derived from its operations therein. The PRC is a developing country with an early stage market economic system, overshadowed by the state. Its political and economic systems are very different from the more developed countries and are in a state of change. The PRC also faces many social, economic and political challenges that may produce major shocks and instabilities and even crises, in both its domestic arena and in its relationships with other countries, including the United States. Such shocks, instabilities and crises may in turn significantly and negatively affect the Company's performance.
	Governmental control of currency conversion
	The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The Company receives all of its revenues in Renminbi, which is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict the Company’s ability to remit sufficient foreign currency to satisfy foreign currency denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.
	The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents the Company from obtaining sufficient foreign currency to satisfy its currency demands, the Company may not be able to pay certain of its expenses as they come due.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

OnRevenue ~~October~~for 24the three months ended March 31, ~~2007~~2011 wewas ~~acquired~~$728,767, ~~beneficial~~a ~~ownership~~decrease of ~~Beijing~~$78,185 ~~GRT~~or ~~Information~~9.7% ~~Services~~from ~~Limited~~$806,952 ~~(Beijing~~for ~~GRT”)~~the three months ended March 31, 2010. ~~Since~~ During the ~~acquisition~~same period, ~~the~~our ~~business~~costs of ~~Beijing~~sales ~~GRT~~increased ~~has~~by ~~gradually~~$15,383, ~~replaced~~or 2.2%, from $635,531 to $650,914, resulting in a decrease of $93,568, or 54.6%, in gross profit. This decrease occurred because we relocated our production facility during the ~~business~~quarter. As a result, almost of all our sales in the three months ended March 31, 2011 were resales of batteries we purchased from other ~~subsidiary~~manufacturers, ~~Beijing~~the ~~Quan~~cost ~~Tong~~of ~~Chang~~which ~~Information~~substantially ~~Service~~exceeds ~~Limited~~the ~~(“Beijing~~costs ~~QTC”)~~of goods manufactured in our facility.

~~Beijing~~Operating ~~QTC~~expenses ~~had~~increased ~~been~~from ~~primarily~~$26,485 ~~involved~~ in the ~~business~~three months ended March 31, 2010 to $99,363 for the three months ended March 31, 2011, representing an increase of ~~operating~~$72,878, ~~public~~or ~~payphones~~275%. We ~~chose~~The increase was primarily attributable to ~~replace~~the ~~Beijing~~increase ~~QTC~~of as$37,819 in the ~~focus~~selling expense, a result of our ~~operations~~efforts into ~~2007~~develop ~~because~~our wemarket ~~saw~~share. For ~~that~~the ~~business~~same ~~waning.~~reason, our ~~The~~payroll ~~primary~~and ~~reasons~~pension ~~for~~expense increased by $25,813 in the ~~reduction~~three ~~were:~~months ended March 31, 2011, as we increased our staff in order to expand our business.

ØWe ~~The~~experienced ~~tariffs~~a onnet ~~mobile~~loss ~~phone~~of ~~calls~~20,425 infor ~~China~~the ~~have~~three ~~fallen~~months byended ~~approximately~~March ~~80%~~31, in2011, ~~the~~as ~~past~~compared ~~two~~to ~~years.~~net Asincome aof ~~result~~$110,537 for the ~~use~~three ofmonths ~~cell~~ended ~~phones~~March ~~has increased dramatically~~31, ~~with~~2010. As anoted ~~concomitant~~above, ~~slackening~~the ofchange ~~demand~~was ~~for~~primarily ~~our~~caused ~~payphone~~by ~~services.~~the ~~When~~relocation weof ~~initiated~~ our ~~business,~~manufacturing ~~the~~facility ~~average~~during ~~cell~~the ~~phone~~quarter. We ~~tariff~~anticipate, ~~was~~therefore, ~~five~~that ~~times~~our ~~the~~operations ~~tariff~~will onreturn ato ~~call~~profitability ~~from~~during ~~our payphones. Now~~ the ~~difference~~remainder isof ~~insignificant~~2011.

Ø In January 2007 China Netcom (Beijing) Corporation Limited cancelled the contract under which we distributed its fixed line call times. This contract had generated $57,329 in revenue for us in the first nine months of 2006.

The acquisition of Beijing GRT provided the Company with a brief period of profitability in 2007. During 2007 we recorded $1,914,609 in revenue, most of which was recorded in the 4th quarter and most of which was attributable to the international call forwarding business of Beijing GRT: $1,196,996 from our sale of SIM cards and an additional $527,753 in fees paid by our franchisees. Beijing GRT achieved the above success in operating the call forwarding business from one office only: its office in Shanghai. The success of that initiative indicated that the business could be successful if we developed it from offices throughout China.

Despite the success of our international call forwarding business in Shanghai area in 2007, a hiatus occurred in that business in 2008. Compared to our revenue of $1,196,996 from the sale of call forwarding cards and $527,753 from the sale of franchises in 2007, we realized only $213,953 from the sale of call forwarding cards in 2008, and no revenue from the sale of franchises during this period. The decreased revenue in 2008 was primarily the result of Management’s decision to relocate our call forwarding business from the Shanghai area to Beijing. Because of that move, most of the revenue that we realized from the call forwarding business in 2008 came from one customer.

As a result of the above business relocation decision, our management decided to sell the Shanghai operations of our call forwarding business and use the proceeds of the sale to fund the establishment of our call forwarding business in Beijing. On October 18, 2008, GRT signed a “Business Transfer Agreement” with Shanghai Zhen Guang Travel Agent and Shanghai North Travel Agent, pursuant to which, Shanghai Zhen Guang Travel Agent and Shanghai North Travel Agent agreed to acquire GRT’s call-forwarding operation in Shanghai area for $511,098 (RMB 3,500,000). On November 30, 2008 the parties agreed to increase the sales price to $729,480 (RMB 5,000,000). On October 21, 2008, GRT received $291,792 (RMB 2,000,000) from Shanghai Zhen Guang Travel Agent, and $29,179 (RMB 200,000) from Shanghai North Travel Agent as a security deposit for the agreement. In November 2009, however, we found ourselves unable to reach agreement with the purchaser on the terms of the closing. As a result, the agreement was terminated, and we refunded the deposits.

Our lack of resources left us unable to revive the call forwarding business. As a result, all of our revenue in the first nine months of 2010 came from the distribution of VoIP call time. Even that business, however, declined by 65% from the first nine months of 2009 to the first nine months of 2010 (88% from the third quarter of 2009 to the third quarter of 2010), as our lack of capital made it difficult to market our services. Unless we obtain funding or develop a new revenue source, we cannot expect our revenues to increase significantly in the near future.

Because of the strategic change in our call forwarding business, our operating expenses were significantly greater than our revenue in both the first nine months of 2010 and the first nine months of 2009. Primary among the components of operating expenses in the first nine months of 2010 were professional fees ($20,484) related to sustaining our status as a U.S. public company, and office expenses ($27,234) and depreciation ($68,328) that are disproportionate to our level of revenues due to financial commitments made when we operated at a much more robust level. In the first nine months of 2009 the primary components of operating expense were (1) $65,025 in depreciation, (2) office expenses of $35,043, and (3) consulting fees of $29,333. The consulting fees were attributable to contracts that we entered in August and September 2007 with consultants who were assisting us in rebuilding our company’s business. To compensate these individuals we issued them shares of our common stock, which had a market value of $404,800. We expensed that amount over the lives of the contracts, which ranged from nine months to two years.

Because of our lack of revenues, we incurred a net loss of $133,405 ($.00 per share) in the first nine months of 2010, compared to a net loss of $165,803 ($.00 per share) in the first nine months of 2009. Our net loss for the third quarter of 2010 was $35,976, compared to a net loss of $48,904 in the third quarter of 2009. Although the PRC Income Tax Law allows the enterprise to offset its future net income with operating losses carried forward, the enterprise must obtain approval from the local tax authority before it can claim that benefit, and the outcome of the application is generally uncertain. Therefore, Management established a 100% valuation allowance for the operating losses carried forward, and no deferred tax assets have been recorded.

Liquidity and Capital Resources

WeTo ~~decreased~~date, ~~our~~the ~~cash~~Company ~~position~~has bybeen ~~$26,696~~financed by paid-in ~~the~~capital ~~first~~from ~~nine~~the ~~months~~founders of ~~2010~~Yupeng Hengli, ascash ~~the~~generated from operations, and a $93112,~~687~~032 ~~cash~~non-interest ~~used~~bearing inloan ~~operations~~from ~~was~~an ~~only~~individual ~~partially~~who ~~offset~~had bybeen a ~~$66~~shareholder at the time when the credit was extended. As a result of these factors,~~991~~ ~~loan~~we ~~from~~had ~~our~~working ~~principal~~capital ~~shareholder~~of $338,087 at March 31, 2011. The ~~decrease~~primary component of our working capital was ~~primarily~~accounts ~~the~~receivable ~~result~~totaling $1,360,656 (an increase of ~~our~~$176,634 ~~operating~~during ~~loss~~the quarter ended March 31, 2011). The allowance for doubtful accounts netted against the total accounts receivable is $631,~~052~~856, a relatively low level of .16%, reflecting our confidence, in ~~cash~~light of all the circumstances, that we ~~held~~will atbe ~~September~~paid ~~30,~~by ~~2010~~our iscustomers. ~~inadequate~~We tohave ~~fund~~had ano ~~significant~~bad ~~increase~~debt inexpenses ~~operations~~during the three months ended March 31, 2011 or the preceding two years.

~~Establishing~~Cash ~~our~~on ~~several~~hand ~~telecommunications~~decreased ~~businesses~~from in$95,264 ~~the~~on ~~public~~December ~~consciousness will cost money. At September 30~~31, 2010 weto ~~had only~~ $6355,~~052~~148 inon ~~cash~~March ~~and~~31, no2011, ~~other~~as ~~liquid~~our ~~assets~~operations onused ~~our~~$46,597 ~~balance~~in ~~sheet~~cash. Our ~~plan,~~use ~~however,~~of iscash towas ~~eventually~~slightly ~~expand~~greater than our ~~operations~~net byloss, ~~opening~~as ~~additional~~we ~~sales~~increased ~~offices~~our ~~throughout~~accounts ~~China,~~payable and ~~hiring~~accrued ~~additional~~expenses ~~sales~~in ~~personnel~~rough proportion to ~~staff~~ the ~~offices. Fulfillment~~increase ofin ~~this goal, however, will depend on~~ our ~~ability~~accounts ~~to obtain financing~~receivable.

24The Company has no long term liabilities. Therefore, we believe that we can continue to fund operations at the current level of activity. However, in order to finance the Company’s continuing growth and construction of a new manufacturing facility, we will need to develop alternative sources of funds. The Company is currently negotiating with investment bankers and seeking loans from commercial banks. However, no financing agreements are yet in place.

~~We have little on our balance sheet that could be pledged as collateral for debt~~. For that reason, our ability to finance growth will necessarily involve the sale of our equity. Our ability to sell equity at an acceptable price is not assured, and to date we have no commitments for funding. So we will continue to explore opportunities for financing. The cash flow from our business is sufficient to indefinitely sustain our operations as they are currently configured. But in order to take full advantage of our market opportunity, we will require additional funds.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as of ~~September~~March 3031, ~~2010~~2011. Pursuant to Rule13a-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, “disclosure controls and procedures” means controls and other procedures that are designed to insure that information required to be disclosed by Smooth Global (China) Holdings in the reports that it files with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time limits specified in the Commission’s rules. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to insure that information Smooth Global (China) Holdings is required to disclose in the reports it files with the Commission is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on ~~her~~their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that Smooth Global (China) Holdings’ system of disclosure controls and procedures was effective as of ~~September~~March 3031, 2010 for the purposes described in this paragraph.

Changes in Internal Controls. There was no change in internal controls over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act or 1934) identified in connection with the evaluation described in the preceding paragraph that occurred during Smooth Global (China) Holdings’ ~~third~~first fiscal quarter that has materially affected or is reasonably likely to materially affect Smooth Global (China) Holdings’ internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1A. Risk Factors

There has been no material change to the risk factors set forth in Item 1A of the Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010.

Item 6. Exhibits

31 Rule 13a-14(a) Certification

31	Rule 13a-14(a) Certification
32	Rule 13a-14(b) Certification

~~32 Rule 13a-14(b) Certification~~21

SIGNATURES

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

	SMOOTH GLOBAL (CHINA) HOLDINGS, INC.
Date: November 18, 2010	By:	/s/ Zheng Shuying
Date: May 24, 2011	By: /s/ Xiaojing Xu
		Zheng Shuying, Chief Executive Officer
	Xiaojing Xu, Chief Executive Officer
		and Chief Financial Officer
	By: /s/ Hui Liang
	Hui Liang, Chief Financial Officer

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Filing Compare · Smooth Global (China) Holdings, Inc.