f10k2009_guangzhou.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File No. 333-130937

GUANGZHOU GLOBAL TELECOM, INC.

(Name of small business issuer in its charter)

Florida	59-3565377
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

Room 03/04, 16/F, Jinke Building, No.17/19, Guangwei Road Guangzhou, PRC	510180
(Address of principal executive offices)	(Zip Code)

(86) 20-8317-2821

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class registered:	Name of each exchange on which registered:
None	None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 (Title of class)

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K. x

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.

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer (Do not check if a smaller reporting company)	o	Smaller reporting company	x

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

The aggregate market value of the registrant’s voting common stock held by non-affiliates as of June 30, 2009 based upon the closing price reported for such date on the OTC Bulletin Board was US $633,977.

As of April 12, 2010, the registrant had 149,475,127 shares of its common stock outstanding.

Documents Incorporated by Reference: None.

TABLE OF CONTENTS

		PAGE
	PART I
ITEM 1.	Business	1
ITEM 1A.	Risk Factors	4
ITEM 2.	Properties	4
ITEM 3.	Legal Proceedings	4

	PART II
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4
ITEM 6.	Selected Financial Data	5
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	5
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	6
ITEM 8.	Financial Statements and Supplementary Data	7
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A(T).	Controls and Procedures

	PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance	8
ITEM 11.	Executive Compensation	8
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	9
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	10
ITEM 14.	Principal Accounting Fees and Services	10

	PART IV
ITEM 15.	Exhibits, Financial Statement Schedules	11
SIGNATURES

PART I

ITEM 1. BUSINESS

General

We were incorporated as Avalon Development Enterprises, Inc. (“Avalon”) on March 29, 1999, under the laws of the State of Florida. From inception, we engaged in the acquisition of commercial property and expanded into building cleaning, maintenance services, and equipment leasing as supporting ancillary services and sources of revenue. On January 10, 2007, Avalon, Global Telecom Holdings, Ltd., a British Virgin Islands Corporation (“GTHL”), and the shareholders of GTHL, entered into a Share Exchange Agreement. Pursuant to that Agreement, the Company issued 39,817,500 shares of its restricted common stock to the Shareholders of GTHL in exchange for all of the issued and outstanding common shares of GTHL common stock. Pursuant to this transaction, on March 27, 2007, GTHL became a wholly-owned subsidiary of Avalon, and the Company changed its name to Guangzhou Global Telecom Holdings, Inc. and succeeded to the business of GTHL. Now we are a nationally integrated mobile phone handset and pre-paid calling card distributor and provider of mobile handset value-added services. Future products and services include the GTL Lineless Messaging Service and retail sales and customer service operations. We are an independent qualified corporation that serves as a principle distribution agent for China Telecom, China Unicom, and China Mobile. We also maintain and operate the largest prepaid mobile phone card sales and distribution center in Guangdong Province and maintain cooperative distribution relationships with VK, Panasonic, Motorola, LG, GE and Bird corporations, among others.

On February 14, 2008, Huantong Telecom Singapor Company Pte. Ltd. (“Huantong”), our wholly-owned subsidiary, entered into a share transfer agreement with TCAM Technology Pte. Ltd. (“TCAM”) whereby Huantong agreed to purchase 30% of the total authorized shares of TCAM for the purchase amount of S$200,000 and 3.5 million shares of Guangzhou Global Telecom, Inc. common stock.

On July 29, 2008, GTHL completed the acquisition of Guangzhou Renwoxing Telecom (“GRT”), a company incorporated under the laws of the People’s Republic of China, in accordance with a share transfer agreement among the Company, GTHL and GRT. Pursuant to the terms of the agreement, we issued 9,727,769 shares of common stock to certain assigners designated by GRT for 51% equity interest of GRT from Mr. Li Hanguang, a shareholder of GRT. As a result, GRT became a subsidiary of the Company, and we became the majority shareholder of GRT.

Overview

We are a nationally integrated mobile phone handset and pre-paid calling card distributor and provider of mobile handset value-added services. Future products and services include the GTL Lineless Messaging Service and retail sales and customer service operations. We are an independent qualified corporation that serves as a principle distribution agent for China Telecom, China Unicom, and China Mobile. We also maintain and operate the largest prepaid mobile phone card sales and distribution center in Guangdong Province and maintain cooperative distribution relationships with VK, Panasonic, Motorola, LG, GE and Bird corporations, among others.

Development

Development activities are a fundamental building block to our future financial success. We will devote significant resources to identifying and developing new software and value-added services through an expanded network of regional and neighborhood service centers, shops and via a virtual store. We plan to continue our distribution operations and to introduce current products and new and innovative software and services through an expanded network of regional and neighborhood retail service centers and shops. This new sales channel will allow us to sell direct to the consumer and to cross-sell additional value-added services and add-on products. We anticipate building strong customer relationships in the local communities that are served in order to take advantage of future sales from existing loyal customers and through word of mouth advertisement. Selling products and value-added services via a retail presence allows us to become part of the community and to enter into exclusive contracts directly with the individual consumer.

Financing

Based on rapid current and anticipated future growth in the mobile phone and mobile phone parts supply and distribution markets and ever increasing demand for mobile consumer telecommunications devices, we are seeking a capital investment partner to fund expansion of our sales, distribution, and post-sale customer support in addition to the development of new business units and operations

Production

In addition to existing hardware distribution and sales partnerships, we are expanding our services, building a retail presence and developing e-commerce business units in order to build and maintain a high-quality brand and service reputation. We currently serve as a nationally integrated mobile phone handset and pre-paid calling card distributor and provider of mobile handset value-added services. Future products and services include Lineless Messaging Service (“LMS”) and retail sales and customer service operations.

Revenue Sources

We currently earn approximately USD $13 million in annual sales. As a handset and pre-paid calling card distributor, GTL faces significant competition from other vertically integrated product and service providers. In order to compete, GTL plans to continue its distribution operations and to introduce current products and new and innovative software and services through an expanded network of regional and neighborhood retail service centers and shops. This new sales channel will allow us to sell direct to the consumer and to cross-sell additional value-added services and add-on products. We anticipate building strong customer relationships in the local communities that are served in order to take advantage of future sales from existing loyal customers and through word of mouth advertisement. Selling products and value-added services via a retail presence allows the Company to become a part of the community and to enter into exclusive contracts directly with the individual consumer.

Our fundamental operating cycle will change over the next 20-30 months as a growing percentage of revenue is derived from web delivered software and associated service and product support. Revenue from current operations, as well as new investment, will fund the expansion of software design and development functions within the company responsible for the design, deployment, quality assurance, and consumer support of LMS™ and associated services.

During the expansion / product introduction phase, retail outlets and product lines will be kept at current size and production levels to focus on development and deployment of LMS. As the margins for LMS exceed those of our traditional distribution business, potential losses from lack of distribution expansion will be offset by gains in market penetration of the instant messaging markets.

Aside from existing in-house prototype development of future products, We have not yet decided on any specific internal and/or outsourced contractor solutions to produce, deploy, and support LMS and associated services.

The distribution channels associated with these revenue streams are discussed in greater detail below:

Direct-support distribution & service network

Using current distribution agent relationships with network service providers and handset manufacturers, we will open multi-functional distribution and post-sale retailer support service centers in five Chinese provinces over a 12 month period. These service centers will be strategically located in areas which will improve relationships with existing distribution & retail partners while increasing margins through increased cost-efficiency. The first service centers will be located in Beijing and Guangzhou, PRC. These centers will serve as management control centers for future retail and wholesale activities.

Specialty shop expansion

Using the five regional multi-functional service centers as local management headquarters, we will establish up to 20 regional specialty shops that will be responsible for the direct interface with manufacturers and functionalization of OEM handsets for retail partner distribution.

These shops will add value through improved quality assurance, reduced product development cycle times, and greater control over handset acquisition and distribution systems. These shops will perform on-site troubleshooting and engineering design to solve supply-side function and quality problems at a minimal overall cost. It is estimated that it will take up to 18 months to establish and staff these 20 regional specialty shops.

Integration of service center & specialty shop network

Once established, the 25 regional service centers and specialty shops will serve as the foundation for our future wholesale and direct-to-consumer retail operations. This newly expanded China-wide presence will place us in close proximity not only with its entire potential domestic market and international retail partners, but also in close geographic range of peers and other emerging competitive threats.

Development of GTL lineless messaging system

Once our initial expansion is complete, it will be prepared to launch a proprietary enhanced instant messaging service software application in concert with its mobile phone distribution agreements. Our lineless messaging system (LMS™) will primarily serve as an intra-corporate communications system that will enable a company to instantly disseminate routine or time-sensitive information to some or all of its employees. Messages may also be sent to a particular subset of the organization based on the employee’s role in the company or for as something as personal as a “happy birthday” message. This system will replace a large portion of an organization’s communication overhead traditionally fulfilled by email or courier messages.

In addition to dissemination of information, LMS™ will facilitate critical company management functions such as meeting reminders, location changes, field reports, etc. This more intuitive and rapid communication protocol will occur through a device that virtually all people already own and carry with them everywhere - their mobile phone. The ability for an organization to communicate more efficiently without additional hardware requirements will give any organization an instant competitive operational advantage. With sufficient and prompt capital investment, initial deployment of LMS™ should occur by mid to late 2007 throughout China with expansion worldwide soon after.

Overview of LMS™

For most messaging service providers, message entry requires accessing the Internet through the line entry of a special service number. GTL LMS does not require discrete text messaging numbers as in the current and traditional ways of transmitting a message through the Internet, but instead sends messages directly by way of PHS/GSM/CDMA mobile web transmission protocols. Using the unique hardware address of each mobile device, LMS™ doesn’t need any special messaging service numbers or an operator to transfer the message - thus the name: lineless messaging service.

LMS is a complex software application which is deployed by itself on PCs, mobile computers, and mobile telephony. It can be used to build unattached messages and enter the LMS network at any point and reach any properly configured subscriber device.

Marketing

Our new strategy is a natural follow on to our existing telephone distribution operation, which is becoming the largest distribution agreement inside and outside China. We anticipate opening fixed and virtual retail outlets in order to continue distributing current products, consumer electronic products and mobile phone value added services.

In line with the development of mobile communication standards and increasing consumer demand for non-voice communications, network added service will be the new development of mobile communication. GTL is currently seeking and offering globally innovative techniques, products and services to include the following mobile functions:

Ø	Color-message
Ø	Drawing and ring
Ø	Chord ring
Ø	Staying color picture

Ø	WAP
Ø	Note games
Ø	Treasure box
Ø	IVR chatting

We use our relationships within the distribution network to develop and offer value-added services and connected mobile handset services. After entry into a region, we will consult strategies used by existing and successful operations such as Virgin’s entry into England and America. GTL will penetrate the market in key cities and regions such as Beijing, Shanghai and Wuhan first. GTL aims to become the handset service distributor of China Mobile or China Unicom, by segmenting the market (for example, developing special communicated brands for young women) and through a demographically segmented, distributed cost model. Using resources from partners higher in the value chain and close agreements with other services, we will realize maximal profit via bundling communication, handset and value-added services within the networks.

Competition

China has become the world’s largest mobile telecommunications market. By the end of 2006, nearly 500 million Chinese citizens used mobile phones. This represents 37 percent of the population. In 2006 alone, more than 48 million people purchased their first mobile phones and projections indicate another 50 million more first time users will purchase in 2007. By 2010, almost half of China’s 1.3 billion people will be using mobile phones. As the Chinese population becomes saturated with multiple mobile handsets per person, demand will still exist for upgraded replacement platforms and value-added services. Customer’s value-added services will operate on an exclusive basis with our company.

Our new strategy is a natural follow on to its existing telephone distribution operation, which is becoming the largest distribution agreement inside and outside China. GTL anticipates opening fixed and virtual retail outlets in order to continue distributing current products, consumer electronic products and mobile phone value added services.

Intellectual Property

We do not own any intellectual property.

Government Approval and Regulation

We do not need government approval for our principal products or services.

Employees

As of April 14, 2010, the Company has 65 employees.

ITEM 1A. RISK FACTORS

Not applicable because we are a smaller reporting company.

ITEM 2. PROPERTIES

The Company’s corporate office is located at Room 03/04, 16/F, Jinke Building, No.17/19, Guangwei Road, GuangZhou, PRC 510180.

ITEM 3. LEGAL PROCEEDINGS

Currently there are no legal proceedings pending or threatened against us. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

PART II

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

Market Information

Our common stock has traded on the OTC Bulletin Board system under the symbol “GZGT” since May 15, 2007. There is a limited trading market for our Common Stock. The following table sets forth the range of high and low bid quotations for each quarter within the last fiscal year. These quotations as reported by the OTCBB reflect inter-dealer prices without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.

		High		Low
2007
May 15, 2007 to June 30, 2007	$	2.95	$	0.70
Third Quarter	$	1.28	$	0.66
Fourth quarter	$	1.08	$	0.25
2008
First Quarter	$	0.32	$	0.21
Second Quarter	$	0.24	$	0.04
Third Quarter	$	0.06	$	0.02
Fourth Quarter	$	0.03	$	0.01
2009
First Quarter	$	0.015	$	0.007
Second Quarter	$	0.025	$	0.006
Third Quarter	$	0.021	$	0.007
Fourth Quarter	$	0.015	$	0.007
2010
First Quarter	$	0.012	$	0.007

The source of these high and low prices was the OTC Bulletin Board. These quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not represent actual transactions. The high and low prices listed have been rounded up to the next highest two decimal places.

The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.

Holders

As of April 12, 2010, in accordance with our transfer agent records, we had 54 recordholders of our 149,475,127 shares of Common Stock.

Dividends

Holders of our common stock are entitled to receive dividends if, as and when declared by the Board of Directors out of funds legally available therefore. We have never declared or paid any dividends on our common stock. We intend to retain any future earnings for use in the operation and expansion of our business. Consequently, we do not anticipate paying any cash dividends on our common stock to our stockholders for the foreseeable future.

Recent Sales of Unregistered Securities

On February 14, 2008, we issued 3.5 million shares of our common stock to TCAM in accordance with the share transfer agreement between Huantong and TCAM whereby Huantong agreed to purchase 30% of the total authorized shares of TCAM for the purchase amount of S$200,000.

On July 29, 2008, we issued 9,727,769 shares of common stock to certain assigners designated by GRT for 51% equity interest of GRT from Mr. Li Hanguang, a shareholder of GRT, in accordance with the share transfer agreement among the Company, GTHL and GRT. As a result, GRT became our subsidiary.

On July 31, 2007, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with the following three investors: Enable Growth Partners LP, Pierce Diversified Strategy Master Fund LLC, and Enable Opportunity Partners LP (collectively, the “Holders"). The aggregate purchase price was $3,000,000, and the investment was as follows:

* Senior Secured Convertible Debentures (the “Debentures”) for up to $3,428,571, with an annual interest rate of 8%. The Debentures will be convertible at the option of the holder at any time into shares of common stock, at an initial conversion price equal to $.82.

* Common Stock Purchase Warrants (the “Warrants”) to purchase 2,090,592 shares of the Company’s common stock at a price of $1.12 per share, subject to adjustment, exercisable for a period of five years.

On November 3, 2008, due to market conditions, the Company re-negotiated the terms of the Debentures and Warrants, and entered into a modification agreement (the “Amendment Agreement”) with the Holders. Pursuant to the Amendment Agreement, the Company agreed to completely remove the monthly interest payment of the Debentures and increase the annual interest rate to 18%. Therefore, the Company will pay an aggregate of $2,151,110.85 and $1,485,714.10 to the Holders that are due on July 31, 2009 and February 21, 2010, respectively. The Company acknowledged that the conversion price of the Debentures on the conversion date shall be equal to the lesser of (a) $0.015 (subject to adjustment), and (b) 80% of the lowest closing bid price during the 20 Trading Days immediately prior to the applicable conversion date (subject to adjustment).

The Amendment Agreement further modified the terms of the transaction by reducing the exercise price of the Warrants to $0.015 (subject to further adjustment), and therefore the number of shares underlying Warrants issued to the Holders will be increased to an aggregate of 156,097,534 shares.

On December 29, 2009, the Company entered into a Settlement Agreement with the Holders. Pursuant to the Settlement Agreement, the Company would make a total payment of $1,300,000 to the Holders no later than January 21, 2010. The Convertible Debentures would be deemed satisfied and all outstanding Warrants held by the Holders would be cancelled. In addition, the Holders agreed to cancel all of the Company shares held by them at such time as the payment has been made. However, as of March 20, 2010, the Company has not paid the sum of $1,300,000 to the Holders.

ITEM 6. SELECTED FIANANCIAL DATA

Not applicable because we are a smaller reporting company.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

BUSINESS OVERVIEW

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2009 COMPARE TO THE YEAR ENDED DECEMBER 31, 2008

Total Revenue

During fiscal year ended December 31, 2009, we earned $33,294,591 in revenues as compared to $44,810,929 during the fiscal year ended in 2008, representing a decrease of $11,516,338 or approximately 26%. The decrease is mainly resulted from the revenue of discontinued operation of 4 entities were not included in year 2009, while these entities contributed revenue of $13,442,021 during 2008.

Gross Profit

The gross profit decreased to $819,761 during the fiscal year ended December 31, 2009 from $3,511,028 in 2008, representing $2,691,267 or 77% decrease. The gross margin decreased from 7.2% to 2.5%. The decrease of gross profit is mainly due to the decrease of sales as explained above. In addition, decrease both in gross profit and gross margin contributed to the reasons as follows: (1) financial crisis take effect to the cell phone and calling cards demand in China; (2) selling our products at negative margin to close our Wuhan Branch, Beijing Branch and Zhengzhou Branches due to their un-expected performance; (3) exclusive of discontinued operations.

Expenses

Our selling, general and administrative expenses (“SG&A expenses”) were $3,457,719 during the fiscal year ended December 31, 2009 as compared to $1,945,433 for the fiscal year ended in 2008, representing an increase of $1,512,286 or approximately 78%. The increase of SG&A expenses is mainly due to the allowance for bad debt of $1,664,013 made during 2009 against purchase deposit.

Other expenses were $26,879 during the year ended December 31, 2009, while other expenses of $1,032,720 during the year ended December 31, 2008 mainly representing interest expenses of $1,065,222, which includes $776,744 restructuring expenses.

Discontinued Operations

Resulted from the shrunk market and unsatisfied operating results, we decided to close 3 branches in mainland China and sell 50% equity interest to former Beijing Lihe's owner to keep our core business. These 4 entities resulted $185,321 loss in during 2009.

Net loss

Net loss recorded $2,890,849 during the fiscal year ended December 31, 2009, as compared to a net loss of $283,590 during the fiscal year ended December 31, 2008. The increase of net loss is mainly due to decrease of gross profit and increase of SG&A expenses as explained above.

Liquidity and Capital Resources

Cash used in operating activities were $(2,091,714) during the fiscal year ended December 31, 2009 as compared to cash used in operating activities of $(526,814) for the year ended December 31, 2008. Cash used in operating activities during year 2009 was mainly resulted from net loss of $2,890,849, increase of receivables of $498,279, decrease of non-controlling interest of $554,310 by netting off decrease of purchase deposit of $2,057,733. Increase of purchase deposits is mainly due to the allowance for bad debt of $1,664,013. While the cash used in operating activities during 2008 mainly resulted from net loss of 283,590, increase of receivables of $404,619, increase of purchase deposits of $1,203,294 and increase in inventory of $419,120, netting off depreciation and minority interest of $907,040, increase in different liabilities of $726,163. The increase of operating assets and liabilities are mainly due to our increasing revenue and operating size.

Cash flows provided from investing activities were $445,843 for the fiscal year ended December 31, 2009 as compared to $404,406 used for the fiscal year ended December 31, 2008. Cash provided from investing activities during year 2009 was resulted from proceeds from proceeds on disposal of fixed assets and intangible assets of $315,081, proceeds on disposal of discontinued operation of $193,762, netting off the deposit payment of 63,000. Cash used for investing activities during year 2008 was resulted from acquisition of property and equipment and intangible assets of $586,884, and $41,602 respectively, by netting of proceeds from repayment of note receivable and repayment from business development of $31,751 and $192,329 respectively.

Cash flows provided by financing activities were $153,725 during the fiscal year ended December 31, 2009 compared to $2,554,098 used in financing activities for the fiscal year ended in 2008. Cash provided by the financing activities during 2009 was mainly due to the proceeds from issuance of stock, while cash provided by financing activities during 2008 was mainly due to proceeds from issuance of stock and issuance of convertible debt.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

ITEM 7A. QUANTITIATIVE AND QUALITATIVE DISCLOUSURES ABOUT MARKET RISK

Not applicable because we are a smaller reporting company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Guangzhou Global Telecom, Inc.

Audited Consolidated Financial Statements

December 31, 2009 and 2008

(Stated in US Dollars)

Guangzhou Global Telecom, Inc.

Content	Page

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets	F-2 – 3

Consolidated Statements of Income	F-4

Consolidated Statements of Changes in Stockholders’ Equity	F-5

Consolidated Statements of Cash Flows	F-6 – 7

Notes to Consolidated Financial Statements	F-8 – 23

F-

To:	The Board of Directors and Stockholders of
	Guangzhou Global Telecom, Inc.

Report of Independent Registered Public Accounting Firm

We have audited the accompanying consolidated balance sheets of Guangzhou Global Telecom, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Guangzhou Global Telecom, Inc. as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 13 to the consolidated financial statements, the Company has incurred substantial losses, and has difficulty to pay the PRC government Value Added Tax and past due Debenture Holders Settlement, all of which raise substantial doubt about its ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

South San Francisco, California	Samuel H. Wong & Co., LLP
January 30, 2010	Certified Public Accountants

F-1

Guangzhou Global Telecom, Inc

Consolidated Balance Sheets

As of December 31, 2009 and 2008

(Stated in US Dollars)

ASSETS			12/31/2009		12/31/2008
	Note
Current Assets
Cash and cash equivalent			$	377,591	$	1,628,134
Other receivable		4		1,418,759		920,481
Purchase deposits		6		1,525,935		3,583,669
Inventory				799,480		849,518
Total Current Assets				4,121,765		6,981,802

Non-Current Assets
Property, plant & equipment, net		7		520,149		624,030
Goodwill				-		215,560
Other non-current assets				63,000		-
Total Non-Current Assets				583,149		839,590

TOTAL ASSETS			$	4,704,914	$	7,821,392

LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES

Current Liabilities
Taxes payable			$	684,043	$	695,687
VAT payable		8		1,399,932		1,396,460
Due to shareholder		5		59,490		44,698
Accrued liabilities and other payable				347,268		420,535
Convertible debenture - current portion		10		2,866,323		1,943,037
Total Current Liabilities				5,357,056		4,500,416

Non-Current Liabilities
Convertible debenture - non-current portion		10		-		1,485,714
Total Non-Current Liabilities				-		1,485,714

TOTAL LIABILITIES			$	5,357,056	$	5,986,130

See Notes to Financial Statements and Accountants’ Report

F-2

Guangzhou Global Telecom, Inc

Consolidated Balance Sheets

As of December 31, 2009 and 2008

(Stated in US Dollars)


	12/31/2009			12/31/2008
STOCKHOLDERS' EQUITY

Common Stock US$0.01 par value; 1,000,000,000
Shares authorized, 149,475,127 and 74,839,071 shares
issued and outstanding as of December 31, 2009
and December 31, 2008, respectively	$	1,494,751		$	748,391

Additional paid in capital		1,409,399			1,439,607
Other comprehensive income		38,758			(202,845	)
Retained earnings		(3,816,247	)		(925,398	)
Non-controlling interest		221,197			775,507

TOTAL STOCKHOLDERS' EQUITY	$	(652,141	)	$	1,835,262



TOTAL LIABILITIES AND
STOCKHOLDERS' EUITY	$	4,704,914		$	7,821,392

See Notes to Financial Statements and Accountants’ Report

F-3

Guangzhou Global Telecom, Inc

Consolidated Statements of Income

For the years ended December 31, 2009 and 2008

(Stated in US Dollars)

	Note	12/31/2009			12/31/2008
Sales		$	33,294,591		$	44,810,929
Cost of sales			32,474,830			41,299,901
Gross profit			819,761			3,511,028

Operating expense
Selling expenses			61,618			361,236
G&A expenses			3,396,101			1,584,197
Total operating expense			3,457,719			1,945,433

Operating income / (loss)			(2,637,958	)		1,565,595

Other income/(expense)
Other income			82,162			3,398
Interest income			22			32,159
Other expenses			(55,305	)		(3,055	)
Interest expenses			-			(1,065,222	)
Total other income/(expense)			26,879			(1,032,720	)

Income/(loss) from continued operation			(2,611,079	)		532,875
Income tax			(27,603	)		(411,671	)
Loss from discontinued operation, net of tax			(185,321	)		-
Non-controlling interest			(66,846	)		(404,794	)
Net Income/(Loss)		$	(2,890,849	)	$	(283,590	)

Earnings Per Share
Basic		$	(0.028	)	$	(0.005	)
Diluted		$	(0.028	)	$	(0.005	)

Weighted Average Shares Outstanding
Basic			104,014,950			61,342,162
Diluted			104,014,950			61,342,162

	Accumulated Comprehensive Income
Comprehensive Income	12/31/2008			12/31/2009			Total
Net Income	$	(283,590	)	$	(2,890,849	)	$	(3,174,439)
Other Comprehensive Income
Foreign Currency Translation Adjustment		(222,946	)		241,603			18,657
	$	(506,536	)	$	(2,649,246	)	$	(3,155,782)

See Notes to Financial Statements and Accountants’ Report

F-4

Guangzhou Global Telecom, Inc

Consolidated Statements of Changes in Stockholders’ Equity

As of and for the years ended December 31, 2009 and 2008

(Stated in US Dollars)

					Additional			Other
	Total Number		Common		Paid in			Comprehensive			Retained			Minority
	of Shares		Stock		Capital			Income			Earnings			Interest			Total

Balance, January 1, 2008		53,170,000	$	531,700	$	408,216		$	20,101		$	(641,808	)	$	-		$	318,209
Conversion of convertible debenture to common stock		7,941,302		79,413		541,836			-			-			-			621,249
Issuance of common stock to acquire BJ Lihe		1,500,000		15,000		285,000			-			-			-			300,000
Issuance of common stock to acquire Renwoxing		9,727,769		97,278		194,555			-			-			-			291,833
Issuance of common stock in relation to management compensation		2,500,000		25,000		10,000			-			-			-			35,000
Net Income/(Loss)		-		-		-			-			(283,590	)		-			(283,590	)
Non-controlling interest		-		-		-			-			-			775,507			775,507
Foreign Currency Translation		-		-		-			(222,946	)		-			-			(222,946	)
Balance at December 31, 2008		74,839,071	$	748,391	$	1,439,607		$	(202,845	)	$	(925,398	)	$	775,507		$	1,835,262

Balance, January 1, 2009		74,839,071	$	748,391	$	1,439,607		$	(202,845	)	$	(925,398	)	$	775,507		$	1,835,262
Conversion of convertible debenture to common stock		60,086,056		600,860		(8,333	)		-			-			-			592,527
Issuance of common stock in relation to management compensation		14,550,000		145,500		(21,875	)		-			-			-			123,625
Net Income/(Loss)		-		-		-			-			(2,890,849	)		-			(2,890,849	)
Non-controlling interest		-		-		-			-			-			(554,310	)		(554,310	)
Foreign Currency Translation		-		-		-			241,603			-			-			241,603
Balance at December 31, 2009		149,475,127	$	1,494,751	$	1,409,399		$	38,758		$	(3,816,247	)	$	221,197		$	(652,141	)

See Notes to Financial Statements and Accountants’ Report

F-5

Guangzhou Global Telecom, Inc

Consolidated Statements of Cash Flows

For the years ended December 31, 2009 and 2008

(Stated in US Dollars)

	12/31/2009			12/31/2008
Cash Flow from Operating Activities
Cash received from customers	$	32,602,550		$	44,438,871
Cash paid to suppliers		(30,362,664	)		(42,786,815	)
Cash paid for selling and G&A expenses		(3,457,719	)		(1,945,433	)
Cash received from other income		158,005			186,822
Cash paid to director		14,793			162,745
Cash paid for other expense		(389,769	)		(29,238	)
Interest received		24			32,159
Interest paid		(2	)		(1,065,222	)
Non-controlling interest		(621,156	)		370,713
Tax paid		(35,775	)		108,584
Cash Sourced from/(Used in) Operating Activities		(2,091,714	)		(526,814	)

Cash Flow from Investing Activities
Proceeds from notes receivable		-			31,751
Advance for business development		-			192,329
Purchase of property, plant & equipment		-			(586,884	)
Proceeds of disposal Assets		99,521			-
Sale/(purchase) of intangible assets		215,560			(41,602	)
Payments for deposits		(63,000	)		-
Net cash inflow from disposal of discontinued operation		193,762			-
Cash Sourced from/(Used in) Investing Activities		445,843			(404,406	)

Cash Flow from Financing Activities
Issuance of common stock		746,361			216,691
Additional paid in capital for common stock		-			1,031,391
Proceeds/(settlements) of convertible debentures		(592,636	)		1,306,016
Cash Sourced from/(Used in) Financing Activities		153,725			2,554,098

Net Increase/(Decrease) in Cash & Cash Equivalents		(1,492,146	)		1,622,878

Effect of Foreign Currency Translation		241,603			(222,946	)

Cash & Cash Equivalent at the Beginning of Year		1,628,134			228,202

Cash & Cash Equivalent at the End of Year	$	377,591		$	1,628,134

See Notes to Financial Statements and Accountants’ Report

F-6

Guangzhou Global Telecom, Inc.

Reconciliation of Net Income to Cash Flow Used in Operating Activities

For the years ended December 31, 2009 and 2008

(Stated in US Dollars)

	12/31/2009			12/31/ 2008

Net (loss)/income	$	(2,890,849	)	$	(283,590	)

Adjustments to reconcile net (loss)/income to
net cash provided by cash activities

Minority interest		(554,310	)		775,507
Depreciation		64,643			131,533
Gain on disposal of property, plant and equipment		13,868			-
Loss on disposal of discontinued operation		(267,912	)		-
Decrease/(increase) in other receivable		(498,279	)		(404,619	)
Decrease/(increase) in due from director		-			118,047
Decrease/(increase) in purchase deposit		2,057,733			(1,203,294	)
Decrease/(increase) in related party		-			32,560
Decrease/(increase) in inventory		50,038			(419,120	)
Increase/(decrease) in tax payable		387,367			213,394
Increase/(decrease) in accrued liabilities and other payable		(58,474	)		205,907
Increase/(decrease) in VAT payable		3,472			86,065
Increase/(decrease) in income tax payable		(399,011	)		220,797
Total of all adjustments		799,135			(243,224	)

Net Cash Provided by (Used in)/Sourced from Operating Activities	$	(2,091,714	)	$	(526,814	)

See Notes to Financial Statements and Accountants’ Report

F-7

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

Guangzhou Global Telecom, Inc. (the Company) formerly Avalon Development Enterprise, Inc. was incorporated in the State of Florida, United States (an OTCBB Company) on March 29, 1999.

On March 27, 2007, the Company underwent a reverse-merger with Global Telecom Holding Limited (GTHL, a British Virgin Islands (BVI) Company incorporated on April 1, 2004 under the British Virgin Islands International Business Companies Act (CAP. 291)) and its wholly-owned subsidiary Guangzhou Global Telecommunication Company Limited (GGT, established on December 4, 2004 in PRC with a registered and paid-up capital of RMB 3,030,000 (approximate $375,307)) involving an exchange of shares whereby the Company issued an aggregate of 39,817,500 shares of common stock in exchange for all of the issued and outstanding shares of GTHL. In connection with the reverse merger, the Company issued 200,000 shares of common stock to Zenith Capital Management LLC in April 2007 at a price of $2.50 per share.

In 2007, the Company established 4 subsidiaries; namely, Zhengzhou Global Telecom Equipment Limited (“ZGTE”), Macau Global Telecom Company Limited (“MGT”), Huantong Telecom Hongkong Holding Limited (“HTHKH”), and Huantong Telecom Singapore Company PTE Limited (“HTS”) with capital of RMB 500,000, Macau Dollar 300,000, Hong Kong Dollar 100 and Singapore Dollar 200,000, respectively. Simultaneously, the Company newly established a subsidiary; namely, Guangzhou Huantong Telecom Technology and Consultant Services, Ltd (“GHTTCS”) with capital of RMB 8,155,730. Pursuant to a Stock Purchase Agreement dated April 9, 2008 and July 29, 2008, respectively, the Company acquired 50% of the issued and outstanding shares in the capital of Beijing Lihe Jiahua Technology and Trading Company Ltd (“BLJ”) and 51% of the issued and outstanding shares in Guangzhou Renwoxing Telecom (“GRT”), a limited liability company incorporated in China. Pursuant to the terms of the Stock Purchase Agreements, the Shareholders agreed to sell and transfer the proportion of the shares to the Company for a purchase consideration of US$300,000 and US$291,833 respectively.

The Company, through its subsidiaries, is principally engaged in the distribution and trading of rechargeable phone cards, cellular phones and accessories within cities in PRC. Customers of the Company embrace wholesalers, retailers, and final users.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)	Method of Accounting

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

(b)	Consolidation

The consolidated financial statements include the accounts of Guangzhou Global Telecom, Inc. and eight wholly and partially owned subsidiaries. The consolidated financial statements were compiled in accordance with generally accepted accounting principles of the United States of America. All significant inter-company accounts and transactions have been eliminated in consolidation.

F-8

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

The company owned the following subsidiaries since the reserve-merger and soon thereafter. As of December 31, 2009, detailed identities of the consolidating subsidiaries are as follows:-

Name of Company	Place of Incorporation	Attributable Equity Interest %	Registered Capital

Global Telecom Holding, Ltd.	BVI	100	HKD 7,800
Huantong Telecom Hong Kong Holding, Ltd.	Hong Kong SAR	100	HKD 100
Guangzhou Global Telecommunication Co., Ltd.	PRC	100	RMB 3,030,000
Zhengzhou Global Telecom Equipment, Ltd.	PRC	100	RMB 500,000
Guangzhou Huantong Telecom Technology and Consultant Services, Ltd.	PRC	100
			RMB 8,155,730

Guangzhou Renwoxing Telecom Co., Ltd.	PRC	51	RMB 3,010,000
Macau Global Telecom Co., Ltd.	Macau SAR	100	MOP 300,000
Huantong Telecom Singapore Co. PTE, Ltd.	Singapore	65	SGD 200,000

(c)	Economic and Political Risks

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, restriction on international remittances, and rates and methods of taxation, among other things.

(d)	Use of Estimates

Our discussion and analysis is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. These accounts and estimates include, but are not limited to, the estimation on useful lives of property, plant and equipment. Actual results could differ from those estimates.

F-9

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

(e)	Cash and Cash Equivalents

The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents.

(f)	Accounts Receivable – Trade

Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.

(g)	Inventories

Inventories are stated at the lower of cost or market value. Cost is computed using the first-in, first-out method and includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Market value is determined by reference to the sales proceeds of items sold in the ordinary course of business or estimates based on prevailing market conditions. The inventories are telecommunication products such as mobile phone, rechargeable phone cards, smart chip, and interactive voice response cards.

(h)	Property, Plant, and Equipment

Property, plant and equipment are carried at cost net of accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method with no salvage value. Estimated useful lives of the property, plant and equipment are as follows:

Building	20 years
Equipment	5 years
Furniture and Fixtures	5 years
Leasehold Improvement	5 years
Motor Vehicles	3 years

(i)	Accounting for Impairment of Long-Lived Assets

The Company adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Live Assets” (“SFAS 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144.SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets.

The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.

F-10

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

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. During the reporting periods, there was no impairment loss.

(j)	Revenue Recognition

Revenue from the sale of the products is recognized on the transfer of risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and the title has passed.

(k)	Cost of Sales

The Company’s cost of sales is comprised of raw materials, factory worker salaries and related benefits, machinery supplies, maintenance supplies, depreciation, utilities, inbound freight, purchasing and receiving costs, inspection and warehousing costs.

(l)	Selling Expense

Selling expenses are comprised of outbound freight, salary for the sales force, client entertainment, commissions, depreciation, advertising, and travel and lodging expenses.

(m)	General & Administrative Expense

General and administrative expenses include outside consulting services, research & development, executive compensation, quality control, and general overhead such as the finance department, administrative staff, and depreciation and amortization expense.

(n)	Advertising

The Company expensed all advertising costs as incurred.

(o)	Research and Development

All research and development costs are expensed as incurred.

(p)	Foreign Currency Translation

The Company maintains its financial statements in the functional currency, which is the Renminbi (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

F-11

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

For financial reporting purposes, the financial statements of the Company, which are prepared using the functional currency, have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Translation adjustments are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.

Exchange Rates	12/31/2009	12/31/2008
Period end RMB : US$ exchange rate	6.8372	6.8542
Average period RMB : US$ exchange rate	6.8409	6.9623

Period end HKD : US$ exchange rate	7.7551	7.7507
Average period HKD : US$ exchange rate	7.7522	7.7874

Period end MOP : US$ exchange rate	8.1439	8.1823
Average period MOP : US$ exchange rate	8.1303	8.1657

Period end SGD : US$ exchange rate	1.4054	1.4426
Average period SGD : US$ exchange rate	1.4545	1.4156

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

(q)	Income Taxes

The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. The Company has implemented Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Income tax liabilities computed according to the United States, Singapore, People’s Republic of China (PRC), Macau SAR, and Hong Kong SAR tax laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

In respect of the Company’s subsidiaries domiciled and operated in China, Singapore, Macau and Hong Kong, the taxation of these entities are summarized below:

GGT, ZGTG, and GRT are located in the PRC, and GTHL is located in the British Virgin Islands, HTHKN is in Hong Kong, MGT is in Macau SAR, and HTS is in Singapore; all of these entities are subject to the relevant tax laws and regulations of the PRC, Hong Kong SAR, Macau SAR, British Virgin Islands, and Singapore in which the related entity domiciled. The maximum tax rates of the subsidiaries pursuant to the countries in which they domicile are: -

F-12

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

Subsidiary	Country of Domicile	Income Tax Rate
GGT, ZGTG and GRT	PRC	25.0%
HTHKN	Hong Kong SAR	17.5%
MGT	Macau SAR	12.0%
GTHL	British Virgin Islands	0.00%
HTS	Singapore	18.0%

Effective January 1, 2008, PRC government implements a new 25% tax rate across the board for all enterprises regardless of whether domestic or foreign enterprise without any tax holiday which is defined as "two-year exemption followed by three-year half exemption" hitherto enjoyed by tax payers. As a result of the new tax law of a standard 15% tax rate, tax holidays terminated as of December 31, 2007. However, PRC government has established a set of transition rules to allow enterprises already started tax holidays before January 1, 2008, to continue enjoying the tax holidays until being fully utilized.

·	Since Guangzhou Global Telecom, Inc. is primarily a holding company without any business activities in the United States, the Company shall not be subject to United States income tax for the year ended December 31, 2009.

(r)	Statutory Reserve

Statutory reserve refers to the amount appropriated from the net income in accordance with PRC laws or regulations, which can be used to recover losses and increase capital, as approved, and, are to be used to expand production or operations. PRC laws prescribe that an enterprise operating at a profit, must appropriate, on an annual basis, from its earnings, an amount to the statutory reserve to be used for future company development. Such an appropriation is made until the reserve reaches a maximum equalling 50% of the enterprise’s registered capital.

However, since GGT being an operating company in PRC does not itself have any foreign shareholders and that the Memorandum and Articles do not provide for such appropriation, the Company is therefore not required to fund the Statutory Reserve.

(s)	Other Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards, as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment.

F-13

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

(t)

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable assets acquired in a business combination. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", goodwill is no longer subject to amortization. Rather, goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis.

(u)	Recent Accounting Pronouncements

In June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets (FASB ASC 860 Transfers and Servicing) and FASB Statement No. 167 (FASB ASC 810 Consolidation), a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC 810 Consolidation).

Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FASB ASC 860 Transfers and Servicing), and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. Statement No. 166 (FASB ASC 860 Transfers and Servicing) must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date. The Company is still evaluating the impact of the above pronouncement.

Statement 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC 810 Consolidation), and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. Statement No. 167 (FASB ASC 810 Consolidation) shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company is still evaluating the impact of the above pronouncement.

On June 30, 2009, FASB issued FASB Statement No. 168, Accounting Standards Codification™ ( FASB ASC 105 Generally Accepted Accounting Principles) a replacement of FASB Statement No. 162 the Hierarchy of Generally Accepted Accounting Principles. On the effective date of this standard, FASB Accounting Standards Codification™ (ASC) became the source of authoritative U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the Securities and Exchange Commission (SEC). This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. If an accounting change results from the application of this guidance, an entity should disclose the nature and reason for the change in accounting principle in their financial statements. This new standard flattens the GAAP hierarchy to two levels: one that is authoritative (in FASB ASC) and one that is non-authoritative (not in FASB ASC). Exceptions include all rules and interpretive releases of the SEC under the authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants, and certain grandfathered guidance having an effective date before March 15, 1992. Statement No. 168 is the final standard that will be issued by FASB in that form. There will no longer be, for example, accounting standards in the form of statements, staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA Accounting Statements of Position.

F-14

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

The Company is currently evaluating the potential impact, if any, of the adoption of the above recent accounting pronouncements on its consolidated results of operations and financial condition.

3.	CONCENTRATION

A substantial portion of GGT’s business operations depend on mobile telecommunications in PRC; any loss or deterioration of such relationship may result in severe disruption to the business operations impacting the Company's revenue. GGT relies entirely on the networks and gateways of these phone operators to provide its services. The Company's agreements with these operators are generally for a short period of one year and generally do not have automatic renewal provision. If these providers are unwilling to continue business with the Company, the Company's ability to conduct its existing business would be adversely affected.

4.	OTHER RECEIVABLE

Other Receivable at December 31, 2009 and 2008 pertained to the Company voluntarily extending financing to business associates for purchase of merchandise in return for 60% of gross profit in those transactions, in lieu of interest.

Type of Account	12/31/2009			12/31/2008
Trade financing to business associates	$	1,484,325		$	920,481
Allowance for bad debt		(65,566	)		-
Other receivable, net	$	1,418,759		$	920,481

5.	DUE TO SHAREHOLDER

The following table presents the balances the Company owed to shareholders.

	12/31/2009			12/31/2008
Due to shareholders	$	(59,490	)	$	(44,698	)
	$	(59,490	)	$	(44,698	)

Payables owed to the Company’s shareholders are non-interest-bearing and, payable on demand. There is no impact to the statement of operations as a result of the payables to the shareholder.

F-15

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

6.	PURCHASE DEPOSITS

Purchase Deposits of $1,525,935 and $3,583,669 at December 31, 2009 and 2008 respectively, consisted of advances to suppliers for the purchase of inventories, and prepayments for general operating costs.

Type of Account	12/31/2009			12/31/2008
Purchase deposits, gross	$	3,189,948		$	3,583,669
Allowance for bad debt		(1,664,013	)		-
Purchase deposit, net	$	1,525,935		$	3,583,669

The Company has advanced $388,343, $787,213 and $488,457 to suppliers Tangxin Technology Co., Ltd., Guangda Commercial Co., Ltd. and Tianhe Tangxie Co., Ltd. for purchase of operating inventories. However, Tianxin filed bankruptcy, Guangda and Tianhe have been closed. The Company accrued 100% bad debt allowance for these purchase deposits.

7.	PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following as of December 31, 2009 and 2008: -

12/31/2009
Category of Asset	Cost		Accumulated Depreciation		Net
Equipment		36,557		21,596		14,961
Furniture & Fixtures		119,850		66,029		53,821
Motor Vehicles		103,687		103,661		26
Building		492,541		41,200		451,341
Total		752,635		232,486		520,149

12/31/2008
Category of Asset	Cost		Accumulated Depreciation		Net
Equipment		179,176		89,244		89,932
Furniture & Fixtures		34,380		27,417		6,963
Motor Vehicles		147,757		92,758		54,999
Building		490,843		18,707		472,136
Total		852,156		228,126		624,030

The depreciation expenses were $ 4,361 and $131,533 for the years ended December 31, 2009and 2008, respectively.

F-16

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

8. VALUE ADDED TAX PAYABLE

The Company has been collecting from its customers Value Added Tax (VAT), on behalf of the government. The Company was granted by the government to pay the balance dues under installments up to the end of 2009. The reason of this special arrangement is that the government may waive past due VAT after decision has been made in accordance with regulations for technology zone on tax-exemption matter. However, the Company has not received the approval notice from the government at December 31, 2009.

9. LEASE COMMITMENTS

The Company leases office space and retail stores under operating leases with non-cancelable terms of less than a year at fixed monthly rent. None of the leases included contingent rentals. Lease expense charged to operations for the years ended December 31, 2009 and 2008 amounted to $9,624 and $199,718, respectively. Future minimum lease payments under non-cancelable operating leases until termination of the leases amounted to $9,436 distributed as:

Fiscal Years	Minimum Lease Payments
2010	$	4,938
2011		4,498
Total	$	9,436

10. CONVERTIBLE BONDS AND BOND WARRANTS

On July 31, 2007 and January 1, 2008, the Company completed two financing transactions with several investors (the “Subscriber”) issuing $2,000,000 and $1,000,000, respectively, Fixed Rate Convertible Debenture due in 2009 and a stock purchase warrant to purchase an aggregate of 2,090,592 shares of the Company common stock, subject to adjustments for stock splits or reorganizations as set forth in the warrant, that will expire in 2012 (the “Warrants”).

The Debentures were subscribed at a price equal to 87.5% of their principal amount, which is the issue price of $3,428,571 less a 12.5% discount. The Debentures were issued pursuant to, and are subject to the terms and conditions of, a trust deed dated July 31, 2007 (the “Trust Deed”).

·	Interest Rate. The Debenture bears interest at the rate of 8% per annum of the principal amount of the Debentures.

·	Conversion. Each Debenture is convertible at the option of the holder at any time after July 31, 2007 up to July 31, 2009, into shares of our common stock at a fixed conversion price of $0.82 per share.

On July 31, 2007, the Company also entered into a registration rights agreement with the Subscriber pursuant to which the Company agreed to include the Debenture, the Warrants, and the shares of common stock underlying the Debenture and Warrants in a pre-effective amendment to a registration statement that the Company have on file with the SEC. The Company intends to have the registration statement cover the resale of the Debenture, the Warrants, and the shares of common stock underlying the Debenture and Warrants.

F-17

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

At July 31, 2007 and January 1, 2008, the dates of issuance, the Company determined the fair value of the Debenture to be $2,000,000 and $1,000,000, respectively. The values of the warrants and the beneficial conversion feature as at December 31, 2008 and 2009 determined under the Black-Scholes valuation method were immaterial. Accordingly, the interest discount on the warrants and beneficial conversion feature were recorded, and are being amortized by the straight-line method over 5 years and 2 years respectively.

Because of the fact that the Fixed Rate Convertible Debenture contain three separate securities and yet merged into one package, the Debenture security must identify its constituents and establish the individual value as determined by the Issuer as follows: -

(1	)	Convertible Debenture (after two rounds)	$	3,428,571
(2	)	Discount	$	428,571
(3	)	Warrant	$	-
(4	)	Beneficial Conversion Feature	$	-

The above item (2) is to be amortized to interest expense over the term of the Debenture by the effective interest method.

The Convertible Debentures Payable, net consisted of the following: -

	12/31/2009			12/31/2008
Convertible Debenture - Principal and interest
Balance at beginning of year	$	3,428,751		$	2,122,735
Addition		-			1,000,000
Redemption		(562,428	)		(507,936	)
Interest charged for the current year		-			400,188
Repayment of interest in current year		-			-
Restructure cost		-			413,764
Restructure of convertible debenture		-
Balance at end of year	$	2,866,323		$	3,428,751

Less: Interest discount – Beneficial conversion feature
Balance as at beginning of year	$	-		$	-
Addition		-			-
Amortization		-			-
Balance as at end of year	$	-		$	-

Less: Interest Discount – Warrant
Balance as at beginning of year	$	-		$	-
Addition		-			-
Amortization		-			-
Balance as at end of year	$	-		$	-
Convertible Debenture, net	$	2,866,323		$	3,428,751

F-18

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

The Convertible Debenture was classified as current and non-current as follows:

	12/31/2009		12/31/2008

Current portion	$	2,866,323	$	1,943,057
No current portion		-		1,485,714
	$	2,866,323	$	3,428,751

On November 3, 2008, due to market conditions, the Company re-negotiated the terms of the Debentures and Warrants, and entered into a modification agreement (the “Amendment Agreement”) with the Holders. Pursuant to the Amendment Agreement, the Company agreed to completely remove the monthly interest payment of the Debentures and increase the annual interest rate to 18%. Therefore, as described in the Schedule A of the Amendment Agreement, the Company will pay an aggregate of $2,151,110.85 and $1,485,714.10 to the Holders that are due on July 31, 2009 and February 21, 2010, respectively. The Company acknowledged that the conversion price of the Debentures on the conversion date shall be equal to the lesser of (a) $0.015 (subject to adjustment), and (b) 80% of the lowest closing bid price during the 20 Trading Days immediately prior to the applicable conversion date (subject to adjustment).

The Company further amended the Article of Association to increase the number of authorized shares of common stock to 1,000,000,000.

On December 29, 2009, the Company entered into a Settlement Agreement with Debenture Holders. Pursuant to the Settlement Agreement, the Company would make a total payment of $1,300,000 to the Holders no later than January 21, 2010. The Convertible Debentures would be deemed satisfied and all outstanding Warrants held by the Holders would be cancelled. In addition, the Holders agreed to cancel all of the Company shares held by them at such time as the payment has been made. However, as of March 20, 2010, the Company has not paid the sum of $1,300,000 to the Debenture Holders.

F-19

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

11. COMMON STOCK CAPITAL

The Company is authorized by its Memorandum of Association (i.e. equivalent to Articles of Incorporation) to issue a total of 1,000,000,000 shares at a par value of US$0.01 of which 149,475,127 and 74,839,071 shares have been issued and outstanding as of December 31, 2009 and 2008, respectively.

The presentation of recapitalization as of December 31, 2009 is being depicted in the following table:

Name of Shareholders	Number of Shares		Common Stock Capital		Additional Paid-in Capital			% of Equity Holdings
Shell: Avalon Development of Enterprises Inc. prior to reverse-merger		13,072,500	$	130,725	$	-			8.75	%
Shareholders of Shell in exchange of all of GTHL shares upon reverse-merger		39,817,500		398,175		-			26.64	%
Zenith Capital Management LLC		200,000		2,000		498,000			0.13	%
Miss. Li Yan Kuan		80,000		800		61,600			0.05	%
Less: Cost of Issuance		-		-		(151,384	)		-
Beijing Lihe		1,500,000		15,000		285,000			1.00	%
Guangzhou Renwoxing		9,727,769		97,278		194,555			6.51	%
Private placement investors		68,027,358		680,273		511,628			45.51	%
Management / Insider		17,050,000		170,500		10,000			11.41	%
		149,475,127	$	1,494,751	$	1,409,399			100.00	%

F-20

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

12. DISCONTINUED OPERATION

During the year ended December 31, 2009, the Company closed operation of three branches namely “Beijing, Wuhan, and Zhengzhou” of Guangzhou Global Telecom Company Limited. Their operation results, net of tax effect are reported in detail as follow:

Financial Position

At December 31, 2009

Beijing

Wuhan

Zhengzhou

Branch

Total

Assets

Current assets

Non-current assets

Total assets

Liabilities

Current liabilities

Non-current liabilities

Total liabilities

Net Assets

Total Liabilities & Net Assets

F-21

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

Results of Operations
For the year ended
December 31, 2009
	Beijing Branch			Wuhan Branch			Zhengzhou Branch			Total
Revenue		689,269			480,546			445,010			1,614,825
Cost of revenue		698,999			505,277			462,644			1,666,920
Gross profit (Loss)		(9,730	)		(24,731	)		(17,634	)		(52,095	)

Selling expenses		8,771			2,192			6,578			17,541
General and administrative expenses		60,766			27,526			16,968			105,260
Total operating expenses		69,537			29,718			23,546			122,801

Other income		-			-			-			-
Other expense		-			(805	)		(9,620	)		(10,425	)
Interest expense		-			-			-			-

Earnings/(Losses) before tax		(79,267	)		(55,254	)		(50,800	)		(185,321	)
Income tax		-			-			-			-
		(79,267	)		(55,254	)		(50,800	)		(185,321	)

F-22

Guangzhou Global Telecom, Inc.

Notes to Consolidated Financial Statements

As of and for the years ended December 31, 2009 and 2008

13. GOING CONCERN UNCERTAINTIES

These consolidated financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

As of December 31, 2009, the Company has an accumulated deficit of $2,890,843 due to the fact that the Company continued to incur losses over the past several years, and has difficulty to pay the PRC government Value Added Tax and past due Debenture Holders Settlement.

As a result, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the Company’s ability to continue as a going concern.

F-23

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

None.

ITEM 9A(T).CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2009, the Company’s internal control over financial reporting was effective for the purposes for which it is intended.

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

Changes in Internal Control over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our executive officers and directors and their ages as of April 12, 2010 are as follows:

NAME	AGE	POSITION

Yankuan Li	51	President, Chief Executive Officer, Chief Financial Officer and Director (1)

(1) Effective April 15, 2010, Ms. Yankuan Li was appointed as the Chief Financial Officer of the Company.

Yankuan Li, President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board

Yankuan Li has been Chairman of the Board of GTL since 2005. From 2004-2005, she was General Manager of Guangzhou YueShen TaiYang Technology Ltd., a subsidiary of Pacificnet Inc. (Nasdaq: PACT). From 2003-2004, she was Managing Director of the phone card division of Guangzhou Trading Center of Renwoxing, responsible for phone cards. From 2000-2003, she was Department Manager of the Industrial and Commercial Bank of China Guangzhou Branch. Ms. Li holds a bachelor degree in Business Management of Beijing United University in 1998.

Board of Directors

Our sole director holds office until the annual meeting of stockholders of the Company following the election or until her successors are duly elected and qualified. Officers are appointed by the Board of Directors and serve at its discretion.

Significant Employees

None.

Family Relationships

No family relationships exist among our directors, executive officers, or persons nominated or chosen by us to become directors or executive officers.

Involvement in Certain Legal Proceedings

To our knowledge, during the past five (5) years, none of our directors, executive officers, promoters, control persons, or nominees has been:

§	the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

§	convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

§	subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

§	found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.

Auditors; Code of Ethics; Financial Expert

We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Furthermore, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.

Potential Conflicts of Interest

We are not aware of any current or potential conflicts of interest with any of our executives or directors.

ITEM 11. EXECUTIVE COMPENSATION

Compensation of Executive Officers

The following executives of the Company received compensation in the amounts set forth in the chart below for the fiscal years ended December 31, 2009 and 2008. All compensation listed is in US dollars. No other item of compensation was paid to any officer or director of the Company other than reimbursement of expenses.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)	Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Non-Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Totals ($)
Yankuan Li, CEO, CFO and	2009			0		0		0		0		0		0
Chairman (1)	2008	$		0		0		0		0		0		0	$

Richard Yan, former CFO (2)	2009	$		0		0		0		0		0		0	$
	2008	$		0		0		0		0		0		0	$
Jingda Ni, General Manager (3)	2009	$													$
	2008	$		0		0		0		0		0		0	$

(1) Effective April 15, 2010, Ms. Yankuan Li was appointed as the Chief Financial Officer of the Company.

(2) Effective March 12, 2010, Mr. Richard Yan resigned as the Chief Financial Officer of the Company due to personal reasons. There were no disagreements between Mr. Yan and us or any officer or director of the Company.

(3) Effective September 21, 2009, Mr. Jingda Ni resigned as the General Manager of the Company due to personal and health reasons. There were no disagreements between Mr. Ni and us or any officer or director of the Company.

Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officer named in the Summary Compensation Table through March 27, 2009.

Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were no stock options exercised.

Long-Term Incentive Plan (“LTIP”) Awards Table. There were no awards made to a named executive officer in the last completed fiscal year under any LTIP

Compensation of Directors

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

Employment Agreements

We do not have any employment agreements with our officers or directors currently.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of our capital stock, as of April 12, 2010, for: (i) each director; (ii) each person who is known to us to be the beneficial owner of more than 5%of our outstanding common stock; (iii) each of our executive officers named in the Summary Compensation Table; and (iv) all of our current executive officers and directors of as a group. Except as otherwise indicated in the footnotes, all information with respect to share ownership and voting and investment power has been furnished to us by the persons listed. Except as otherwise indicated in the footnotes, each person listed has sole voting power with respect to the shares shown as beneficially owned.

Title of Class	Name and Address	Number of Common Shares Beneficially Owned		Percent of Class (1)
Common Stock	Yankuan Li		14,193,934		9.50%
Common Stock	Enable Growth Partners LP (2)		32,704,376		21.88%
Common Stock	All directors and executive officers as a group (1 person)		14,193,934		9.50%

(1)	Based on 149,475,127 shares of common stock issued and outstanding as of April 12, 2010.

(2)	Including 27,798,719 shares of common stock held by Enable Growth Partners LP, 3,270,438 shares held by Enable Opportunity Partners LP and 1,635,219 shares held by Pierce Diversified Strategy Master Fund LLC (collectively, “Enable”). The Company and Enable agreed to cancel these shares.

Securities authorized for issuance under equity compensation plans.

We have no equity compensation plans

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

Transactions with Management and Others

There were no material transactions, or series of similar transactions, since the beginning of the Company’s last fiscal year, or any currently proposed transactions, or series of similar transactions, to which we were or are a party, in which the amount involved exceeds $60,000, and in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest.

Indebtedness of Management

There were no material transactions, or series of similar transactions, since the beginning of our last fiscal year, or any currently proposed transactions, or series of similar transactions, to which we were or are a party, in which the amount involved exceeds $60,000 and in which any director or executive officer, or any security holder who is known to us to own of record or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest.

Transactions with Promoters

There were no material transactions between us and our promoters or founders.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

(1) Audit Fees

For the Company’s fiscal years ended December 31, 2009 and 2008, we were billed approximately $81,000 and $92,000 for professional services rendered for the audit and review of our financial statements.

Audit Related Fees

There were no fees for audit related services for the years ended December 31, 2009 and 2008.

Tax Fees

For the Company’s fiscal years ended December 31, 2009 and 2008, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.

All Other Fees

The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2009 and 2008.

Pursuant to the requirements of Section 13 or 15(d) 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.

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

-	approved by our audit committee; or

entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees was pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

a) Documents filed as part of this Annual Report

1. Financial Statements

2. Financial Statement Schedules

3. Exhibits


Exhibit No.	Title of Document

3.1	Articles of Incorporation (1) Amendment to Articles of Incorporation

3.2	Bylaws (1)

10.1	Securities Purchase Agreement (2)

10.2	Registration Rights Agreement (2)

10.3	Subsidiary Guarantee (2)

10.4	Security Agreement (2)

10.5	Form of Senior Secured Convertible Debenture (2)

10.6	Form of Common Stock Purchase Warrant (2)

10.7	Amendment Agreement among the Company and certain investors, dated February 21, 2008 (3)

10.8	Share Transfer Agreement between Huantong Telecom Singapor Company Pte. Ltd. and TCAM Technology Pte. Ltd., dated February 14, 2008 (4)

10.9	Share Transfer Agreement between Global Telecom Holdings Limited and Guangzhou Renwoxing Telecom, dated July 29, 2008 (5)

10.10	Amendment Agreement between the Company and certain investors, dated November 3, 2008 (6)

10.11	Settlement Agreement, dated December 29, 2009 (7)

31.1	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer

31.2	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer

32.1	Section 1350 Certification of Chief Executive Officer

32.2	Section 1350 Certification of Chief Financial Officer

(1)	Incorporated by reference to Form SB-2 filed on January 6, 2006.
(2)	Incorporated by reference to Form 8K/A filed on August 8, 2007.
(3)	Incorporated by reference to Form 8K filed on February 28, 2008.
(4)	Incorporated by reference to Form 8K filed on March 11, 2008.
(5)	Incorporated by reference to Form 8K filed on July 31, 2008.
(6)	Incorporated by reference to Form 8K filed on November 5, 2008.
(7)	Incorporated by reference to the Form 8-K filed on January 4, 2010.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GUANGZHOU GLOBAL TELECOM, INC.

Date: April 15, 2010	By:	/s/ Li, Yankuan
		Li, Yankuan
		President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date

/s/ Li Yankuan	President, Chief Executive Officer, Chief Financial Officer and Director	April 15, 2010
Li Yankuan