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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: March 31, 2011

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

For the transition period from ____________to _____________

Commission File No. 333-139940

CHINA SKYRISE DIGITAL SERVICE INC.
(Exact name of registrant as specified in its charter)

Nevada	98-0554885
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ X ]     No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [   ]     No [   ]

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

Large accelerated filer [   ]		Accelerated filer [   ]
Non-accelerated filer [   ] (Do not check if a smaller reporting company)		Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]     No [ X ]

The number of shares outstanding of each of the issuer’s classes of common stock, as of May 13, 2011 is as follows:

Class of Securities		Shares Outstanding
Common Stock, $0.001 par value		21,433,550

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CHINA SKYRISE DIGITAL SERVICE INC.
Quarterly Report on Form 10-Q
Three Months Ended March 31, 2011
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	(Removed and Reserved)	29
Item 5.	Other Information	29
Item 6.	Exhibits	29

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PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

Financial Statements	Page(s)
Consolidated Balance Sheets	2
Consolidated Statements of Comprehensive Income	3
Consolidated Statements of Cash Flows	4
Notes to Consolidated Financial Statements	5 - 23

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CHINA SKYRISE DIGITAL SERVICE, INC.
CONSOLIDATED BALANCE SHEETS
		March 31,			December 31,
		2011			2010
		(Unaudited)			(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	234,338		$	427,558
Accounts receivable, net of allowance for doubtful accounts		5,242,703			5,195,896
Inventory		1,945,103			2,119,846
Deposits and prepaid expenses		859,138			775,706
Other receivables		444,038			384,649
Total current assets		8,725,320			8,903,655
Property, plant and equipment, net of accumulated depreciation		324,922			339,317
Other assets
Intangible assets, net of accumulated amortization		171,920			136,206
Goodwill		193,754			193,754
Total other assets		365,674			329,960
Total assets	$	9,415,916		$	9,572,932
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	814,018		$	895,599
Unearned revenue		411,278			456,668
Other payables and accrued expenses		695,439			784,404
Short term debt		713,700			746,364
Taxes payable		23,147			166,220
		2,657,582			3,049,255
Commitments and contingencies		-			-
Stockholders' equity
Common stock: $0.001 par value
Authorized: 75,000,000 common shares
21,433,550 and 21,283,550 shares issued and outstanding at
March 31, 2011 and December 31, 2010, respectively		21,434			21,284
Additional paid-in capital		2,306,936			2,246,689
Statutory reserve		381,829			381,829
Retained earnings		3,825,217			3,685,646
Accumulated other comprehensive income		222,918			188,229
Total stockholders' equity		6,758,334			6,523,677
Total liabilities and stockholders' equity	$	9,415,916		$	9,572,932

See accompanying notes to consolidated financial statements

2

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CHINA SKYRISE DIGITAL SERVICE, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
		Three months			Three months
		ended			ended
		March 31,			March 31,
		2011			2010
		(Unaudited)			(Unaudited)
Revenues	$	1,379,594		$	1,323,819
Cost of goods sold		880,503			706,411
Gross profit		499,091			617,408
Selling and marketing expenses		(167,231	)		(91,702	)
General and administrative expenses		(180,081	)		(239,888	)
Net income from operations		151,779			285,818
Other income (expenses)
Other income		20,962			1,323
Interest expense		(11,347	)		(6	)
Total other income (expenses)		9,615			1,317
Income before provision for income taxes		161,394			287,135
Provision for income taxes		(21,823	)		-
Net income		139,571			287,135
Other comprehensive income
Foreign currency translation gain /(loss)		34,689			(3,306	)
Total comprehensive income	$	174,260		$	283,829
Earnings per share
Basic	$	0.01		$	0.01
Diluted	$	0.01		$	0.01
Weighted average number of shares outstanding:
Basic		21,433,550			21,110,550
Diluted		21,433,550			21,110,550

See accompanying notes to consolidated financial statements

3

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CHINA SKYRISE DIGITAL SERVICE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three months			Three months
		ended			ended
		March 31,			March 31,
		2011			2010
		(Unaudited)			(Unaudited)
Cash flows from operating activities
Net income for the period	$	139,571		$	287,135
Adjustments to reconcile net income to net cash from operations:
Depreciation		19,770			21,030
Amortization of intangible assets		12,665			10,754
Changes in operating assets and liabilities
Decrease (increase) decrease in inventory		174,743			(192,880	)
(Increase) decrease in deposits and prepaid expenses		(83,432	)		52,147
Increase in accounts receivable		(46,807	)		(901,493	)
(Increase) decrease in other receivables		(59,389	)		204,714
Decrease in taxes payable		(143,073	)		(61,016	)
(Decrease) increase in accounts payable		(81,581	)		272,589
(Decrease) increase in unearned revenue		(45,390	)		197,942
(Decrease) increase in other payable and accrued expenses		(88,965	)		526
Net cash used in operating activities		(201,888	)		(108,552	)
Cash flows from investing activities
Purchases of property, plant and equipment		(3,638	)		(4,922	)
Purchase of intangible assets		(47,546	)		(28,994	)
Net cash used in investing activities		(51,184	)		(33,916	)
Cash flows from financing activities
Repayment of short term debt		(32,664	)		-
Net cash used in financing activities		(32,664	)		-
Effects of exchange rate changes on cash		92,516			(3,306	)
Decrease in cash and cash equivalents		(193,220	)		(145,774	)
Cash and cash equivalents, beginning of period		427,558			409,718
Cash and cash equivalents, end of period	$	234,338		$	263,944
Supplementary disclosures of cash flow information:
Cash paid for interest	$	11,347		$	6
Cash paid for taxes	$	154,420		$	-

See accompanying notes to consolidated financial statements

4

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	CORPORATE INFORMATION
	China Skyrise Digital Service, Inc. (the “Company” or “CSD”) (formerly known as Getpokerrakeback.com) was incorporated on June 5, 2006 in the State of Nevada. The Company commenced business by developing and launching its website getpokerrakeback.com, on which it offered “rake backs,” a poker loyalty program that rewards online poker players for playing online poker at a specific online poker room.
	On September 25, 2009, the Company completed a reverse acquisition transaction through a share exchange with United Digital Home H.K. Group Company Limited (“UDH”) whereby the Company acquired 100% of the issued and outstanding capital stock of UDH, in exchange for 12,379,800 shares of the Company’s common stock, which shares constituted 72.8% of the Company’s issued and outstanding capital stock on a fully-diluted basis, as of and immediately after the consummation of the reverse acquisition. As a result of the acquisition of UDH, the Company now owns all of the issued and outstanding capital stock of UDH, which in turn owns Shenzhen Skyrise Technology Co., Ltd (“SST”) and Shenzhen Skyrise Digital Electronics Co., Ltd. (“SSD”). For accounting purposes, the share exchange transaction with UDH was treated as a reverse acquisition and recapitalization of CSD, with UDH as the acquirer and China Skyrise Digital Service Inc. as the acquired party. Upon completion of the exchange, UDH, SST and SSD became wholly owned subsidiaries of CSD.
	UDH is a private corporation incorporated on December 11, 2007 in Hong Kong. It was principally established to serve as an investment holding company and its operations are carried out in Hong Kong. On January 28, 2008, UDH acquired 100% of the equity interest in SST, a corporation incorporated under the laws of the People’s Republic of China (“PRC”), from SST’s shareholders, including Mr. Mingchun Zhou, the Company’s Chairman and Chief Executive Officer. SST was established on May 23, 2003 and its principal activity is the development and sale of digital residential intercom and safety products and solutions. On April 23, 2008, SST established SSD, a corporation incorporated under the laws of the PRC. SSD’s principal activity is development and sales of computing network and intelligence systems.
	As a result of the reverse acquisition of UDH, the Company entered into a new business. Through its Chinese subsidiaries, the Company is now engaged in the development and sale of digital residential intercom and safety products, system-on-chip solutions, as well as the development and operation of community e-business value-added services. On September 25, 2009, the Company changed its name to China Skyrise Digital Service, Inc. to more accurately reflect its new business operations.
	CSD, UDH, SST and SSD are hereafter referred to as (“the Company”).
2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	2.1	FISCAL YEAR
		The Company has adopted December 31 as its fiscal year end.

5

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	2.2	REPORTING ENTITIES
		The accompanying consolidated financial statements include the following entities:

	2.3	BASIS OF CONSOLIDATION AND PRESENTATION
		The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). In the opinion of management, the accompanying balance sheets, and statements of income, and cash flows and include all adjustments, consisting only of normal recurring items, considered necessary to give a fair presentation of operating results for the periods presented. All material inter-company transactions and balances have been eliminated in consolidation.
		For accounting purposes, the combination of the company and UDH was accounted for as a reverse merger with UDH as the acquirer and CSD as the acquired party and the acquisition of SST and SSD was accounted for under the acquisition method with UDH as the immediate parent corporation of both companies for legal purposes. Accordingly the Company’s financial statements have been prepared on a consolidated basis for the periods presented and the consolidated balance sheets, consolidated statements of income and comprehensive income, stockholders’ equity and cash flows were presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquired party from the date of stock exchange transaction.
		Interim results are not necessarily indicative of results for a full year. The information included in the Form 10-Q should be read in conjunction with the information included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2010, filed with the SEC on April 1, 2011.
	2.4	USE OF ESTIMATES
		The preparation of financial statements in conformity with US GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

6

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	2.5	ECONOMIC AND POLITICAL RISK
		The Company’s business operations are conducted in the PRC and are subject to special considerations and risks not typically associated with companies in North America and Western Europe. China’s political, economic and legal environments may influence the Company’s business, financial condition and results of operations, including adverse effects by changes in governmental policies in laws and regulations, anti-inflationary measures, and rates and methods of taxation.
	2.6	REVENUE RECOGNITION
		Sales revenue is recognized when all of the following have occurred: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price is fixed or determinable, and (iv) the ability to collect is reasonably assured. These criteria are generally satisfied at the time of shipment when risk of loss and title passes to the customer.

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

	2.7	COST OF GOODS SOLD
		Cost of goods sold consists primarily of direct material costs, direct labor costs, direct depreciation and related direct expenses attributable to the production of the products. Inbound shipping and handling costs and purchasing are included in direct material costs. Manufacturing overhead includes expenses such as indirect labor, depreciation as it relates to the cost of production, rent, utilities, receiving costs, and equipment maintenance and repairs.
	2.8	SHIPPING AND HANDLING
		Shipping and handling costs related to costs of goods sold are included in selling and marketing expenses, and general and administrative expenses totaled $4,754 and $4,835 for the three months ended March 31, 2011 and March 31, 2010, respectively.
	2.9	ADVERTISING
		Advertising costs are included in selling and marketing expenses which totaled $8,628 and $2,437 for the three months ended March 31, 2011 and March 31, 2010, respectively.
	2.10	RESEARCH AND DEVELOPMENT COSTS
		Research and development costs are included in general and administrative expenses and include the cost to develop new products and are expensed when incurred and totaled $74,949 and $116,209 for the three months ended March 31, 2011 and March 31, 2010, respectively. The costs for development of new products and substantial enhancements to existing products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized. The Company has determined that technological feasibility is established at the time a working model of products is completed.
	2.11	GOVERNMENT GRANT
		Government grants represent local authority grants to the Company for software development. Grants are recognized when the local authority approve the grant.

7

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	2.12	FOREIGN CURRENCY TRANSLATION AND OTHER COMPREHENSIVE INCOME
		The reporting currency of the Company is the United States Dollars ($). The functional currencies of the Company and its subsidiaries UDH, SST and SSD, are the United States Dollars ($) and Chinese Renminbi (RMB), respectively.
		For those entities whose functional currency is other than the US dollars, all assets and liabilities are translated into US dollars at the exchange rate on the balance sheet date; stockholders’ equity is translated at historical rates and items in the statements of income and of cash flows are translated at the average rate for the year. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported in the statement of cash flows will not necessarily agree with changes in the corresponding balances in the balance sheet. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statement of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.
		Accumulated other comprehensive income amounted to $222,918 and $188,229 as of March 31, 2011 and December 31, 2010, respectively. The balance sheet amounts with the exception of equity at March 31, 2011 and March 31, 2010 were translated at RMB6.56 to $1.00 and RMB6.82 to $1.00, respectively. The average translation rates applied to the statements of income and of cash flows for the three months ended March 31, 2011 and March 31, 2010 were RMB 6.58 to $1.00 and RMB 6.82 to $1.00, respectively.
	2.13	PROPERTY, PLANT AND EQUIPMENT
		Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such costs include the cost of replacing parts that are eligible for capitalization when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalization. The assets’ residual values, useful lives and amortization methods are reviewed, and adjusted if appropriate, at each financial year-end.
		Depreciation is calculated on a straight-line basis over the estimated useful life of the assets.

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

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

2.13

PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

		Depreciation expense was $19,770 and $21,030 for the three months ended March 31, 2011 and March 31, 2010, respectively.
		Expenditures for maintenance and repairs are charged to expense as incurred, whereas major improvements are capitalized as additions to property, plant and equipment. The Company reviews its property, plant and equipment whenever events or changes in circumstances indicate that the carrying value of certain assets might not be recoverable. In these instances, the Company recognizes an impairment loss when it is probable that the estimated cash flows are less than the carrying value of the asset. To date, no such impairment losses have been recorded.
	2.14	LONG –LIVED ASSETS
		The Company reviews the carrying amount of its long-lived assets, including intangibles, for impairment, each reporting period in accordance with ASC Topic 360 “Property, Plant, and Equipment”. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is considered not recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flow. As of March 31, 2011 and December 31, 2010, the Company determined no impairment charges were necessary.
	2.15	CAPITALIZED INTERNAL USE SOFTWARE
		The Company capitalizes certain costs incurred to purchase or create internal-use software in accordance with ASC Topic 350-40, “Internal Use Software”. To date, such costs have included external direct costs of materials and services incurred in the implementation of internal-use software and are included within computer hardware and software. Once the capitalization criteria have been met, such costs are classified as software and are amortized on a straight-line basis over five years once the software has been put into use. Subsequent additions, modifications, or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred.

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	2.16	INTANGIBLE ASSETS
		The Company records identifiable intangible assets in other assets at cost less accumulated amortization and impairment. These assets consist primarily of software licenses. The Company amortizes them over the shorter of their stated or statutory duration or their estimated useful lives on a straight-line basis over five years.

			March 31,			December 31,
			2011			2010
			$			$
	Patent		10,677			8,825
	Software system		279,080			232,555
			289,757			241,380
	Less: Accumulated amortization		(117,837	)		(105,174	)
	Net book value		171,920			136,206

		Amortization expense was $12,665 and $10,754 for the three months ended March 31, 2011 and March 31, 2010, respectively.
	2.17	GOODWILL
		Goodwill represents the fair value of the assets acquired in the acquisitions over the cost of the assets acquired. Goodwill is tested for impairment on an annual basis of the end of the company’s fiscal year, or when impairment indicators arise. The Company uses a fair-value-based approach to test for impairment. The Company indirectly acquired two separate companies, SST and SSD. SST is engaged in the development and sales of digital residential intercom and safety products and solutions and SSD is engaged in the development and sales of computing network and intelligence systems. As a result of these acquisitions, the Company recorded goodwill in the amount of $193,754. This goodwill represents the fair value of the assets acquired in these acquisitions over the cost of the assets acquired.
	2.18	INVENTORY
		Inventory consists primarily of raw materials, components, finished goods and low value consumable goods. Raw materials, components and low value consumable cost are stated at cost. Cost comprises direct materials and, where applicable direct labor costs and those overheads that have been incurred in bringing the inventory to their present location and condition. Finished goods are stated at the lower of cost (determined on weighted average method) or net realizable value.

			March 31,			December 31,
			2011			2010
			$			$
	Raw materials		344,921			349,539
	Consumable stores		131,655			130,964
	Components		90,513			90,594
	Finished goods-in-transits		392,047			394,750
	Finished goods		985,967			1,153,999
			1,945,103			2,119,846

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	2.18	INVENTORY (CONTINUED)
		The Company provides for inventory losses based on obsolescence and levels in excess of forecasted demand. In these cases, inventory is reduced to estimated realizable value based on historical usage and expected demand. Inherent in the Company’s estimates of market value in determining inventory valuation are estimates related to economic trends, future demand for the Company’s products, and technical obsolescence of products. When products have been delivered, but the product revenue associated with the arrangement has been deferred as a result of not meeting the revenue recognition criteria. The Company includes the costs for the delivered items in inventory until recognition of the related revenue occurs.
	2.19	ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR DOUBTFUL ACCOUNTS
		The Company reduces gross trade accounts receivable by an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company reviews its allowance for doubtful accounts on a regular basis and all past due balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Provisions for doubtful accounts for the three months ended March 31, 2011 and year ended December 31, 2010 are $nil and $46,312, respectively. Bad debts written off for the three months ended March 31, 2011 and March 31, 2010 are $nil.
		Aging of accounts receivable of the Company is as follows:

			March 31,			December 31,
			2011			2010
			$			$
	within 1 year		5,107,008			4,791,800
	within 1- 2 years		82,168			350,500
	over 2 years		100,083			99,908
			5,289,259			5,242,208
	Allowance for doubtful accounts		(46,556	)		(46,312	)
			5,242,703			5,195,896

	2.20	DEPOSITS AND PREPAID EXPENSES

			March 31,			December 31,
			2011			2010
			$			$
	Trade deposits		797,912			740,061
	Prepaid expenses		61,226			35,645
			859,138			775,706

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

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.21	OTHER RECEIVABLES

			March 31,			December 31,
			2011			2010
			$			$
	Project tender and other deposits		51,829			54,612
	Rental and utility deposits		14,496			13,728
	Due from employees		209,271			181,800
	Guarantee deposits		13,162			13,098
	Samples loaned to customers		54,970			2,108
	Temporary payments to third parties		19,596			15,125
	Government grant receivable		80,714			104,178
			444,038			384,649

Project tender deposits are refundable on the completion of the entire tender process. Due from employees are the amounts advanced for handling business transactions on behalf of the Company and will be reconciled by the Company on the completion of the business transactions. Samples loaned to customers are physical samples advanced to customers for exhibition and promotion purposes. Temporary payments to third parties are deposits represent temporary deposits paid by the Company to suppliers and service providers in anticipation of their delivery of products and services of the Company. Such deposits are unsecured, interest free and have no fixed repayment terms.

2.22

TAXES PAYABLE

				March 31,			December 31,
				2011			2010
				$			$
	VAT			(12,695	)		11,118
	City maintenance and construction levies			5,868			6,657
	Personal income tax			5,605			19,971
	Enterprise income tax			21,895			126,532
	Eduction levies			2,474			1,863
	Other levies			-			79
	Taxes payable			23,147			166,220

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.23	OTHER PAYABLES AND ACCRUED EXPENSES

Wages and professional accruals are amounts due to employees and professional firms. Due to related party represented the amount due to Mr. Mingchun Zhou, Chief Executive Officer of the Company. SST has borrowed funds from Mr. Mingchun Zhou at intervals commencing in fiscal year 2008. Until July 10, 2009, these loans were unsecured, interest free and had no fixed repayment term. On July 10, 2009, the Company entered into a Repayment Agreement with Mr. Zhou, pursuant to which the Company acknowledged and memorialized its obligation to repay an outstanding balance of RMB 1,937,000 (approximately, $284,158) to Mr. Zhou. According to the agreement, the loan remains unsecured, and is interest free, but the Company is obligated to repay the amount on or before July 10, 2011, the second anniversary of execution date. The other remaining amount due to Mr. Zhou was unsecured, interest free and had no fixed repayment term. Security deposits for samples loaned to customers received are deposits paid by customers in order to safeguard that samples will be returned to the Company. Temporary receipts from third parties represent temporary deposits provided to the Company in anticipation of the Company’s delivery of products and services to third parties in the future. This is a usual and customary way to show a good faith intent to conduct business with the Company in the future. Such deposits are unsecured advances, interest free and without a fixed term of repayment.

2.24

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

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

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	2.24	FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
		The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments.
		The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value as of March 31, 2011 or December 31, 2010, nor gains or losses are reported in the statement of income and comprehensive income that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the three months ended March 31, 2011 or March 31, 2010.
	2.25	STOCK COMPENSATION
		The Company has adopted both ASC Topic 718, “Compensation - Stock Compensation” and ASC Topic 505-50, “Equity- Based Payments to Non-Employees” using the fair value method. Under ASC Topic 718 and ASC Topic 505-50, stock compensation expenses is measured at the grant date on the value of the option or restricted stock and is recognized as expenses, less expected forfeitures, over the requisite service period, which is generally the vesting period.
	2.26	RETIREMENT BENEFIT COSTS
		PRC state managed retirement benefit programs are defined contribution scheme and the payments to the scheme are charged as expenses when employees have rendered service entitling them to the contribution
	2.27	INCOME TAXES
		The Company adopted ASC Topic 740, “Income Taxes” that requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consist of taxes currently due plus deferred taxes. Since the Company had no operations within the United States there is no provision for US income taxes and there are no deferred tax amounts as of March 31, 2011 and December 31, 2010.
		The charge for taxation is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can be utilized.
		Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
		A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no affect on the Company’s financial statements.

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.28	PRODUCT WARRANTIES

Substantially all of the Company’s products are covered by a standard warranty of 2 years for products. In the event of a failure of products covered by this warranty, the Company must repair or replace the software or products or, if those remedies are insufficient, and at the discretion of the Company, provide a refund. The sales contracts encompass its warranty obligations. Occurrence of the failure of products within warranty period is few and insignificant; therefore, the Company provides nil% of sales income for product warranties for the three months ended March 31, 2011 and March 31, 2010. The product warranty reserve was $nil as of March 31, 2011 and December 31, 2010.

	2.29	RELATED PARTIES
		Parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control the party, or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significance. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities which are under the significant influence of related parties of the Company where those parties are individuals, and post-employment benefit plans which are for the benefits of employees of the Company or of any entity that is a related party of the Company.
	2.30	CASH AND CASH EQUIVALENTS
		Cash and cash equivalents comprise cash in bank and on hand.

				March 31,			December 31,
				2011			2010
	Cash and bank balances		$	234,338		$	427,558

	2.31	CONCENTRATIONS OF CREDIT RISK

The Company’s operations are carried out in the PRC. Accordingly, its business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC's economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Cash includes cash on hand and demand deposits in accounts maintained with state owned banks within the People’s Republic of China. Total cash in these banks as of March 31, 2011 and December 31, 2010 amounted to $221,195 and $413,736, respectively, of which no deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	2.31	CONCENTRATIONS OF CREDIT RISK (CONTINUED)
		The Company had 5 major customers whose revenue individually represented of the Company’s total revenue as follows:

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

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.	WEIGHTED AVERAGE NUMBER OF SHARES
	In September 2009, the Company entered into share exchange transaction which has been accounted for as a reverse merger since there has been a change of control. The Company computes the weighted-average number of common shares outstanding in accordance with ASC Topic 805 “Business Combination” which states that in calculating the weighted average shares when a reverse merger takes place in the middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (the accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement. The number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period.
4.	EARNINGS PER COMMON SHARE
	The Company reports earnings per share in accordance with the provisions of ASC Topic 260 “Earning per Share” requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution (using the treasury stock method) that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.
	For the three months ended March 31, 2011 and March 31, 2010, basic and diluted earnings per share amount to $0.01.
5.	ACCUMULATED OTHER COMPREHENSIVE INCOME
	ASC Topic 220 “Comprehensive Income” establishes standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income is defined as the change in stockholders’ equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The comprehensive income for all periods presented includes both the reported net income and net change in cumulative translation adjustments.
6.	RECENT ACCOUNTING PRONOUNCEMENTS
	In January 2010, FASB issued ASU No. 2010-01 Accounting for Distributions to Shareholders with Components of Stock and Cash. The amendments in this Update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December.
	In January 2010, FASB issued ASU No. 2010-02 regarding accounting and reporting for decreases in ownership of a subsidiary. Under this guidance, an entity is required to deconsolidate a subsidiary when the entity ceases to have a controlling financial interest in the subsidiary. Upon deconsolidation of a subsidiary, and entity recognizes a gain or loss on the transaction and measures any retained investment in the subsidiary at fair value. In contrast, an entity is required to account for a decrease in its ownership interest of a subsidiary that does not result in a change of control of the subsidiary as an equity transaction. This ASU clarifies the scope of the decrease in ownership provisions, and expands the disclosures about the deconsolidation of a subsidiary or de-recognition of a group of assets. This ASU is effective for beginning in the first interim or annual reporting period ending on or after December 31, 2009. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements In January 2010, FASB issued ASU No. 2010-02 – Accounting and Reporting for Decreases in Ownership of
	a	Subsidiary – a Scope Clarification. The amendments in this Update affect accounting and reporting by an entity that experiences
	a	decrease in ownership in a subsidiary that is a business or nonprofit activity. The amendments also affect accounting and
	reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit activity for an equity interest in another entity. The amendments in this update are effective beginning in the period that an entity adopts SFAS No. 160, “Non- controlling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51.” If an entity has previously adopted SFAS No. 160 as of the date the amendments in this update are included in the Accounting Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopted SFAS No. 160. The Company adopted this standard and has determined the standard does not have material effect on the Company’s consolidated financial statements.

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.	RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

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

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

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

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

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

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.	RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

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

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

7.	INCOME TAXES

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

No Hong Kong corporate income tax has been provided in the financial statements, as UDH did not have any assessable profits for the three months ended March 31, 2011 and March 31, 2010.

The Company’s subsidiaries are governed by the income tax law of the PRC concerning foreign investment enterprises and foreign enterprises and various local income tax laws. Beginning January 1, 2008, the new enterprise income tax law (“New EIT Law”) replaced the prior tax laws for domestic enterprises and foreign invested enterprises (“FIEs”). Prior to 2008, FIEs and domestic enterprises established in the PRC, unless granted preferential tax treatments by the PRC government, were generally subject to an enterprise income tax ("EIT") rate of 15% and 33%, respectively. New EIT Law and its implementing rules impose a unified EIT of 25% on all domestic enterprises and FIEs, unless they qualify under certain limited exceptions.

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

Under the old EIT law, SST was entitled to certain tax exemptions and reductions available to software companies. Under these “tax holidays,” SST is entitled to exemption from EIT for 2 years and reduced tax rates for 3 years after that, effective as of 2008. Therefore, SST incurred no income tax expense during fiscal years 2008 and 2009 and should pay income tax expense on the tax rate of 11% and 12% for fiscal year 2010 and fiscal year 2011, respectively. SSD, tax rate prior New EIT Law was 15%, is subject to the New EIT Law and provides income tax provision on a gradually increased EIT rate over a 5-year period. Tax rate for SSD for fiscal year 2010 and fiscal year 2011 are 22% and 24%, respectively. No deferred tax has been provided in the financial statements as there are no material temporary differences.

In addition, the New EIT Law and its implementing rules generally provide that a 10% withholding tax applies to China-sourced income derived by non-resident enterprises for PRC enterprise income tax purposes unless the jurisdiction of incorporation of such enterprises’ shareholder has a tax treaty with China that provides for a different withholding arrangement. SST is considered an FIE and is directly held by UDH, a Hong Kong company. According to a 2006 tax treaty between the Mainland and Hong Kong, dividends payable by an FIE in China to the company in Hong Kong who directly holds at least 25% of the equity interests in the FIE will be subject to a no more than 5% withholding tax.

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.	INCOME TAXES (CONTINUED)

The following table reconciles the U.S statutory rates to the Company’s effective tax rate for the three months ended March 31, 2011:

8.	SHORT TERM DEBT

There are no provisions in the Company’s bank borrowings that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business. Under certain agreements, the Company has the option to retire debt prior to maturity, either at par or at a premium over par.

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.	COMMON STOCK
	The Company has authorized 75,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.
	On September 25, 2009, the Company issued 12,379,800 shares of common stock to the shareholders of UDH. The total consideration for the 12,379,800 shares was 10,000 shares of UDH, which is all the issued and outstanding capital stock of UDH. As a result of the reverse merger, the equity account of the Company, prior to the share exchange date, has been retroactively restated so that the ending outstanding share balance as of the share exchange date is equal to the number of post share-exchange shares.
	On September 25, 2009, the Company issued certain individuals 4,105,750 shares of its common stock at a fair value of $0.01 per share, for services rendered and to be rendered to the Company in connection with the reverse acquisition of UDH. These services are to be provided over a 5-year period and were valued at $41,058. Stock based compensation expenses will be recognized pro-rata over the life of the agreement of 5 years
	During the year ended December 31, 2010, the Company issued certain company a total of 173,000 shares of common stock of $0.001 per share, as stock based compensation for certain consulting services rendered and to be rendered to the Company.
	As of January 1, 2011, the Company issued to a consultant, a total of 150,000 shares of the Company’s common stock, par value $0.001 per share, as compensation for services rendered to the Company during 2010. This amount had been accrued at December 31, 2010 as part of the Company’s accrued expenses.
	As of March 31, 2011 and December 31, 2010, respectively, the Company has 21,433,550 and 21,283,550 shares of its common stock issued and outstanding.
10.	STOCK OPTIONS
	The Company has not granted any stock options as of March 31, 2011. The Company does not have a formal stock option plan, however, options may be granted with terms and conditions at the discretion of the Company’s board of directors.
	On September 25, 2009, Mr. Lai, the owner of approximately 65.75% of the Company’s issued and outstanding common stock, entered into an option agreement with Mr. Mingchun Zhou, our Chairman and Chief Executive Officer and an original shareholder of SST, pursuant to which Mr. Zhou was granted an option to purchase all shares of the Company’s common stock currently owned or later acquired by Mr. Lai. Mr. Zhou may exercise this option, in whole but not in part, during the period commencing on the 365th day following of the date of the option agreement and ending on the second anniversary of the date thereof. On September 27, 2010, Mr. Zhou exercised this option to purchase all shares of the Company’s common stock owned by Mr. Lai, resulting in a change of control of the Company.
11.	STOCK BASED COMPENSATION
	On September 25, 2009, the Company issued 4,105,750 shares of common stock to certain individuals who provided services for the benefit of the Company and/or its subsidiaries in connection with reverse acquisition of UDH. The fair value of the common stock issued is determined using the fair value of the Company’s common stock on the grant date at $0.01 per share. The Company calculated a stock based compensation of $41,058 and recognized $2,053 for the three months ended March 31, 2011 and March 31, 2010. As of March 31, 2011 and December 31, 2010, the deferred compensation balances were $22,581 and $24,634, respectively, and the deferred compensation balance of $24,634 was amortized over three years beginning on January 1, 2011.

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.	COMMITMENTS AND CONTINGENCIES

For the three months ended March 31, 2011 and March 31, 2010, total lease expenses were $19,542 and $14,336, respectively. The future minimum lease payments at March 31, 2011, are as follows:

From time to time and in the ordinary course of business, the Company may be subject to various claims, damages and litigation. As of March 31, 2011 and December 31, 2010, the Company did not have any pending claims, charges, or litigation that it expects would have material adverse effects on its consolidated balance sheets, consolidated statements of income and comprehensive income or cash flows.

13.	PRODUCT LINE INFORMATION

The Company sells software and hardware. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. The Company considers itself to be operating within one reportable segment. The Company does not have long-lived assets located in foreign countries. The Company’s net revenue from external customers by main product lines is as follows:

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CHINA SKYRISE DIGITAL SERVICE, INC.
QUARTERLY FINANCIAL REPORT
FOR THE THREE MONTHS ENDED MARCH 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14.	RELATED PARTIES TRANSACTIONS

For the three months ended March 31, 2011 and March 31, 2010, there was cash and non-cash compensation of $15,501 and $5,735 awarded to, earned by, or paid to any of our executive officers or directors. In addition to the transactions and balances as disclosed elsewhere in these consolidated financial statements, during the period, the Company had the following significant related party transactions:

15.	SUBSEQUENT EVENTS

As required by ASC Topic 855 “Subsequent Events”, the Company has evaluated subsequent events that have occurred through May 13, 2011, the date the consolidated financial statements were available to be issued.

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ITEM 2.

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

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to:

• “We,” “us,” “our,” or the “Company” are to the combined business of China Skyrise and its consolidated subsidiaries, United Digital, Skyrise Technology and Skyrise Digital;

• “China Skyrise” are to China Skyrise Digital Service Inc., a Nevada corporation;

• “United Digital” are to United Digital Home H.K. Group Company Limited, a Hong Kong limited company;

• “Skyrise Technology” are to Shenzhen Skyrise Technology Co., Ltd., a PRC limited company;

• “Skyrise Digital” are to Shenzhen Skyrise Digital Electronics Co., Ltd., a PRC limited company;

• “Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China;

• “PRC” and “China” are to the People’s Republic of China;

• “SEC” are to the Securities and Exchange Commission;

• “Securities Act” are to the Securities Act of 1933, as amended;

• “Exchange Act” are to the Securities Exchange Act of 1934, as amended;

• “Renminbi” and “RMB” are to the legal currency of China; and

• “U.S. dollars,” “dollars” and “$” are to the legal currency of the United States.

Overview of Our Business

We develop and sell digital residential intercom and safety products. Our revenues are mainly derived from sales of digital residential intercom and safety products. Revenues derived from the sale of our products are not concentrated within any one customer or group of related customers. We are also developing a system-on-chip product, as well as community e-business value-added services which we expect will generate recurring revenues from our existing clients.

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

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

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

First Quarter Financial Performance Highlights

The following are some financial highlights for the first quarter:

• Revenues: Revenues increased $0.06 million, or 4%, to $1.38 million for the three months ended March 31, 2011, from $1.32 million for the same period in 2010.

• Gross profit: Gross profit decreased $0.12 million, or 19%, to $0.50 million for the three months ended March 31, 2011, from $0.62 million for the same period in 2010.

• Income from operations: Income from operations decreased $0.13 million, or 47%, to $0.15 million for the three months ended March 31, 2011, from $0.28 million for the same period last year.

• Net income: Net income was $0.14 million for the three months ended March 31, 2011, a decrease of $0.15 million, or 52%, from $0.29 million for the same period in 2010.

• Fully diluted earnings per share: Fully diluted earnings per share was $0.01 for the three months ended March 31, 2011, as compared to $0.01 for the same period last year.

Results of Operations

The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of sales revenue and key components of our revenue for the periods indicated in dollars.

Comparison of three months ended March 31, 2011 and March 31, 2010

The following table sets forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales.

		Three Months Ended						Three Months Ended
		March 31, 2011						March 31, 2010
					% of						% of
		Amount			Revenues			Amount			Revenues
Revenues	$	1,379,594			100%			1,323,819			100%
Cost of goods sold		880,503			64%			706,411			53%
Gross profit		499,091			36%			617,408			47%
Operating expenses
Selling & marketing expenses		(167,231	)		(12%	)		(91,702	)		(7%	)
General and administrative expenses		(180,081	)		(13%	)		(239,888	)		(18%	)
Total operating expenses		(347,312	)		(25%	)		(331,590	)		(25%	)
Income from operations		151,779			11%			285,818			22%
Interest expense		(11,347	)		(1%	)		(6	)		0%
Other income		20,962			1%			1,323			0%
Income before income taxes		161,394			12%			287,135			22%
Income taxes		(21,823	)		(2%	)		-			-
Net income	$	139,571			10%			287,135			22%

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Revenues. Our revenue is mainly derived from the sale of digital intercom packaged solutions. Our sales revenue increased to $1,379,594 in the three months ended March 31, 2011, from $1,323,819 in the same period last year, representing a 4% growth year-over-year. The modest growth in our sales revenue was mainly due to a slightly higher sales volume resulting from our marketing and sales efforts, including pricing discounts.

Cost of Goods Sold. Our cost of goods sold consists primarily of direct material costs, direct labor costs, direct depreciation and related direct expenses attributable to the production of our products. Our cost of good sold increased $174,092, or 24%, to $880,503 in the three months ended March 31, 2011, from $706,411 in the same period in 2010. The increase was related to our increased sales volume.

Gross Profit and Gross Margin. Gross profit is equal to the difference between our revenue and the cost of revenue. Our gross profit decreased $118,317, or 19%, to $499,091, in the three months ended March 31, 2011, from $617,408 in the same period in 2010. Gross profit as a percentage of revenue was 36% and 46% for the three months ended March 31, 2011 and 2010, respectively. For the three months ended March 31, 2011, we discounted the sales price of our products to gain more market share, which led to the decrease in our gross margin. We plan to launch a new generation product in the third quarter, which will bring high gross margin to the Company.

Selling and Marketing Expenses. Our selling and marketing expenses consist primarily of compensation and benefits for our sales and marketing staff, sales commissions, the cost of advertising, promotional and travel activities, transportation expenses, after-sales support services and other sales related costs. Our selling and marketing expenses in the three months ended March 31, 2011 increased to $167,231, or 82%, from $91,702 in the same period last year. The increase was mainly due to increased sales and marketing activities, particularly sales exhibitions and almost $56,000 in increased benefits for sales staff and sales activities.

General and Administrative Expenses. Our general and administrative expenses consist primarily of compensation and benefits for our general management, finance and administrative staff, professional and advisory fees, bad debts reserves, research and development cost and other expenses incurred in connection with general corporate purposes. Our administrative expenses decreased $59,807, or 24%, to $180,081 in the three months ended March 31, 2011, from $239,888 in the same period in 2010. The decrease was mainly due to a reduction in our research and development expenses during the 2011 period.

Income Before Income Taxes. Our income before income taxes decreased, to $161,394 in the three months ended March 31, 2011 from $287,135 in the same period last year. The decrease was mainly driven by the decrease in our gross profit.

Net Income. In the three months ended March 31, 2011, we generated a net income of $139,571 in the three months ended March 31, 2011, a decrease of $147,564 from a net income of $287,135 in the same period last year. The decrease in net income was as a result of the factors described above.

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Liquidity and Capital Resources

As of March 31, 2011, we had cash and cash equivalents of $0.23 million. The following table summarizes the key cash flow metrics from our condensed consolidated statements of cash flows for the three months ended March 31, 2011 and 2010.

Cash Flow (all amounts in U.S. dollars)
		Three Months Ended March 31,
		2011			2010
Net cash used in operating activities	$	(201,888	)	$	(108,552	)
Net cash used in investing activities		(51,184	)		(33,916	)
Net cash used in financing activities		(32,664	)		-
Effects of Exchange Rate Change in Cash		92,516			(3,306	)
Net Decrease in Cash and Cash Equivalents		(193,220	)		(145,774	)
Cash and Cash Equivalents, Beginning		427,558			409,718
Cash and Cash Equivalent, End	$	234,338		$	263,944

Operating activities

Our operations are, and expansion will be, mainly supported by cash generated from operating activities. We apply most of our cash to marketing and sales and research and development activities to enhance our competitive position consistent with our strategic goals. Net cash used in operating activities was $201,888 for the three months ended March 31, 2011, as compared to $108,552 net cash used in operating activities for the same period in 2010. The modest increase in net cash used in operating activities resulted from pricing discounts and increased spending for sales and marketing activities.

Investing activities

Net cash used in investing activities for the three months ended March 31, 2011 was $51,184, as compared to $33,916 net cash used in investing activities for the same period in 2010. During early 2011, we invested in new equipment to improve the quality of our products.

Financing activities

Net cash used in financing activities for the three months ended March 31, 2011 was $32,664, as compared to $nil net cash used in financing activities for the same period in 2010. The change from period to period is primarily attributable to our repayment of $32,664 in short term debt during the 2011 period.

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

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Obligations under Material Contracts

From time to time, we have borrowed funds from Mr. Mingchun Zhou, our Chief Executive Officer, and have entered into agreements with him to memorialize our obligation to repay these amounts. As of March 31, 2011, the total outstanding amount due to Mr. Zhou is approximately RMB 3,590,000 (approximately $547,258). These loans are unsecured, interest free and have no fixed repayment term, except for one loan in the principal amount of RMB 1,937,000 (approximately, $284,158) which must be repaid before July 10, 2011.

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

Critical Accounting Policies

There have been no changes in our critical accounting policies from those disclosed in under Item 7, “Management's Discussion and Analysis of Results of Operations and Financial Condition” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Seasonality of our Sales

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

Inflation

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

Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

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

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As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer, Mr. Mingchun Zhou and our Chief Financial Officer, Mr. Jiabo Fan, of the effectiveness of the design and operation of our disclosure controls and procedures, as of March 31, 2011. Based upon, and as of the date of this evaluation, Mr. Zhou and Mr. Fan, determined that, for the reasons disclosed below, as of March 31, 2011, and as of the date of this Report, our disclosure controls and procedures were effective.

Changes in Internal Controls over Financial Reporting

In addition to the December 2010 appointment of Mr. Jiabo Fan as the Company’s new Chief Financial Office, management has also hired additional financial reporting and accounting personnel with relevant accounting experience, skills and knowledge in the preparation of financial statements under the requirements of US GAAP and financial reporting disclosure under the requirement of SEC rules, and has evaluated and implemented our processes for collecting and reviewing information required for the preparation of the financial statements and related footnotes. Management believes that the foregoing will operate effectively for a sufficient period of time to reduce to a less than reasonably possible likelihood the possibility of a material misstatement and remediate the material weakness reported by our independent registered public accounting firm.

There were no other changes in our internal controls over financial reporting during the first quarter of fiscal 2011 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

ITEM 1A.

RISK FACTORS.

There are no material changes from the risk factors previously disclosed in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2010.

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.	(REMOVED AND RESERVED).
ITEM 5.	OTHER INFORMATION.

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

ITEM 6.

EXHIBITS.

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

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

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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.

Date: May 13, 2011

CHINA SKYRISE DIGITAL SERVICE INC.

By: /s/ Mingchun Zhou                                        
Mingchun Zhou, Chief Executive Officer
(Principal Executive Officer)

By: /s/ Jiabo Fan                                                    
Jiabo Fan, Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)

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