Unassociated Document

Hailong Liu

Chairman, President, CEO and CFO

Director and Vice President

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 15, 2010

Commission File Number: 333- 152535

Buyonate, Inc.

(Exact name of registrant as specified in its charter)

Nevada		98- 0550385
(State or other jurisdiction of incorporation)		(IRS Employer Identification Number)

Building 3, Binhe District, Longhe East Road, Lu’an City, Anhui Province, PRC 237000

(Address of principal executive offices)

011-86-564-3224888

(Registrant’s telephone number, including area code)

# 803-5348 Vegas Drive, Las Vegas, NV 89108

(Former name or former address if changed since the last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

This Current Report on Form 8-K is being filed by Buyonate, Inc. We are reporting the acquisition of a new business and providing a description of this business and its audited financials below. In addition, on July 15, 2010 we consummated a private placement to 27 investors for an aggregate gross purchase price of $3,278,397 ($10.56 per unit) of 310,454 units, each unit consisting of four shares of our Common Stock, par value $0.0001 per share (“Stock”), a three-year warrant to purchase one shares of our Common Stock for $3.70 per share and a three-year warrant to purchase one share of our Common Stock for $4.75 per share pursuant to a Subscription Agreement (the “Subscription Agreement”) with such investors (the “Private Placement”).

USE OF DEFINED TERMS

Except as otherwise indicated by the context, references in this Report to:

"Buyonate," "the Company," "we," "us," or "our," are references to the combined business of Buyonate, Inc, and its subsidiary, China Electronic Holdings, Inc., and China Electronic Holdings, Inc.’s direct and indirect subsidiaries;

"China Electronic" refers to China Electronic Holdings, Inc., a Delaware corporation and our direct, wholly owned subsidiary, and/or its direct and indirect subsidiaries, as the case may be;

“Guoying” refers to Lu’an Guoying Electronic Sales Co., Ltd., a PRC corporation;

"China," "Chinese" and "PRC," refer to the People’s Republic of China;

"RMB" refers to Renminbi, the legal currency of China; Based on the exchange rate as of June 30, 2010, 1 U.S. dollar equals to RMB 6.8;

"U.S. dollar," "$" and "US$" refer to the legal currency of the United States;

"Securities Act" refers to the Securities Act of 1933, as amended; and

"Exchange Act" refers to the Securities Exchange Act of 1934, as amended.

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Share Exchange Agreement

On July 15, 2010, we entered into a Share Exchange Agreement, dated as of July 9, 2010 (the “Share Exchange Agreement”) with China Electronic and certain stockholders and warrantholders of China Electronic (the “CEH Stockholders”). Pursuant to the Share Exchange Agreement, on July 15, 2010, 10 CEH Stockholders transferred 100% of the outstanding shares of common stock and preferred stock and 100% of the warrants to purchase common stock of China Electronic held by them, in exchange for an aggregate of 13,785,902 newly issued shares of our Common Stock and warrants to purchase an aggregate of 1,628,570 shares of our Common Stock. The shares of our common stock acquired by the CEH Stockholders in such transactions constitute approximately 86% of our issued and outstanding Common Stock giving effect to the share and warrant exchange and the sale of our Common Stock pursuant to the Subscription Agreement discussed below, but not including any outstanding purchase warrants to purchase shares of our common stock, including the warrants issued pursuant to the Subscription Agreement. In connection with the closing of the Share Exchange Agreement, China Electronic purchased from the former principal stockholder of Buyonate an aggregate of 4 million shares of our common stock and then agreed to the cancellation of such shares.

The Share Exchange Agreement contains representations and warranties by us, China Electronic and the CEH Stockholders which are customary for transactions of this type such as, with respect to Buyonate, Inc.: organization, good standing and qualification to do business; capitalization; subsidiaries, authorization and enforceability of the transaction and transaction documents, consents being obtained or not required to consummate the transaction; with respect to China Electronics: authorization, capitalization and no conflicts or violations resulting from executing, delivering and performing the transaction documents and with respect to the CEH Stockholders: investment representations regarding the Buyonate securities to be acquired by them in the exchange and no broker’s fees except as disclosed.

The foregoing description of the terms of the Share Exchange Agreement is qualified in its entirety by reference to the provisions of the Share Exchange Agreement which is included as Exhibit 2.1 of this Current Report and is incorporated by reference herein.

Subscription Agreement

On July 15, 2010 we consummated transactions under a Subscription Agreement, dated as of July 9, 2010 (the “Subscription Agreement”) with 27 investors pursuant to which the investors agreed to and purchased for an aggregate of $3,278,397 an aggregate of (a) 1,241,817 shares of our common stock, (b) three year warrants (“Series C Warrants”) to purchase an aggregate of 310,454 shares of our common stock for $3.70 per share and (c) three year warrants (“Series D Warrants”) to purchase an aggregate of 310,454 shares of our Common Stock for $4.75 per share.

Representations and Warranties; Indemnification : The Subscription Agreement contains representations and warranties by us and the investors which are customary for transactions of this type such as, with respect to the Company: organization, good standing and qualification to do business; capitalization; authorization and enforceability of the transaction and transaction documents; no conflicts or violations resulting from executing, delivering and performing the transaction documents; financial statements; valid issuance of stock, governmental being obtained or not required to consummate the transaction; litigation; no market manipulation; no defaults; no undisclosed liabilities or events, no general solicitation; full disclosure; environmental compliance; quotation of Buyonate’s shares on the OTC Bulletin Board; no foreign corrupt practices related party transactions; representations concerning employees and no brokers used, and with respect to the investors: authorization, investment intent and no conflicts arising as a result of execution, delivery and performance of the transaction documents. The Company has agreed to indemnify the investors and their affiliates against claims, costs, losses, damages, expenses and obligations arising out of or based on material misrepresentations by the Company made in the Subscription Agreement and breaches by the Company of material covenants in the Subscription Agreement.

Covenants: The Subscription Agreement contains certain covenants on our part, including the following:

Registration: we must file a registration statement covering the resale by the investors of 100% of our shares of Common Stock issuable to the investors upon the exercise of all of the Series C Warrants and the Series D Warrants (the “Resale Registration Statement”). The Resale Registration Statement must be filed with the SEC within 60 days after the final closing date of sales of our securities pursuant to the Subscription Agreement and cause the registration statement to be declared effective within 180 days after the final closing date). The Subscription Agreement provides for liquidated damages of .5% per month of the purchase price of the securities purchased by the investors (with a cap of 5% of the purchase price in the aggregate) if the filing or effectiveness of the registration statement is delayed beyond the required deadlines or if after effectiveness is declared by the SEC, effectiveness of the Resale Registration Statement is not maintained or if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144.

Listing: we have agreed to maintain the quotation or listing of our common stock on the American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market, OTC Bulletin Board, or New York Stock Exchange use our best efforts to list our Common Stock on the American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market or New York Stock Exchange and comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the applicable principal market on which the common stock is traded or quoted as long as any Purchased Securities are outstanding. We have also agreed to complete an uplisting of our common stock to the Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market or NYSE Amex Equities.

Filings: For the later of two years after the final closing date of the sale of securities pursuant to the Subscription Agreement or until all of the Purchased Securities can be resold by the investors under Rule 144 the Company will comply with all of its reporting and filing obligations under the Securities Exchange Act of 1934 and all of the requirements relating to maintaining the effectiveness of the Resale Registration Statement within 12 months after the closing date.

Lockup Agreement: The Chairman of the Company has agreed that for a period of 18 months after the final closing date he will not sell any offer, pledge, sell, contract to sell, sell any option or contract to purchase, lend, transfer or otherwise dispose of any shares of common stock or any options, warrants or other rights to purchase shares of common stock or any other security of the Company which he owns or has a right to acquire as of July 9, 2010.

Right of Participation: The investors shall have the right to purchase up to 25% of any subsequent underwritten offering of the Company’s securities before the time the Company completes an uplisting of its common stock to the Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market or NYSE Amex Equities.

Most Favored Nations provision: subject to certain exceptions, if at any time prior to July 9, 2012, the Company shall issue any common stock or securities convertible into or exercisable for shares of common stock (or modify the conversion or exercise price of any of the foregoing which may be outstanding) to any person or entity at a price per share which shall be less than $3.43, subject to adjustment for stock dividends, subdivisions and combinations (the “Lower Price Issuance”), without the consent of the investor, then the Company shall issue, for each such occasion, additional shares of common stock to the investors respecting those purchased securities that are then still owned by the investor at the time of the Lower Price Issuance so that the average per share purchase price of the purchased securities owned by the investors on the date of the Lower Price Issuance plus such additional shares issued to investor pursuant to this provision is equal to such other lower price per share.

Delivery of up to 1,241,817 shares of Common Stock from Based on 2010 Net Income: If our net income for the year ending December 31, 2010 (“Actual 2010 Net Income”) is less than $12.0 million (“2010 Guaranteed NI”), then the Company shall issue, for each such occasion, to each investor on a pro-rata basis (determined by dividing each investor’s consideration paid for the securities purchased by such investor by the aggregate consideration paid for the securities purchased by all investors), an additional amount of shares of common stock (the “Make Good Shares”) equal to, as applicable, a number of shares equal to the difference between A and the product of A x B, where A is the number of common shares originally purchased and B equals (2010 Guaranteed NI minus Actual 2010 Net Income)/2010 Guaranteed NI.

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

On July 15, 2010, we completed the acquisition of China Electronic pursuant to the Share Exchange Agreement. The acquisition was accounted for as a recapitalization effected by a share exchange. China Electronic is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

As a result of this transaction, the Company ceased being a “shell company” as that term is defined in Rule 12b-2 under the Securities and Exchange Act of 1934 (the “Exchange Act”).

Our Corporate Structure

As set forth in the following diagram, following our acquisition of China Electronic, China Electronic became and currently is our direct, wholly-owned subsidiary.

Organizational History of China Electronic Holdings, Inc. and Subsidiaries

China Electronic Holdings, Inc. was incorporated in Delaware on November 15, 2007. Pursuant to a Share Transfer Agreement, dated as of December 31, 2008 (the “December 2008 Agreement”), four shareholders of Lu’an Guoying Electronic Sales Co., Ltd., a PRC corporation (“Guoying”), transferred 60% of the outstanding shares of Guoying to China Electronic Holdings Inc. (“China Electronic”) for a consideration of RMB 600,000 (approximately $ 88,235). Pursuant to a notice dated February 10, 2010, issued by Anhui Provincial Department of Commerce, Lu’an Guoying Electronic Sales Co., Ltd. became a wholly foreign-owned enterprise, or “WFOE,” under the laws of the PRC by virtue of its status as a wholly-owned subsidiary of China Electronic Holdings, Inc.

Guoying was formed in the PRC on January 4, 2002 as a limited liability company (a company solely owned by a natural person). Pursuant to a Share Transfer Agreement, dated as of December 26, 2008, China Electronic became the owner of 40% of the outstanding capital stock of Guoying and Guoying became a Sino-foreign joint venture under the laws of the PRC.

DESCRIPTION OF BUSINESS

Through its subsidiary, China Electronic Holdings Inc., (the Company is engaged in the retail sale of consumer electronics and appliances in China, such as solar heaters, refrigerators, air conditioners, televisions, and etc. The Company is targeting the rural market in Anhui Province.

The Company started sales of home appliances and electronics in 2001.

During the fiscal year ended December 31, 2009 (“fiscal 2009”), approximately 66% of the Company’s revenues were from the sale of solar water heaters, , approximately 10.5% of its revenues were from the sale of refrigerators and approximately 6.5% of its revenues were generated from the sale of televisions. Approximately 69% of the Company’s net income for fiscal 2009 was from the sale of solar water heaters, approximately 12.7% of the Company’s 2009 net income was from the sale of refrigerators and approximately 8.0% of the Company’s 2009 net income was profit from sales of televisions.

The Company operates 3 company owned stores, all of which are located in Lu’an City, Anhui Province. The Company operates 408 exclusive franchise stores and 600 non-exclusive franchise stores, which are located in the rural areas around Lu’an. Approximately 3.3% of the Company’s revenues for fiscal 2009 were from the company owned stores, approximately 88.9% of the Company’s 2009 revenues were from the exclusive franchise stores and approximately 7.8% of the Company’s 2009 revenues were generated from the non-exclusive franchise stores.

For additional information concerning the location and area of each of the Company’s company owned stores and the terms under which the real estate for each store is leased, see “Description of Property” herein.

The Company purchases the consumer electronics and appliances it sells directly from the manufacturers thereof or large distributors. Currently, 30% of the products are supplied to the Company by large distributors, mainly under the brand names Samsung and LG. Guoying is the exclusive wholesaler in the Lu’an area for products under the brand names, Sony, LG, Samsung, Shanghai Shangling, Chigo, Huayang and Huangming. Guoying is the general sales agency of Sino-Japan Sanyo electronic products, such as Sanyo TVs, air conditioners, washing machines and micro-wave ovens. Guoying has teamed up with Huangming and Huayang, the 2 largest manufacturers of solar thermal products in China, to be their exclusive retail outlet in Anhui. Some of their energy efficient, “green” products include: solar thermal water heaters, solar panels (photovoltaic) and energy saving glass.

In addition to purchasing from the manufactures or distributors, the Company has refrigerators manufactured by an OEM manufacturer under the Company’s own trademark “Guoying”. Guoying refrigerators have “3C” quality national authentication certificates. During fiscal year 2009, approximately 2 % of the Company’s 2009 revenues and 2.5% of the Company’s 2009 net income were from the sale of Guoying brand refrigerators. In August 2007, Guoying entered into a 5 year OEM agreement with Shanghai Pengpai Electronic Co., Ltd (“Pengpai”), under which Pengpai will manufacture refrigerators for Guoying to sell under its own trademark. Guoying sold a total of 30,000 refrigerators in 2007, 46,000 in 2008, and 62,000 in 2009, and expects to sell 77,000 in 2010 and 100,000 in 2011, in provinces like Anhui, Henan and Hubei. On October 2, 2006, Guoying entered into a loan agreement with Pengpai where Guoying loaned to Pengpai a total of RMB 80 million (approximately $ 11.76 million) from year 2006 to 2010. In exchange Pengpai sells refrigerators to Guoying at a discounted price. Pengpai is required to repay the loan within 4 years, starting from October 2013. The loan is secured by all the assets of Pengpai

The various stores are described below:

Company Owned Stores

The Company operates 3 company owned stores. Two of them are focused on the sale of solar thermal products, with one store having an area of 100 square meters and another one having an area of 60 square meters. The third one is a general store with an area of 180 square meters, which carries solar thermal products, refrigerators, air conditioners, TV, and other products. The Company’s offices are located on the second floor of the third store. The Company currently leases all the company owned stores.

Exclusive Franchise Stores

The Company operates 408 exclusive franchise stores. The stores are located in rural areas around Lu’an City. The customers of these stores are residents of the local towns and villages. Guoying is the only wholesaler providing products to these type of stores. Guoying is in charge of the delivery to each store and the stores pay the purchase price of the products provided in cash at delivery. Generally, after receiving orders from the stores, Guoying can make the delivery within 3 days. For products within the national “Rural consumer electronics and appliances” plan, meaning, the maximum sales price is fixed, Guoying will give the stores certain discounts based on the quantity of their purchases.

With each store, Guoying has signed an exclusive franchise agreement with a term ranging from 1 year to 3 years. Based on the agreements, Guoying provides a loan to the store owner when establishing the stores. The loan is in the form of cash and products, while the loan amount to each store depends on the specific needs of each store. The store owners provide the operating space. In consideration of the loan, the stores will exclusively purchase products from Guoying.

Non-Exclusive Franchise Stores

The Company also operates 600 non-exclusive franchise stores, which are located at the rural areas around Lu’an City. Guoying is in charge of the delivery of products and gets cash payment for the products it sells to the stores at delivery. Each non-exclusive franchise store pays Guoying an annual franchise fee of 5,000 RMB (approximately $ 735). Guoying is not the only wholesaler of the stores and the stores are free to purchase products from anyone, including Guoying’s competitors.

We currently distribute products to our stores from two warehouses located within Lu’an city, which are leased by Guoying. For additional information concerning the location and area of each of the Company’s warehouse and the terms under which the real estate for each warehouse is leased, see “Description of Property” herein.

Approximately 56% of China’s population still resides in rural areas of China, making rural residents the largest consumer group in China. After many years of economic reforms, the average income of people living in China's rural areas has gradually increased. The rural market is largely untapped and has enormous potential for growth. The rural consumer group has tremendous purchasing power and is increasing as the Chinese government encourages rural communities to modernize.

There are several reasons for the potential development of rural consumer electronics and appliances market.

First, the central government has decided to expand internal demand by increasing the income of the rural population. The continuous improvements in the rural power network, rural transportation, and rural communication make the rural market extremely favorable for home appliances and electronics.

Second, after many years of economic reforms, the average income of people living in China's rural areas has gradually increased. It is reported that the rural residents hold more than US $120 billion in savings and US$106 billion in cash. A survey done by the China Electronic Product Association showed that 14% to 33% of rural families are willing to spend their money on televisions, DVDs, washers and dryers, and telephones in the next few years. For example, refrigerator ownership in big and middle cities of China is over 95%, even 99% in some cities. However, the ownership of refrigerators is only 22.7% in rural areas of China.

Third, the Chinese government has initiated a rural home appliance and electronics rebate program, called “Rural Consumer Electronics” plan. The plan provides that the maximum sales price of electronics is fixed, at a price which is usually equal to or less than the market price in urban areas of the same product. Meanwhile, rural consumers can get a 13% government rebate on their purchases of electronics.

Fourth, the current consumer electronics and appliances markets in big cities like Beijing, Shanghai, and Shenzhen are already saturated by an over abundance of competitors – leading to very lean margins. Although some competitors have announced interest in the rural market, none of the current competitors have established any significant presence in the rural markets. Successful brand names typically established in cities are not an indicator of automatic success in the rural. A majority of the population from the rural market has not seen or heard of the retail chains that exist in the cities. Additionally, the rural consumers have different tastes and values in making their purchases. For example, when it comes to appliances, functionality to cost is the most important factor in deciding which product to purchase. However, product colors have a significant impact in decision making. Most rural consumers prefer certain colors, such as red, over colors like black, silver, and white that are successful in the city. As a result, much research has to be carried out to fully understand the outlook of the rural consumer.

Guoying is the first rural home appliance and electronics retailer in Anhui province.

Raw Materials and Suppliers

Approximately 95% of the cost of sales is the purchase price of products.

Our biggest suppliers of merchandise in 2009, in terms of cost to us, were:

Name of Supplier	Percentage
Shangdong Huangming Solar Power Sales Co.		52.15	%
Jiangshu Huayang Solar Power Sales Co.		14.89	%
Hier Hefei Ririshun Sales Co.		26.22	%
Shanghai Tengpai Electronic Co.		1.50	%
Sanyo Hefei Office		3.21	%
Jiangshu Taizhou Chunlan Sales Co.		0.78	%
Anhui Germei Tech. Co.		1.02	%

Our biggest suppliers of merchandise in 2008, in terms of cost to us ,, were:

Name of Supplier	Percentage
Hier Hefei Ririshun Sales Co.		45.51	%
Shangdong Huangming Solar Power Sales Co.		24.33	%
Jiangshu Taizhou Chunlan Sales Co.		25.34	%
Sanyo Hefei Office		4.82	%

Our biggest suppliers of merchandise in 2007, in terms of value, were:

Name of Suppliers	Percentage
Sanyo Hefei Office		78.85	%
Shanghai Pengpai Electronic Sales Co.		21.15	%

We receive all of our merchandise from our suppliers, which are often the manufacturers, by the suppliers’ delivery trucks sent to our two warehouses located within Lu’an city.

Marketing, Sales, and Distribution

The Company has a staff of 27 employees who take orders and provide customer service to each franchise store in assigned geographical areas. We advertise in many ways, including using TV advertisements, on buses and walls and on pagers on the streets distributed by our promotion personnel and general promotions, including discounts. We base our advertising on our observations of the market and our competitors. Under contracts we have with our suppliers, our suppliers are responsible for the costs of all discounts and promotions.

Customers and Pricing

Our customer strategy is to offer products to the rural market where there is less competition.

Our customers pay different prices for our products depending on where they live.

In general, most of the products sold in our franchise stores are under the regulation of the national “Rural Consumer Electronics” plan, meaning that the maximum sales price is fixed, which price is usually equal to or less than the market price in urban areas of the same product. Meanwhile, rural consumers can get a 13% government rebate on electronics.

·	Some products sold by our company owned stores to the residents in Lu’an city are at the market price in urban areas.

Payment methods for customers are mainly cash.

In recent years, the pricing of our merchandise has changed as the price charged by our vendors has changed. For example, due to inflation in the recent years, the market price of consumer electronics and appliances has risen. However, the selling prices on some old models have decreased since such models are being discontinued.

As of July 9, 2010, 2010, Guoying had 47 full-time employees, including 15 management and supervisory personnel, 27 sales and marketing personnel and 5 after sale support.

Approximately 30% of the Company’s sales of products are made in the first quarter as the Chinese Spring Festival (which is a traditional shopping time) is in the first quarter. The fourth quarter is the next busiest. For sales of electronic appliances, the first quarter is the busiest quarter and the third quarter is the slowest quarter, because in the third quarter the demands for solar heaters, refrigerators and air conditioners decrease and the demands for Chinese Spring Festival have not begun.

We believe our main competitor is Guosheng Electronic (“Guosheng”), which is a state-owned enterprise in Anhui Province. Guosheng is the third biggest retail of consumer electronics and appliances in Anhui Province and runs several franchise stores in small cities and towns. Guosheng also has stores in Lu’an city.

Compared to Guosheng, our competitive disadvantages are:

·	Fund. As a state-owned enterprise, it is easier for Guosheng to get bank loans.

·	Exclusive Representative Rights. With its current larger size, it is easier for Guosheng to get the exclusive representative rights with respect to certain major brands

Compared to Guosheng, our competitive advantages are:

·	Rural market. We have hundreds of franchise stores in rural markets, which are market with high potential margin, but which markets are ignored by the big retail chain stores.

·	Flexibility. We are running 24/7 in making deliveries. After receiving an order, we can make delivery as soon as within 2 hours. Huge state-owned retail stores, such as Guosheng, usually take 2-3 days to deliver after receipt of orders.

·	Sales Networking. We have 27 sales persons visiting the franchise stores each week, which serves to keep a good relationship between Guoying and the stores.

Research and Development

We are not presently involved or engaged in any research and development activities.

Intellectual Property

The Company does not own any patents.

Mr. Hailong Liu, our CEO, owns the following trademarks:

(i)	Trademark Registration No:	5307764
	Owned Trademark:	GUOYING(国鹰)
	Clarification No:	11
	Term:	May 7, 2009 to May 6, 2019
	Issued by:	Trademark Office, State Administration for Industry and Commerce

(ii)	Trademark Registration No:	5307765
	Owned Trademark:	GUOYING(国鹰)
	Clarification No:	7
	Term:	April 28, 2009 to April 27 2019
	Issued by:	Trademark Office, State Administration for Industry and Commerce

Mr. Liu has orally authorized the Company to use the trademarks for an unspecified term at no cost to the Company.

We are subject to a wide range of regulation covering every aspect of our business. The most significant of these regulations are set forth below.

Chain Stores Management

In March 1997, the Domestic Trade Ministry issued and enforced the Standard Opinions on the Operation and Management of Chain Stores, or the Opinions, to regulate and administrate the forms, management models, composition, business area and other requirements of Chain Stores. Such Opinions specifically stipulate the three forms of Chain Stores, including regular chain, franchise chain and voluntary chain. The Opinions also stipulate that the franchise chain and voluntary chain store shall execute relevant cooperation contracts with specified clauses provided in the Opinions including but without limited to license use of trademarks, product quality management, centralized purchase and sales promotion policies.

In May 1997, the State Administration of Industry and Commerce issued the Circular of the Relevant Issues for the Administration of Registration of Chain Stores, mainly providing the conditions of the establishment for chain stores and branches, the procedures and documents for application for the registration with the administration of industry and commerce and name of chain stores to regulate the registration issues of chain stores.

Regulations on consumer protection

On October 31, 1993, the Standing Committee of the National People's Congress issued and enforced the Law on the Protection of the Rights and Interests of Consumers, or the Consumer Protection Law, revised in 2009. The State Administration of Industry and Commerce also issued the notice regarding Handling of Acts of Infringement of Rights of Consumers or the Notice in March 2004. Under the Consumer Protection Law and the Notice, a business operator providing a commodity or service to a consumer shall first undertake the responsibilities of products for the manufacturers. These liabilities include restoring the consumer’s reputation, eliminating the adverse effects suffered by the consumer, and offering an apology and compensation for any losses incurred. The following penalties may also be imposed upon business operators for the infraction of these obligations: issuance of a warning, confiscation of any illegal income, imposition of a fine, an order to cease business operation, revocation of its business license or imposition of criminal liabilities under circumstances that are specified in laws and statutory regulations.

Regulations on commercial franchising

On May 1, 2007, the State Council issued and enforced the Regulations for Administration of Commercial Franchising, to supervise and administrate the Franchise activities. The Regulations for Administration of Commercial Franchising were later supplemented by the Administrative Measures for Archival Filing of Commercial Franchise and the Administrative Measures for Information Disclosure of Commercial Franchise, both of which were issued by the Ministry of Commerce. Under these regulations, Franchisors are required to file franchise contracts with the Ministry of Commerce or its local counterparts; and franchise contracts shall include certain required provisions, such as terms, termination rights and payments. Franchisors are also required to satisfy certain requirements including but without limitation to have mature business models, the capacity to provide operation guidance, technical support and training to franchisees. Franchisors engaged in franchising activities without satisfying the above requirements may be subject to administrative penalties.

Regulations on trademarks

The State Council issued the PRC Trademark Law in 1982, revised in 2001, and the Implementation Regulation of the PRC Trademark Law in 2002, to protect the owners of registered trademarks and trade names. The Trademark Office handles trademark registrations and grants a term of ten years to registered trademarks. Trademark license agreement must be filed with the Trademark Office or its regional counterpart.

Home appliances sales on the rural market

On April 16, 2009, the Ministry of Commerce, the Ministry Of Finance, the Industry and Information Technology, National Development and Reform Committee, the Ministry of Environmental Protection, State Administration of Industry and Commerce and State Administration of Quality Supervision promulgated the Implementation Rules of Home Appliance Sales on the Rural Market, or the Implementation Rules to stimulating domestic demands and promote the economic development. Under the Implementation Rules, the local government authority would fix the home appliance sales enterprise by bidding. Such enterprise shall satisfy the certain requirements including having measures on dispatching, price management, after-sale service and sales channel. Such enterprises are also required to file with local commerce bureau for sale of home appliances and shall provide good service. The sales enterprises can be cancelled its qualification to sell home appliances in the rural areas in case of any serious violation of commitments or duties as set forth in the Implementation Rules.

DESCRIPTION OF PROPERTY

Set forth below is a table containing certain information concerning the location and area of each of the Company’s company owned stores and warehouses and the terms under which such properties are leased.

Name

Area

(Square Meters)

Location

Landlord

Lease

Commencement

Date

Term

(years)

Rent per Year ($)

Foziling Road Warehouse

800

Foziling Road

Zongjun Gao

January 1,2008

6 years and 11 months

9,882.35

Development Zone Warehouse

1437.50

Development Zone, East of Jing Er Road, North of Foziling Road

Benjun Zhang

April 1,2010

1 year

20,294.12

Guangcai Big Market Lease Agreement

100

First Floor of Guangcai Big Market

Haibo Liu

October 30,2008

3 years

20,882.35

Haomen Garden Lease Agreeement

Haomen Store operation site

Haibo Liu

June 1, 2007

3 years

10,000

Wangpai Warehouse

808

Wangpai Warehouse, Liufo Road

Haibo Liu

January, 2008

4 years and 11 months

950.59

Office Lease Building

375

No.166, No.266 and No.176 stores, Building 3, Longgang Road, Liu’an City

Taidong Han

September 1, 2007

10 years

11647.06

The Company believes that the foregoing properties are adequate for its present needs.

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

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Buyonate, Inc. (the “Company,” “we,” “us” or “pur”) was organized in Nevada on July 9, 2007 with a business purpose of seeking and acquiring interest in an operating business. We did not restrict our search to any specific business, industry, or geographical location.

We entered into a Share Exchange Agreement, dated as of July 9, 2010 (the “Share Exchange Agreement”) with China Electronic and certain stockholders and warrantholders of China Electronic (the “CEH Stockholders”). Pursuant to the Share Exchange Agreement, on July 15, 2010, 10 CEH Stockholders transferred 100% of the outstanding shares of common stock and preferred stock and 100% of the warrants to purchase common stock of China Electronic held by them, in exchange for an aggregate of 13,785,902 newly issued shares of our Common Stock and warrants to purchase an aggregate of 1,628,570 shares of our Common Stock. The shares of our common stock acquired by the CEH Stockholders in such transactions constitute approximately 86% of our issued and outstanding Common Stock giving effect to the share and warrant exchange and the sale of our Common Stock pursuant to the Subscription Agreement discussed below, but not including any outstanding purchase warrants to purchase shares of our common stock, including the warrants issued pursuant to the Subscription Agreement. In connection with the closing of the Share Exchange Agreement, China Electronic purchased from the former principal stockholder of Buyonate an aggregate of 4 million shares of our common stock and then agreed to the cancellation of such shares.

The Share Exchange resulted in (i) a change in our control with a shareholder of China Electronic owning approximately 72.5% of issued and outstanding shares of our common stock, (ii) China Electronic becoming our wholly-owned subsidiary, and (iii) appointment of certain nominees of the shareholder of China Electronic as our directors and officers and resignation of Mr. Ryan Cravey as our sole director, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer.

China Electronic was incorporated in Delaware on November 15, 2007 for the purpose of acquiring an existing company with continuing operations. On December 31, 2008 China Electronic entered into a Share Transfer Agreement with four shareholders of Lu’an Guoying Electronic Sales Co., Ltd., a limited liability company organized under the laws of the PRC, which resulted in Guoying becoming a wholly-owned subsidiary of China Electronic. The transfer of ownership of Guoying took effect on February 10, 2010 upon approval of the transaction by the PRC authorities. Guoying is a manufacturer and retailer of home appliances and consumer electronics in the PRC.

Because until its acquisition of Guoying in 2010, China Electronic was a development stage company and did not have significant operations, the discussion and analysis of our financial condition and results of operations presented below was prepared without taking into account operations of China Electronic during fiscal years ended December 31, 2009 and 2008.

Results of Operations

Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009

					$		%
	2010		2009		Change		Change
Revenue	$	26,598,134	$	7,183,590	$	19,414,544		270.3
Cost of goods		21,861,352		6,100,206		15,761,146		258.4
Gross profit		4,736,782		1,083,384		3,653,398		337.2
Operating expenses		454,547		23,387		431,160		1,843.6
Net Operating Income		4,282,235		1,055,997		3,226,238		305.5
Income taxes		498		708		210		(29.7)
Net income		4,279,764		1,056,042		3,223,722		75.3

Our revenue for the three months ended March 31, 2010 was $26,598,134, an increase of 270.3% or $19,144,544 from $7,183,590 for the three months ended March 31, 2009. The increase was mainly due to the improved economic situation in PRC and globally which had a positive impact on the demand for our products and our sales.

Cost of Goods Sold

Our cost of goods sold for the three months ended March 31, 2010 was $21,861,352 compared to $6,100,206 for the three months ended March 31, 2009, an increase of 258.4% or $15,761,146. The increase was mainly due to the increase in sales.

Gross Profit

Gross profit for the three months ended March 31, 2010 was $4,736,782, an increase of $3,653,398 or approximately 337.2%, compared to $1,083,384 for the three months ended March 31, 2009. The increase was proportionate to the increased sales.

Operating Expenses

Operating expenses for the three months ended March 31, 2010 was $454,547, an increase of $431,160 or 1,843.6%, from $23,387 for the three months ended March 31, 2009. The increase was mainly due the increase in capital raising related general and administrative expenses.

Net Operating Income

Our net operating income for the three months ended March 31, 2010 was $4,282,235, an increase of $3,226,238 or 305.5%, from $1,055,997 for the same period in 2009. The increase was proportionate to the increased sales

Income Tax Expense

Pursuant to authorizations from the Company’s local and provincial taxing authorities, the Company pays di minimis annual income taxes. There can be no assurance that such preferential tax treatment will continue or that PRC tax authorities will not assess taxes in the future which relate to prior periods.

Fiscal Year Ended December 31, 2009 Compared to the Fiscal Year Ended December 31, 2008

					$			%
	2009		2008		Change			Change
Revenue	$	47,671,380	$	55,107,177	$	(7,435,797	)		(13.5	)
Cost of goods		37,766,469		47,104,992		(9,338,523	)		(19.8	)
Gross profit		9,904,912		8,002,185		1,902,727			23.8
Operating expenses		159,668		7,957,589		(7,797,921	)		(98.0	)
Net Operating Income		9,745,244		44,956		9,700,288			21,577.3
Income taxes		-		-		-			-
Net income		9,743,245		44,522		9,698,723			21,784.1

Revenues

Our revenue for the fiscal year ended December 31, 2009 was $47,671,380 a decrease of $7,435,797 or 13.5% from $55,107,177 for the fiscal year ended December 31, 2008. The decrease in revenue in fiscal 2009 was primarily due to the economic slowdown in PRC. Our revenues in the first quarter of 2009 were lower than our expectation. The first quarter is typically our best quarter and can account for as much as 30% of our annual sales due to greater volume for the Chinese New Year.

Cost of Goods Sold

Our cost of goods sold for the year ended December 31, 2009 decreased by $9,338,523 or 19.8% from $47,104,992 for the fiscal year ended December 31, 2008 to $37,766,469 for the fiscal year ended December 31, 2009. The decrease was due primarily to the decrease in revenues in the fiscal year 2009.

Gross Profit

Gross profit for the fiscal year ended December 31, 2009 was $9,904,912, an increase of $1,902,727 or approximately 23.8%, compared to $8,002,185 for the fiscal year ended December 31, 2008. The increase in gross profit is mainly attributable to the increases in both gross margin and revenue.

Gross Margin

Our gross margin for the fiscal year ended December 31, 2009 was 20.8% compared to 14.5% for the same period in 2008. The increase in gross margin for the year ended December 31, 2009 compared to the same period in 2008 was due to our product mix changes. We added solar water heater in our product mix, which has a better gross margin.

Operating Expenses

Operating expenses for the fiscal year ended December 31, 2009 decreased by $7,797,921 or 98.0%, from $7,957,589 for the fiscal year ended December 31, 2008 to $159,668 for the year ended December 31, 2009. Selling expenses for the fiscal year ended December 31, 2009 decreased by 82.3% or $222,948 in comparison to the same period in 2008 primarily due to the change in compensation of our sales managers. In 2009 we increased our sales network and commissions earned by our sales managers increased. However, we required that selling expenses of the sales managers be covered by the sales managers themselves, thereby decreasing selling expenses. General and administrative expenses for the year ended December 31, 2009 decreased by 94.3% or $1,881,048 in comparison to the same period in 2008. Additionally, operating expenses in the fiscal year 2008 included a one time expense of $5,693,925 incurred in connection with a write-off of accounts receivable from a franchise store.

Net Operating Income

Our net operating income for the fiscal year ended December 31, 2009 was $9,745,244, an increase of $7,826,725 or 408.0%, from $1,918,519 for the fiscal year ended December 31, 2008. The increase in net operating income is due to a decrease of the cost of goods sold in the fiscal year 2009.

Income Tax Expense

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements during the year ended December 31, 2009 that have, or are reasonably likely to have, a current or future affect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our interests.

Liquidity and Capital Resources

As of March 31, 2010, we had cash and cash equivalents of $51,956. We have historically funded our working capital needs from operations, advance payments from customers, bank borrowings, and capital from shareholders. Our working capital requirements are influenced by the level of our operations, and the timing of accounts receivable collections.

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

	Three Months Ended March 31,
	2010			2009
Net cash provided by (used in) operating activities	$	(8,552	)	$	(11,163	)
Net cash provided by (used in) in investing activities		247,420			-
Net cash provided by (used in) financing activities		-			-
Effect of exchange rate change on cash and cash equivalents		(4)			(45	)
Increase (decrease) in cash and cash equivalents		238,863			(11,208	)
Cash and cash equivalents, beginning balance		64,736			33,600
Cash and cash equivalents, ending balance	$	303,599		$	22,392

Operating Activities

Net cash used in operating activities was $8,552 for the three months ended March 31, 2010, compared to net cash used in operating activities of $11,163 for the three months ended March 31, 2009, a decrease of $2,611, or 23.4%. The decrease of net cash provided by operating activities was primarily due to a increase of accounts receivable during the first quarter of 2010.

Investing Activities

Net cash provided by investing activities was $247,420 for the three months ended March 31, 2010, compared to $0 for the three months ended March 31, 2009 because the Company raised capital in the first quarter of 2010.

Critical Accounting Policies

Revenue Recognition - Direct sales and Wholesale Activities

The Company receives revenue from sales of electronic products. The Company's revenue recognition policies are in compliance with ASC 605 (previously Staff Accounting Bulletin 104). Sales revenue is recognized at the date of shipment to customers, when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Our sales are usually covered by the manufacturers’ return and warranty policies. Therefore, we do not estimate deductions or allowance for sales returns. Sales are presented net of any discounts, reward, or incentive given to customers. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as customer deposit. Customer deposit amounted to $1,333,092 and $74,641 as of December 31, 2009 and 2008, respectively.

Our products delivered to customers would be checked on site by customers and, once the products are accepted by customers, they will sign the acceptance notice.

Reward or incentive given to our customers is an adjustment of the selling prices of our products; therefore, the consideration is characterized as a reduction of revenue when recognized in our income statement.

The Company recognizes its revenues net of value-added taxes (“VAT”). The Company is subject to VAT which is levied at a fixed annual amount. Currently, the Company is charged at a fixed annual amount of approximately $1,200 to cover all types of taxes including income taxes and value added taxes. This is approved by the PRC tax department.

Revenue Recognition – Franchise Activities

Revenues from franchised activities include area development and initial franchise fees (collectively referred to as “Franchise fees”) received from franchisees to establish new stores and royalties charged to franchisees based on a percentage of a franchised store’s sales. Franchise fees are accrued as an unearned franchise revenue liability when received and are recognized as revenue when the franchised stores covered by the fees open, which is generally when we have fulfilled all significant obligations to the franchisee. Continuing fees and royalties are recognized in the period earned.

The preparation of financial statements in conformity with generally accepted accounting principles requires management 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 income and expenses during the reporting period. Actual results could differ from those estimates.

Inventories are stated at the lower of cost, determined on a weighted average basis, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of Buyonate, Inc. common stock as of July 15, 2010 (i) by each person who is known by us to beneficially own more than 5% of our Common Stock; (ii) by each of the officers and directors of Buyonate, Inc.; and (iii) by all of officers and directors of Buyonate, Inc. as a group.

Address of

Beneficial Owner (1)

Positions with the

Company

Title of Class

Amount and

Nature

of Beneficial

Ownership (2)

Percent of

Class (2)

Officers and Directors

Hailong Liu

Chairman, President, CEO and CFO

Common stock, $0.0001 par value

11,556,288

Haibo Liu

Director and Vice President

Common stock, $0.0001 par value

All officers and directors as a group (2 persons named above)

Common stock, $0.0001 par value

11,556,288

(1) Unless otherwise provided, the address of each person is Building 3, Binhe District, Longhe East Road, Lu’an City, Anhui Province, PRC 237000.

(2) Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. The percent of class has also been determined in accordance with rules of the SEC. For purposes of computing such percentage, as of July 15, 2010, there were 16,027,719 shares of Buyonate, Inc. Common Stock outstanding.

(3) Pursuant to certain Call Option Agreements between Ms. Sherry Li and Hailong Liu, Hailong Liu has been granted an option, subject to the satisfaction of certain conditions, to purchase from Ms. Li over the course of approximately 2 years for $0.0001 per share, up to 11,556,288 shares of our Common Stock held by Ms. Li. The conditions and the percentage of the total number of shares subject to the option that would vest upon satisfaction of the condition are as follows:

Filing of Form 10-Q with SEC, following the execution of the Share Exchange Agreement – 50%

2 years after the filing of Form 10-Q – 50%;

Except as described herein, there are currently no arrangements which may result in a change in control of the Company.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Directors and Executive Officers

The following table sets forth the name and position of each of our current executive officers and directors.

Hailong Liu became our Chairman, President and CEO on July 15, 2010. Mr. Liu is the CEO of Lu’an Guoying Electronic Sales Co., Ltd. since May 2007. From 2004 to 2007, Mr. Liu was the general manager of Guoying (Formerly named as Lu’an Dongshen Electronic Sales Co., Ltd.). From 2001 to 2003, Mr. Liu was the general manager of Lu’an Xianglong Electronic Sales Co., Ltd. From 1997 to 2001, Mr. Liu was the associate manager of Operation Department of Lu’an Xianglong Electronic Sales. From 1994 to 1996, Mr.Liu was the manager of Nanjing Branch of Shanghai Kaili Company. From 1990 to 1994, Mr. Liu was the manager of Shenzhen Branch of Shanghai Kaili Company. Mr. Liu got his Executive MBA Degree on Marketing and Sales of Beijing University on 2005.

Haibo Liu became our Director and Vice President on July 15, 2010. Mr.Liu is the general manager of sales of Lu’an Guoying Electronic Sales Co., Ltd. since September 2007. From January 2004 to September 2007, Mr.Liu was the shareholder and general manager of Guoying. From 2000 to 2003, Mr. Liu was the general manager of Lu’an Shengtang Sales Co., Ltd. From 1992 to 1999, Mr. Liu established Lu’an Haifeng Sales Operation Department. Mr Liu has been enrolled as a part-time student in Shenzhen Jucheng Business School since October 2007, majoring in marketing and sales.

Employment Agreements

The Company has not entered into employment agreements with any of its officers or other key employees.

Compensation of Officers and Directors

In 2010 Hailong Liu received an annual salary of 400,000 RMB (approximately $58,823) from Guoying. In 2009 Hailong Liu has received an annual salary of 300,000 RMB (approximately $44,118). In 2008 Hailong Liu received an annual salary of 280,000 RMB (approximately $41,176).

The Company does not currently pay any compensation to its non-officer directors.

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CONTROL PERSONS; CORPORATE GOVERNANCE

Transactions with related persons

Director Independence

We currently do not have any independent directors, as the term “independent” is defined by the rules of the Nasdaq Stock Market.

Board Composition and Committees

The Company’s board of directors is currently composed of two members, Hailong Liu and Haibo Liu.

We currently do not have standing audit, nominating or compensation committees. Currently, our entire board of directors is responsible for the functions that would otherwise be handled by these committees. We intend, however, to establish an audit committee, a nominating committee and a compensation committee of the board of directors as soon as practicable. We envision that the audit committee will be primarily responsible for reviewing the services performed by our independent auditors, evaluating our accounting policies and our system of internal controls. The nominating committee would be primarily responsible for nominating directors and setting policies and procedures for the nomination of directors. The nominating committee would also be responsible for overseeing the creation and implementation of our corporate governance policies and procedures. The compensation committee will be primarily responsible for reviewing and approving our salary and benefit policies (including stock options), including compensation of executive officers.

Our board of directors has not made a determination as to whether any member of our board of directors is an audit committee financial expert. Upon the establishment of an audit committee, the board will determine whether any of the directors qualify as an audit committee financial expert.

Our board of directors will adopt a new code of ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. The new code will address, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code.

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.

MARKET PRICE OF AND DIVIDENDS ON OUR COMMON

EQUITY AND RELATED STOCKHOLDER MATTERS

Prior to the share exchange transaction described above, China Electronic was a privately held company and there was no trading in its common stock. China Electronic has become a wholly owned subsidiary of the Company as a result of the share exchange transaction.

RECENT SALES OF UNREGISTERED SECURITIES;

USE OF PROCEEDS FROM REGISTERED SECURITIES

Reference is made to the disclosure set forth under Item 3.02 of this report, which disclosure is incorporated herein by reference.

DESCRIPTION OF SECURITIES

China Electronic is authorized to issue up to 50,000,000 shares of common stock, par value $.00001 per share and up to 500,000 shares of preferred stock, par value $.00001 per share. Each outstanding share of common stock entitles the holder thereof to one vote per share on all matters. China Electronic’s bylaws provide that elections for directors shall be by a majority of votes. Stockholders do not have preemptive rights to purchase shares in any future issuance of our common stock. Upon its liquidation, dissolution or winding up, and after payment of creditors the assets of China Electronic will be divided pro-rata on a share-for-share basis among the holders of the shares of its common stock.

The holders of shares of China Electronic common stock are entitled to dividends out of funds legally available when and as declared by our board of directors. The board of directors of China Electronic has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future. However, certain subsidiaries of China Electronic declared and paid dividends to their shareholders prior to such subsidiaries’ acquisitions by China Electronic. Should China Electronic decide in the future to pay dividends, as a holding company, its ability to do so and meet other obligations depends upon the receipt of dividends or other payments from its operating subsidiaries and other holdings and investments, and such payments may be restricted under the laws of the PRC. In addition, China Electronic’s operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to China Electronic, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. In the event of China Electronic’s liquidation, dissolution or winding up, holders of its common stock are entitled to receive, ratably, the net assets available to stockholders after payment of all creditors.

All of the issued and outstanding shares of China Electronic’s common stock are duly authorized, validly issued, fully paid and non-assessable. To the extent that additional shares of China Electronic’s common stock are issued, the relative interests of existing stockholders will be diluted.

China Electronic is a privately held company and has no transfer agent.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

China Electronic’s Articles of Incorporation do not provide for the indemnification of its directors, officer or agents. Article V, Section 1 of China Electronic’s By-laws provide that China Electronic may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of China Electronic) by reason of the fact that he or she is or was a director, officer, employee or agent of China Electronic, or is or was serving at the request of China Electronic as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of China Electronic, and, with respect to any criminal action or proceedings, had no reasonable cause to believe his or her conduct was unlawful.

Reference is made to Section 145 of the Delaware General Corporation Law, which provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation (a “derivative action”)), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s charter, bylaws, disinterested director vote, stockholder vote, agreement or otherwise.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore unenforceable.

At the present time, there is no pending litigation or proceeding involving a director, officer, employee or other agent of ours in which indemnification would be required or permitted. We are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Please see Item 9.01 - “Financial Statements and Exhibits” of this Current Report.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Commission, located on 100 F Street NE, Washington, D.C. 20549, Current Reports on Form 8-K, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and other reports, statements and information as required under the Securities Exchange Act of 1934, as amended.

The reports, statements and other information that we have filed with the Commission may be read and copied at the Commission's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.


Exhibit Number		Description
2.1		Share Exchange Agreement by and among Buyonate, Inc., China Electronic Holdings, Inc and the China Electronic Stockholders, dated July 9, 2010
4.1		Subscription Agreement between Buyonate, Inc. and certain investors, dated July 9, 2010.
4.2		Form of Warrant of Buyonate, Inc. issued on July 15, 2010
4.3		Chairman Lock-up Agreement between Buyonate, Inc and Hailong Liu, dated July 9, 2010.
10.1		Call Option Agreement between Sherry Li and Hailong Liu, dated as July 9, 2010.
10.2		Voting Trust Agreement between Sherry Li and Hailong Liu, dated as July 9, 2010


	Date: July 21, 2010

	BUYONATE, INC.

	By:	/s/ Hailong Liu
		Hailong Liu
		Chief Executive Officer

	DECEMBER 31,
	2009		2008
Assets
Current assets
Cash and cash equivalents	$	64,736	$	33,600
Trade accounts receivable		6,295,375		746,410
Inventories		992,090		2,554,922
Total current assets		7,352,201		3,334,932

Property, plant and equipment, net		11,733		17,508

Other receivables - Long term		12,831,848		5,794,650

Total assets	$	20,195,782	$	9,147,090

Liabilities and Stockholders' equity (deficit)
Current liabilities
Trade accounts payable	$	-	$	8,156
Customer deposit		1,333,092		74,641
Accrued payroll and welfare payable		1,925,721		1,876,550
Dividends payable		10,915,576		10,915,576
Total current liabilities		14,174,389		12,874,922

Stockholders' equity (deficit)
Share Capital		137,100		137,100
Retained earnings (Accumulated deficits)		4,216,433		(4,552,488	)
Statutary reserve		978,777		4,452
Accumulated other comprehensive income		689,084		683,103
Total stockholders' equity (deficit)		6,021,392		(3,727,833	)

Total liabilities and stockholders' equity	$	20,195,782	$	9,147,090

	2009			2008

Net revenue from co-operative stores	$	29,358,234		$	29,539,441
Net revenue from franchise		17,589,402			22,285,335
Net revenue from company owned stores		723,745			3,282,401
Net Revenue		47,671,380			55,107,177

Cost of goods sold - co-operative stores		23,427,871			25,522,077
Cost of goods sold - franchise		13,800,013			18,725,161
Cost of goods sold - company owned stores		538,585			2,857,754
Cost of goods sold		37,766,469			47,104,992

Gross profit		9,904,912			8,002,185

Operating expenses:
Selling expense		47,838			270,786
General and administrative expenses		111,830			1,992,878
Bad debt expenses		-			5,693,925
Total operating expenses		159,668			7,957,589

Net operating income		9,745,244			44,596

Other income (expense):
Financial income (expense)		(1,953	)		(74	)
Other expense		(47	)		-
Total other income (expense)		(1,999	)		(74	)

Net income		9,743,245			44,522

Foreign currency translation adjustment		5,981			410,737

Comprehensive income	$	9,749,226		$	455,259

	DECEMBER 31,
	2009			2008

Net income	$	9,743,245		$	44,522
Adjustments to reconcile net income to net cash used in operations:
Depreciation		10,463			10,215
Bad debt expenses		-			5,693,925
Changes in operating liabilities and assets:
Trade accounts receivable		(5,152,389	)		-
Prepayments		-			2,110,355
Inventories		1,561,874			7,203,300
Other receivables		(7,032,882	)		(11,387,850	)
Trade accounts payable		(401,323	)		(3,882,536	)
Other payables		-			(720,664	)
Customer deposit		1,257,679			(2,037,011	)
Accrued expenses		10,084			1,884,234
Net cash used in operating activities		(3,249	)		(1,081,511	)

Cash flows from investing activities:
Property, plant, and equipment additions		(4,692	)		-
Net cash used in investing activities		(4,692	)		-

Effect of rate changes on cash		39,076			55,093

Increase (decrease) in cash and cash equivalents		31,136			(1,026,418	)
Cash and cash equivalents, beginning of period		33,600			1,060,018
Cash and cash equivalents, end of period	$	64,736		$	33,600

Supplemental disclosures of cash flow information:
Interest paid in cash	$	-		$	-
Income taxes paid in cash	$	-		$	-

Non-cash investing activities:
Declaration of Dividends - unpaid	$			$	(10,915,576	)

			Retained Earnings (Accumulated Deficit)					Accumulated Other
						Statutory		Comprehensive		Total
	Share Capital		Unrestricted			Reserve		Income		Stockholders' equity (deficit)

Balance: December 31, 2007	$	137,100	$	6,323,018		$	-	$	272,366	$	6,732,484

Net income		-		44,522			-		-		44,522

Allocation to statutory reserve		-		(4,452	)		4,452		-		-

Dividends declared		-		(10,915,576	)		-		-		(10,915,576	)

Foreign currency translation adjustment		-		-			-		410,737		410,737

Balance: December 31, 2008		137,100		(4,552,488	)		4,452		683,103		(3,727,832	)

Net income		-		9,743,245					-		9,743,245

Allocation to statutory reserve				(974,324	)		974,324

Foreign currency translation adjustment		-		-			-		5,981		5,981

Balance: December 31, 2009	$	137,100	$	4,216,433		$	978,777	$	689,084	$	6,021,393

		December 31, 2009				December 31, 2008
Electronic products		$	992,090			$	2,554,922

	December 31, 2009			December 31, 2008
Vehicle	$	4,694		$	-
Furniture and office equipment		54,713			54,712
Total property, plant and equipment		59,407			54,712
Accumulated depreciation		(47,674	)		(37,204	)
Net property, plant and equipment	$	11,733		$	17,508

	For the year ended December 31,
	2009		2008
Loan to direct stores	$	1,241,142	$	-
Loan to franchise		250,797		-
Loan to Shanghai Pengpai		11,339,910		5,794,650
Total	$	12,831,849	$	5,794,650

	2010			2009

U.S. Statutory rates		34.0	%		34.0	%

Foreign income not recognized in USA		(34.0	)		(34.0	)

China income taxes		25			25

China income tax exemption		(25	)		(25	)

Total provision for income taxes		0	%		0	%

	MARCH 31,		DECEMBER 31,
	2010		2009
Assets
Current assets :-
Cash and cash equivalents	$	303,599	$	64,736
Trade accounts receivable, net		10,926,144		6,295,375
Inventories, net		1,080,902		992,090
Total current assets		12,310,645		7,352,201

Property and equipment, net		13,751		11,733

Other receivables - Long term		12,831,849		12,831,849

Total assets	$	25,156,244	$	20,195,783

Liabilities and Stockholders' Equity
Current liabilities :
Customer deposit	$	1,333,092	$	1,333,091
Accrued expenses		2,353,316		1,925,722
Dividend payable		10,915,576		10,915,576
Total current liabilities		14,601,984		14,174,389

Stockholders' equity
Preferred stock, $0.0001 par value; 500,000 shares authorized; 343,750 shares issued and outstanding as of March 31, 2010		34		-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 14,052,636 and 13,213,268 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively		1,406		1,322
Additional paid in capital		387,303		135,778
Retained earnings		8,068,220		4,216,433
Statutary reserve		1,406,753		978,777
Accumulated other comprehensive income		690,544		689,084
Total stockholders' equity		10,554,261		6,021,394

Total liabilities and stockholders' equity	$	25,156,244	$	20,195,783

	Preferred				Common						Retained Earnings (Accumulated Deficit)					Accumulated Other		Total
	Stock				Stock				Additional Paid					Statutory		Comprehensive		Stockholders'
	Number		Amount		Number		Amount		In Capital		Unrestricted			Reserve		Income		Equity (deficit)

Balance: December 31, 2008		-	$	-		13,213,268	$	1,322	$	135,778	$	(4,552,488	)	$	4,452	$	683,103	$	(3,727,832	)

Net income		-		-		-		-		-		9,743,245					-		9,743,245

Allocation to statutory reserve		-		-		-		-		-		(974,324	)		974,324		-		-

Foreign currency translation adjustment		-		-		-		-		-		-			-		5,981		5,981

Balance: December 31, 2009		-		-		13,213,268		1,322		135,778		4,216,433			978,777		689,084		6,021,393

Recapitalization on Reverse Acquisition		343,750		34		839,368		84		251,525		0			0		0		251,643

Net income		-		-		-		-		-		4,279,764			-		-		4,279,764

Allocation to statutory reserve		-		-		-		-		-		(427,976	)		427,976		-		-

Foreign currency translation adjustment		-		-		-		-		0		0			0		1,460		1,460

Balance: March 31, 2010		343,750	$	34		14,052,636	$	1,406	$	387,303	$	8,068,220		$	1,406,753	$	690,544	$	10,554,261

		March 31, 2010				December 31, 2009
Electronic products		$	1,080,902			$	992,090

	March 31, 2010		December 31, 2009
Advances to direct stores	$	1,241,142	$	1,241,142
Advances to franchises		250,797		250,797
Loan to Shanghai Pengbai		11,339,910		11,339,910
Total	$	12,831,849	$	12,831,849