8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 13, 2009

Sino Charter, Inc.

(Exact name of registrant as specified in Charter)

NEVADA	000-53155	20-8658254
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(IRS Employee Identification No.)

No 1749-1751 Xiangjiang Road

Shishi City, Fujian Province

People’s Republic of China

 (Address of Principal Executive Offices)

(561) 245-5155

(Issuer Telephone number)

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 (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ 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))

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

Forward Looking Statements

This Form 8-K and other reports filed by the Registrant from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward looking statements and information that are based upon beliefs of, and information currently available to, the Registrant’s management as well as estimates and assumptions made by the Registrant’s management. When used in the filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to the Registrant or the Registrant’s management identify forward looking statements. Such statements reflect the current view of the Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this report entitled “Risk Factors”) relating to the Registrant’s industry, the Registrant’s operations and results of operations and any businesses that may be acquired by the Registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although the Registrant believes that the expectations reflected in the forward looking statements are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with the Registrant’s pro forma financial statements and the related notes filed with this Form 8-K.

In this Form 8-K, references to “we,” “our,” “us,” “Sino Charter” the “Company” or the “Registrant” refer to Sino Charter, Inc., a Nevada corporation.

Item 1.01 Entry into a Material Definitive Agreement

On  February 13, 2009 (the “Closing Date”), Sino Charter, Inc., a Nevada corporation (“Sino Charter” or the “Company”), closed a reverse acquisition by which it acquired a business engaged in the design, sourcing, marketing and distribution of casual apparel and clothing products in the People’s Republic of China (“China” or the “PRC”) pursuant to a Share Exchange Agreement (the “Exchange Agreement”) by and among the Company, Peng Xiang Peng Fei Investments Limited, a company incorporated in the British Virgin Islands (“Peng Xiang”), and  the shareholders who, immediately prior to the closing of the transactions contemplated by the Exchange Agreement, collectively held 100% of Peng Xiang’s issued and outstanding share capital (the “BVI Shareholders”).  Peng Xiang is a holding company that, through its wholly owned subsidiary, Korea Jinduren (International) Dress Limited, a company incorporated in Hong Kong Special Administrative Region (“Korea Jinduren”), controls Jinjiang Yinglin Jinduren Fashion Limited, a company organized in the PRC (“Yinglin Jinduren”), by a series of contractual arrangements.  Throughout this current report on Form 8-K, Peng Xiang, Korea Jinduren and Yinglin Jinduren are sometimes collectively referred to as “V·LOV.”

Prior to the reverse acquisition under the Exchange Agreement, we were a public reporting “shell company,” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  As a result of the reverse acquisition transaction, the BVI Shareholders became our controlling shareholders and Peng Xiang became our wholly-owned subsidiary, and we acquired the business and operations of V·LOV.

The following is a brief description of the terms and conditions of the Exchange Agreement and the transactions contemplated thereunder that are material to the Company. A copy of the Exchange Agreement is filed herewith as Exhibit 2.1.

Issuance of Common Stock. At the closing of the Exchange Agreement on the Closing Date, the Company issued 14,560,000 restricted shares of its common stock to the BVI Shareholders in exchange for 100% of the issued and outstanding capital stock of Peng Xiang. Immediately prior to the Exchange Agreement transaction, the Company had 1,440,000 shares of common stock issued and outstanding.  Immediately after the issuance of the shares to the BVI Shareholders, the Company had 16,000,000 shares of common stock issued and outstanding.

Change in Management. As a condition to closing the Exchange Agreement and as more fully described in Item 5.02 below, Mr. Matthew Hayden will resign as the Company’s President, Chief Executive Officer, Chief Financial Officer and Secretary on February 18, 2009 or immediately after the Company files its annual report on Form 10-K for the year ended November 30, 2008, whichever occurs earlier, and two designees of Peng Xiang will be appointed as new officers of the Company concurrently with Mr. Hayden's resignation. Additionally, a designee of Peng Xiang was appointed to the Company’s board of directors effective at the closing, and upon the satisfaction of the requirements of Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, the Company’s sole director immediately prior to the closing, Mr. Hayden, will resign from the board of directors, and three additional designees of Peng Xiang will be appointed to the board of directors.

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Item 2.01 Completion of Acquisition or Disposition of Assets

On February 13, 2009, Sino Charter acquired Peng Xiang and its business operations in a reverse acquisition transaction.  Reference is made to Item 1.01, which is incorporated herein, which summarizes the terms of the reverse acquisition transaction under the Exchange Agreement.

From and after the Closing Date, our primary operations consist of the business and operations of V·LOV, which are conducted in the PRC. Therefore, we disclose information about the business, financial condition, and management of V·LOV in this Form 8-K.

On the earlier of February 18, 2009 or immediately after the filing of the Company's annual report on Form 10-K for fiscal 2008, Mr. Matthew Hayden will resign as Chief Executive Officer, President, Chief Financial Officer and Secretary, and the following persons will be appointed as the Company’s new executive officers:

Name:	Officer Position/s held:
Qingqing  Wu	President, Chief Executive Officer, Chief Operating Officer and Secretary
Yushan  Zheng	Chief Financial Officer and Treasurer

Mr. Wu was also appointed to the Company’s board of directors concurrent with closing of the Exchange Agreement.    In addition, upon the Company’s compliance with Section 14(f) of the Exchange Act, and Rule 14(f)-1 thereunder,  the resignation of Mr. Hayden from, and the appointment of three Peng Xiang designees, namely Dr. Jianwei Shen, Mr. Zhifan Wu and Mr. Yuzhen Wu, to the Company’s board of directors, will become effective.  The Company will file and mail the information statement required under Rule 14f-1 to its shareholders shortly following the filing of this Form 8-K.  Additional information regarding the above-mentioned directors and executive officers is set forth below under the section titled “Management”.

DESCRIPTION OF BUSINESS

Overview

We are a leading apparel producer in People’s Republic of China (“PRC” or “China”) that designs, develops, manufactures, distributes and sells trendy casual apparel and cutting edge clothing products targeted toward fashion-conscious middle-class Chinese consumers under the brand name “V·LOV”.  We seek to be a trendsetting leader in the design, marketing, distribution and sale of premium lifestyle apparel with affordable prices. Our products can be categorized as denim jeans, jackets, t-shirts, pants, sweaters, windbreakers, cotton wear, suits, and other clothing accessories.

We design and develop our apparel accessory products in our 120,000 square foot facility located in Yinlin in southeastern Fujian Province.  As a part of our strategy, we plan to take full advantage of the robust consumer spending growth in China and the growth in the youth fashion market segment.  According to the Chinese Statistical Yearbook 2006, the country’s retail sales of consumer goods increased from approximately US $535 billion in 2001 to approximately US $633 billion in 2003, and to approximately US $945 billion in 2005, representing a total growth rate of 76% in four years.  We target consumers in the 15-34 year old, medium to medium high income group, which account for approximately 29.65% of China’s total population of 1.3 billion in 2005, a target demographic comprising a total of 388 million people.

With regards to apparel, Chinese consumers are highly brand conscious and the ability to wear branded apparel is seen as a status symbol.  For many consumer segments, particularly younger consumers, foreign brands that are well known are still regarded as superior and are seen as a status symbol.  However, in recent years attitudes to domestic brands have changed as state-owned companies have been privatized and better quality products are produced.  Pride in the nation’s accomplishments has resulted in many consumers preferring local brands. Although Chinese consumers are price sensitive, consumers are also increasingly concerned about product quality and customer service, particularly with respect to apparel.  V·LOV’s favorable brand recognition and affordable prices appeal to a broad base of Chinese consumers.  For example, our coats and jackets ranging between RMB 300 (US$44) to RMB 600 (US$88) appeal to a wider range of consumers compared to our competitors such as Fairwhale and jack.jones whom also sell a comparable line but at the price of RMB 400 (US$59) to RMB 900 (US$132), while similar coats and jackets at G-STAR retail for over RMB1000 (US$146).  V·LOV takes pride in the affordability and quality of its products and superior customer service.

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We market and distribute our products through independent agents, each of whom is granted rights to market and sell our products in a defined market or territory through a distribution agreement.  We currently have distribution agreements with 14 distributors throughout northern, central and southern China.  Our distributors currently own and operate 689 point of sales (“POS”) across the PRC.  We maintain and exercise control over brand advertising and marketing activities from our headquarters in Yinlin, a city of Fujian Province, where we set the tone for integrity, consistency and direction of the V·LOV brand image throughout China.  We also have marketing staff travelling around the country to help us enforce our visions and provide support and guidelines for our distributors.  We manufacture some of our apparel products at our Jinjiang production facility and outsource approximately 80% to 85% of manufacturing from third parties.

Company Organization

Peng Xiang is a holding company incorporated in the British Virgin Islands.  Since incorporation, Peng Xiang has not conducted any substantive operations of its own except for holding 100% of the equity interests of Korea Jinduren.

Korea Jinduren is a holding company established in Hong Kong Special Administration Region on January 5, 2005.  Korea Jinduren was formed by the owners of Yinglin Jinduren as a special purpose vehicle for purposes of raising capital. Other than activities relating to its contractual arrangements with Yinglin Jinduren as described below, Korea Jinduren has no other separate operations of its own.

Yinglin Jinduren is a limited liability company organized in the PRC on January 19, 2002.  Yinglin Jinduren holds the government licenses and approvals necessary to operate the apparel manufacturing and distribution business in China.  We do not own any equity interests in Yinglin Jinduren, but control and receive the economic benefits of its business operations through contractual arrangements. Through Korea Jinduren, we have contractual arrangements with Yinglin Jinduren and its owners pursuant to which we provide consulting and other general business operation services. Through these contractual arrangements, we also have the ability to substantially influence their daily operations and financial affairs, since we are able to appoint their senior executives and approve all matters requiring approval of the equity owners. As a result of these contractual arrangements, which enable us to control Yinglin Jinduren and to receive, through Korea Jinduren, all of its net profits, we are considered the primary beneficiary of Yinglin Jinduren. Accordingly, we consolidate its results, assets and liabilities in our financial statements.

For a description of these contractual arrangements, see “Contractual Arrangements with Yinglin Jinduren and its Owners.”

Contractual Arrangements with Yinglin Jinduren and its Owners

Our relationships with Yinglin Jinduren and its owners are governed by a series of contractual arrangements, as we (including our subsidiaries) do not own any equity interests in Yinglin Jinduren. The contractual arrangements constitute valid and binding obligations of the parties of such agreements. Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of the PRC. Under Chinese laws, each of Korea Jinduren and Yinglin Jinduren is an independent legal entity and neither of them is exposed to liabilities incurred by the other party.  Other than pursuant to the contractual arrangements between Korea Jinduren and Yinglin Jinduren, Yinglin Jinduren does not transfer any other funds generated from its operations to Korea Jinduren.

On December 28, 2005, Korea Jinduren entered into the following contractual arrangements with Yinglin Jinduren:

Consulting Services Agreement.  Pursuant to the exclusive consulting services agreement between Korea Jinduren and Yinglin Jinduren, Korea Jinduren has the exclusive right to provide to Yinglin Jinduren general consulting services relating to the management and operations of Yinglin Jinduren’s apparel business (the “Services”). Additionally, Korea Jinduren owns any intellectual property rights developed through the Services provided to Yinglin Jinduren. Yinglin Jinduren pays a quarterly consulting service fee in Renminbi (“RMB”) to Korea Jinduren that is equal to all of Yinglin Jinduren’s net income for such quarter.  The consulting services agreement is in effect unless and until terminated by written notice of either party in the event that: (a) the other party causes a material breach of this agreement, provided that if the breach does not relate to a financial obligation of the breaching party, that party may attempt to remedy the breach within 14 days following the receipt of the written notice; (b) the other party becomes bankrupt, insolvent, is the subject of proceedings or arrangements for liquidation or dissolution, ceases to carry on business, or becomes unable to pay its debts as they become due; (c) Korea Jinduren terminates its operations; (d) Yinglin Jinduren’s business license or any other license or approval for its business operations is terminated, cancelled or revoked; or (e) circumstances arise which would materially and adversely affect the performance or the objectives of the consulting services agreement.  Additionally, Korea Jinduren may terminate the consulting services agreement without cause.

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Operating Agreement.  Pursuant to the operating agreement among Korea Jinduren, Yinglin Jinduren and the owners of Yinglin Jinduren who collectively hold 100% of the outstanding equity interests of Yinglin Jinduren, Korea Jinduren provides guidance and instructions on Yinglin Jinduren’s daily operations, financial management and employment issues.  The owners of Yinglin Jinduren must designate the candidates recommended by Korea Jinduren as their representatives on Yinglin Jinduren’s board of directors.  Korea Jinduren has the right to appoint senior executives of Yinglin Jinduren.  In addition, Korea Jinduren agrees to guarantee the performance of Yinglin Jinduren under any agreements or arrangements relating to Yinglin Jinduren’s business arrangements with any third party.  Yinglin Jinduren, in return, agrees to pledge its accounts receivable and all of its assets to Korea Jinduren.  Moreover, Yinglin Jinduren agrees that without the prior consent of Korea Jinduren, Yinglin Jinduren will not engage in any transactions that could materially affect the assets, liabilities, rights or operations of Yinglin Jinduren, including, without limitation, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of its assets or intellectual property rights in favor of a third party or transfer of any agreements relating to its business operation to any third party.  The term of this agreement is the maximum period of time permitted by law unless sooner terminated by any other agreements reached by all parties or upon a 30-day written notice from Korea Jinduren.  The term may be extended only upon Korea Jinduren’s written confirmation prior to the expiration of the agreement, with the extended term to be mutually agreed upon by the parties.

Equity Pledge Agreement Under the equity pledge agreement between the owners of Yinglin Jinduren and Korea Jinduren, the stockholders of Yinglin Jinduren pledged all of their equity interests in Yinglin Jinduren to Korea Jinduren to guarantee Yinglin Jinduren’s performance of its obligations under the consulting services agreement.  If Yinglin Jinduren or its owners breach their respective contractual obligations, Korea Jinduren, as pledgee, will be entitled to certain rights, including, but not limited to, the right to vote with, control and sell the pledged equity interests.  The owners of Yinglin Jinduren also agreed, that upon occurrence of any event of default, Korea Jinduren shall be granted an exclusive, irrevocable power of attorney to take actions in the place and instead of the owners to carry out the security provisions of the equity pledge agreement, and take any action and execute any instrument as required by Korea Jinduren to accomplish the purposes of the equity pledge agreement.  The owners of Yinglin Jinduren agreed not to dispose of the pledged equity interests or take any actions that would prejudice Korea Jinduren’s interest.  The equity pledge agreement will expire two years from the fulfillment of Yinglin Jinduren’s obligations under the consulting services agreement.

Option Agreement.  Under the option agreement between the owners of Yinglin Jinduren and Korea Jinduren, the owners irrevocably granted Korea Jinduren or its designee an exclusive option to purchase, to the extent permitted under Chinese law, all or part of the equity interests in Yinglin Jinduren for the cost of the owners’ initial contributions to Yinglin Jinduren’s registered capital or the minimum amount of consideration permitted by applicable Chinese law.  Korea Jinduren or its designee has sole discretion to decide when to exercise the option, whether in part or in full.  The term of this agreement is ten years from January 1, 2006 and may be extended prior to its expiration by written agreement of the parties.

Proxy Agreement.  Pursuant to the proxy agreement between Korea Jinduren and the owners of Yinglin Jinduren, the owners agreed to irrevocably grant a designee of Korea Jinduren with the right to exercise the owners’ voting and other rights, including the rights to attend and vote at shareholders’ meetings (or by written consent in lieu of such meetings) in accordance with applicable laws and Yinglin Jinduren’s governing charters.  The proxy agreement may not be terminated without the unanimous consent of all parties, except that Korea Jinduren may terminate the proxy agreement with or without cause upon 30-day written notice to the owners.

Our Current Corporate Structure

The following diagram illustrates our corporate structure from and after the closing of the Exchange Agreement:

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(1)   From and after the earlier of February 18, 2009 or the filing of the Company's 10-K for fiscal 2008, the management of Sino Charter includes: Mr. Qingqing  Wu as Chairman and Chief Executive Officer, and Mr. Yushan Zheng as Chief Financial Officer, and Dr. Jianwei Shen, Mr. Zhifan Wu and Mr. Yuzhen Wu as members of the board of directors. As of the date of this current report: Mr. Qingqing Wu owns approximately 59.98% of Sino Charter’s issued and outstanding common stock; Mr. Yushan Zheng, Dr. Jianwei Shen, Mr. Zhifan Wu, and Mr. Yuzhan Wu do not own any shares of Sino Charter’s common stock as of the date of current report.

(2)   The management of BVI is comprised of  Mr. Qingqing Wu as its sole director. Sino Charter is the sole shareholder of BVI.

(3)   The management of Korea Jinduren is comprised of  Mr. Qingqing Wu as Chairman and Mr. Lileng Lin as Director.

(4)   Korea Jinduren controls Yinglin Jinduren through contractual arrangements designed to mimic equity ownership of Yinglin Jinduren by Korea Jinduren. These contracts include a consulting services agreement, operating agreement, equity pledge agreement, option agreement, and proxy agreement.

(5)   The management of Yinglin Jinduren is comprised of  Mr. Qingqing Wu as Chairman and Executive Director, and Mr. Zhifan Wu as Executive Director.

Our Products

We design and distribute a broad array of products in various categories, of which 80% of our dedicated to men’s and 20% of our production is dedicated to women’s market.  Our products lines include the following:

Women’s Clothing:	jeans, jackets, t-shirts, windbreakers, sweaters, cotton wear, knit wear and accessories
Men’s Clothing:	jeans, jackets, undershirts, t-shirts, shirts, windbreakers, sweaters, cotton wear, knit wear and accessories

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The 2007 revenue breakdown per production was as follows: 25% jeans; 22% shirts, undershirts and windbreakers; 19% jackets; 11% t-shirts; 6% cotton wear; 17% other clothing and accessories.

Our Distribution Channel and Customers

We do not directly engage in retail sales of our products; we market and distribute our products through independent agents, each of whom is granted rights to market and sell our products in a defined market or territory through a distribution agreement. We currently have distribution agreements with 14 distributors throughout northern, central and southern China.

The following is a list of our top ten major distributors for fiscal 2007. None of our distributors accounted for more than 25% of our total sales in fiscal 2007.

Company	Geographical Location	Fiscal 2007 Sales (RMB)		Fiscal 2007 Sales (US$)*	% of Sales
Xinshiji Apparel City, Fengtai District, Beijing	Beijing		9,598,312	approx. $1,321,302		3.18	%
Jinduren Store, Shenhe District, Shenyang	Liaoning		15,736,230	approx. $2,151,492		5.22	%
Jinduren Store in Duocai Xintiandi, Shaanxi	Shaanxi		16,044,217	approx. $2,193,601		5.32	%
Nachun Li	Guangxi		16,110,168	approx. $2,202,618		5.34	%
Yinji Fuchun Apparel, Zhengzhou	Henan		16,674,023	approx. $2,279,710		5.53	%
Yunfang Jingduren Store, Kunming	Yunnan		27,061,642	approx. $3,699,928		8.97	%
Jingduren Store, Tianqiao District, Jinan	Shandong		30,937,647	approx. $4,229,864		10.25	%
Jinyang Commerce Co., Ltd., Wuhan	Hubei		36,980,382	approx. $5,056,040		12.26	%
Clothwork Apparel, Wanma Plaza, Jiangxi	Jiangxi		45,023,909	approx. $6,155,769		14.92	%
C-002 of Mingzhu 100 Market, Hangzhou	Zhejiang		72,436,662	approx.$9,903,701		24.01	%

* Based on an exchange rate of 1US$ =7.3141 RMB as quoted on www.oanda.com on December 31, 2007.

Through our distributors, our products are currently sold at 689 V·LOV retail stores in China. These retail stores, also known as points of sales or POS, include counters, concessions, free standing stores and store-in-stores. We do not own or operate any V·LOV retail stores ourselves; the POS are established and owned by our distributors, each of whom operates its network of POS directly or through third party retail operators. V·LOV POS are currently spread over 10 provinces in the PRC. A breakdown of our POS by provinces is as follows:

PROVINCES	NUMBER OF POS
Beijing		39
Zhejiang		78
Shandong		153
Jiangxi		105
Yunnan		68
Shaanxi		62
Liaoning		38
Hubei		45
Henan		69
Guangxi		32

We believe that the sale of our products through distributors has enabled us to grow by leveraging on their regional retail expertise and economies of scale.  We provide retail policies and guidelines, training, advertising and marketing support as well as advertising subsidies to assist our distributors in the management and expansion of the V·LOV retail sales network.  To achieve consistency in our brand image, we set management and operational guidelines for all our distributors to follow at the V·LOV POS. These guidelines include inventory control, pricing and sale procedures, product and window display requirements and customer service standards. While our distributors currently do not share and our distributorship agreements do not require them to share sales information on each of their POS, our distributorship agreements require all POS to be V·LOV’s exclusive POS and our sales and marketing staff travel throughout China to monitor and advise our distributors. Distributors that maintain at least a three-year good standing relationship with us enjoy 30 to 60 days of credit while new distributors usually pay us upon the receipt of their orders.  The bad debt has been less than 1% for V·LOV during the last three years.

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Each year, we hold two sales fairs – in November and in April/May – to showcase our new designs to our distributors. At each sales fair, the distributors place orders for products based on designs that they believe will appeal to their specific geographical markets, and we manufacture and deliver our products to the distributors according with the specifications of their orders. We then monitor and oversee their operations of the V·LOV POS through our marketing and sales team.  Our marketing and sales team advise and work closely with our distributors to renovate and update V·LOV POS as and when necessary to achieve maximum performance and expand their sales distribution network. Distributors are encouraged to hit performance targets in order to enjoy advertising rebate from us.

We are constantly looking for new distributors. We select distributors based on a range of criteria which we consider important for the operation of the V·LOV distribution sales network of cutting edge casual wear retail stores. We do not require our distributors to have any minimum number of years of relevant experience. We assess the suitability of a candidate to be our distributor based on, but not limited to, the following:

·   the relevant experience in the management and operation of casual wear retail stores;

·   the ability to develop and operate a network of retail stores in its designated sales region;

·   the perceived ability to meet our sales targets;

·   the suitability of its store location and size; and

·   overall creditworthiness;

We identify suitable distributors and enter into distributorship agreements, generally for a term of up to 12 months, renewable on a year to year basis upon satisfying certain criteria.  We set guidelines for our distributors in respect of the location, store layout and product display of their V·LOV POS.  We allow our distributors to use authorized third party retail store operators to operate V·LOV POS.  Distributors must obtain our prior written approval before appointing such retail store operators.

We have contractual relationships only with our distributors and not with authorized third party retail store operators; thus we require our distributors to implement, monitor compliance with and enforce our retail store guidelines on the authorized third party retail store operators. Except for the provision of advertising subsidies to our distributors upon satisfying certain sales performances, we do not make any payment, give any sales incentives, or pay any fee to our distributors.  Our distributors do not pay us any fee other than the purchase price for the purchase of our products.

Our Suppliers and Manufacturers

Although we have our own manufacturing capacity at our 120,000 square foot production facility located in Yinlin, the most important function of that facility is to support our research and development department in sample and prototype designs and other research and development activities. Instead, we currently outsource approximately 80% to 85% of our manufacturing to independent third-party factories as a part of our overall sourcing strategy. Outsourcing work allows us to maximize production flexibility while managing capital expenditures and costs of maintaining what would otherwise be a massive workforce.

The amount of manufacturing that we outsource varies seasonally depending upon such factors as current factory capacity and customer demand. We currently work with a select list of 10 manufacturers. We do not execute agreements with such manufacturers since there are many well-qualified clothing manufacturers to choose from and any of them can be readily replaced. However, we have established good working relationships with all of the manufacturers that we work with and do not expect to replace any of our manufacturers.

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We select raw materials (including fabric, fasteners, thread, buttons, labels and related materials) directly from local fabric and accessory suppliers and identify imported specialty fabrics to meet requirements specially that may be requested by our distributors. Our contractors purchase these raw materials from these suppliers according with our manufacturing and design specifications. We currently work with a select list of more than 20 suppliers. We do not execute agreements with our suppliers since there are no shortages of suppliers and materials to choose from. At any given time, we can easily replace any of our current suppliers. However, we have good working relationships with all of our current suppliers and do not expect the replacement of any of our suppliers. For the fiscal year ended December 31, 2007, one supplier, Fujian Longzhizu Textile Development Co., Ltd., accounted for 14.5% of our total supply purchases. For the fiscal year ended December 31, 2006, two suppliers, Shishi City Jiexing Apparel Industry Development Co., Ltd. and Shishi Meilian Textile Co., Ltd., accounted for 11.88% and 13.81%, respectively, of our total supply purchases. For the nine months ended September 30, 2008, two suppliers, namely, Shishi City Jiexing Apparel Industry Development Co., Ltd. and Zhongshan City Luzhicheng Apparel Co., Ltd., accounted for 45.85% and 16.3%, respectively, of our total supply purchases.  Up to the present we have not experienced any significant difficulty in obtaining materials that are essential to our business. We generally agree to pay our subcontractors within 30-60 days after dispatching the goods to our distributors. We typically place orders with our subcontractors when we receive orders from our distributors.

Our Sales and Marketing

The strength of the V·LOV brand name and image is not only contributable to our ability to design and produce trendy and high quality apparel; it is also largely dependent on the skill of our sales and marketing team to promote our products to our target group of young and fashion conscious consumers. We currently have 35 sales and marketing staff. The Sales and Marketing Director is in charge of four departments, including sales, marketing, strategic planning and logistics.

We have sales and marketing guidelines for all our distributors to follow at the V·LOV POS. These guidelines include pricing and sale procedures, product and window display requirements and customer service standards. We are in the process of employing a new database to learn more about our consumers’ spending behaviors and obtain more market feedback through our distributors in order to allocate our sales and marketing resources more efficiently.

We actively market our brand by placing print ads in local newspapers and fashion magazines. Our ads also appear in various outdoor venues, such as mass transit posters, exterior bus panels, bus stations and billboards, and indoor venues, such as in-mall kiosks. We also run televisions and radio ads for V·LOV brands. We promote our brand through sponsorship of movies, sporting events and television programs targeted at our customer demographic profile. In 2003, the Company appointed Yang Chengang, the number one internet pop singer in China, as the Company’s celebrity spokesperson. Mr. Yang’s contract expired in 2007, and we are in the process of pursuing another celebrity spokesperson to represent our brand.  Additionally, our Chief Designer, Mr. Fengfei Zeng, who is renowned in the PRC, acts as our spokesperson.  Under the terms of his employment agreement which expires on March 1, 2010, Mr. Zeng is required, in addition to being our Chief Designer, to appear at all V·LOV fashion shows and events as our spokesperson.

Our advertising expenses were RMB 10.99 million (US$1,380,015) and RMB 10.55 million (US$1,388,832) for the fiscal years ended 2006 and 2007 respectively. We spent approximately RMB 17.67 million (US$2,533,271) in advertising for the nine months ended September 30, 2008. Advertising expenses represented 42.97% to 58.70% of our operating costs for these periods and we expect that it will increase approximate 5% to 7% within the next two years.

We are always promoting our brand to new distributors to expand our POS. Management believes we continue to benefit from our solid reputation for providing high quality goods in the markets where we have a presence, which provides us further opportunities to work with desirable distributors in our business. Our marketing strategy aims to attract distributors with the strongest branding experience within the strongest markets in order to effectively promote our brand. Referrals from existing distributors have been and continue to be a fruitful source of new customers.

Production and Quality Control

We are committed to designing and manufacturing high quality garments.  We have implemented strict quality control and craft discipline systems to ensure that our products meet certain quality and safety standards, which include:

·   evaluate customers to make sure we produce middle to high-end products only;

·   evaluate suppliers to make sure the supplies could meet our standards;

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·   inspect the manufacturing process and quality of the fabrics supplies by our trained employees;

·   run routine checks on the fabrics for flammability, durability, chemical content, static properties, color retention and various other properties in our advanced testing center;

·   conduct on-line inspection in the manufacturing process by our trained employees; and

·   final audit the products before products are delivered.

In addition, we work closely with our distributors so that they understand our testing and inspection process.  Due to our strict quality control and testing process, we have not undergone any product or merchandise recalls, and we generally do not receive any significant requests by our distributors to return finished goods. Product returns have not resulted in material operating expenses.

We require our contract manufacturers to comply with our manufacturing standards and specifications. We do not allow our manufacturers to sub-contract our production orders without our prior written consent. We inspect products manufactured by our contractors to ensure that they meet our rigorous quality standards and our specifications.  The products are subject to our stringent quality control procedures; and we routinely perform continuous on-site inspections. Our policies and arrangements allow us to return defective products back to the relevant manufacturers. We inspect prototypes of each product prior to cutting by the contractors, and conduct a final inspection of finished products prior to shipment to ensure that they meet our high standards.  

Logistics and Inventory

Beginning in 2008, the majority of our products are made by contract factories that ship finished goods directly to our distributors after final quality inspections. As a result, we experienced significant drop in inventory of finished goods beginning in September 2008. Products that we make at our facility are typically delivered to our distributors by truck or local couriers.

Competition

The high fashion apparel industry is quite competitive in China, including brand names and companies of all sizes, both within China and elsewhere in the world, many of which have greater financial and manufacturing resources than us.  Nevertheless, we have been in the high fashion apparel business since 2004 and believe that we have earned a reputation for producing high fashion and high quality products and at competitive prices, with excellent customer service.

We believe that our chief competitive strength is our in-depth and thorough understanding of our targeted customer groups in China. Our design team led by our Chief Designer, Mr. Fengfei, Zeng, with the assistance of our distributors, formulates new design concepts by analyzing information on global and local fashion trends and market research. Then, our product samples are reviewed by distributors and marketing team. Then, the sample prototypes are further refined based on evaluations carried out by marketing personnel before showcasing the final designs at our sales fairs.

Currently, there are several companies in China that we consider to be direct competitors, including both state-owned and private companies of different sizes.  Some of our local competitors include Fairwhale and Cabbeen.  International brands such as G-STAR and jack.jones are also competing in the same space as V·LOV. We believe we differentiate ourselves from the competition due to persistent pursuit of quality control, a diversified casual wear product lineup and in-house design talent.

Intellectual Properties and Licenses

The following table describes the intellectual property currently owned by V·LOV:

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Type	Name	Category Number and Description	Issued By	Duration	Description
Trademark	劲都人 Jingduren	28 (entertainment products, toys, sports and athletic products, Christmas ornaments)	Trademark Administration of the National Administration of Industry and Commerce (the “PRC Trademark Bureau”)	January 7, 2009 to January 6, 2019 (10 years)	Logo, brand name used in our products
Trademark	劲都人 JINDUREN	25 (apparel, shoes and hats)	PRC Trademark Bureau	January 7, 2009 to January 6, 2019 (10 years)	Logo, brand name used in our products Logo, brand name used in our products

Trademark 劲都人 JINDUREN 18 (leather (work), artificial leather (work), fur, suitcase and travelling bag, umbrella and parasol, walking stick, saddle and harness etc.) PRC Trademark Bureau January 7, 2009 to January 6, 2019 (10 years) Logo, brand name used in our products Logo, brand name used in our products

Trademark 劲都人 JINDUREN 32 (beer, non-alcoholic drinks such as mineral water, soda, fruit drink, syrup, etc.) PRC Trademark Bureau November 14, 2008 to November 13, 2018 (10 years) Logo, brand name used in our products Logo, brand name used in our products

Trademark V.LOV 33 (alcoholic drinks (except beer)) PRC Trademark Bureau November 14, 2008 to November 13, 2018 (10 years) Logo, brand name used in our products Logo, brand name used in our products

Trademark V.BOLD 25 (apparel, shoes and hats) PRC Trademark Bureau September 28, 2008 to September 27, 2018 (10 years) Logo, brand name used in our products Logo, brand name used in our products

Trademark V.LOV 25 (apparel, shoes and hats) PRC Trademark Bureau September 28, 2008 to September 27, 2018 (10 years) Logo, brand name used in our products Logo, brand name used in our products

Trademark 劲都人 JINDUREN 33 (alcoholic drinks (except beer)) PRC Trademark Bureau February 28, 2008 to February 27, 2018 (10 years) Logo, brand name used in our products Logo, brand name used in our products

Trademark 劲都人 JINDUREN 34 (tobacco and cigarettes, smoking set, matches) PRC Trademark Bureau February 28, 2008 to February 27, 2018 (10 years) Logo, brand name used in our products Logo, brand name used in our products

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Trademark 劲都人 JINDUREN 25 (apparel, shoes and hats) PRC Trademark Bureau September 14, 2007 to September 13, 2017 (10 years) Logo, brand name used in our products Logo, brand name used in our products

The following table describes the intellectual property currently licensed by V·LOV from Mr. Qingqing  Wu, our President and CEO. As of the date of this current report, we have not used any of the trademarks in connection with our products.

Type	Name	Category Number and Description	Issued By	Duration	Description
Trademark	罗纳贝克	25 (apparel, shoes and hats)	PRC Trademark Bureau	March 14, 2007 to March 13, 2017 (10 years)	Logo, brand name
Trademark	柏仕顿	25 (apparel, shoes and hats)	PRC Trademark Bureau	April 7, 2007 to April 6, 2017 (10 years)	Logo, brand name
Trademark	劲都龙	25 (apparel, shoes and hats)	PRC Trademark Bureau	January 28, 2007 to January 27, 2017 (10 years)	Logo, brand name
Trademark	劲都人	35 (advertisement, industry, industrial management, office business)	PRC Trademark Bureau	February 21, 2008 to February 20, 2018 (10 years)	Logo, brand name

We have also applied for registration of the following trademarks with the PRC Trademark Bureau, which approvals are still pending as of the date of this current report:

Trademark	Category Number and Description	Application No.	Application Date	Accepted by the PRC Trademark Bureau	Description
锐觉	25 (apparel, shoes and hats)	5426659	June 19, 2006	November 9, 2006	Logo, brand name used in our products
锐觉	35 (advertisement, industry, industrial management, office business)	5426658	June 19, 2006	November 9, 2006	Logo, brand name used in our products
锐觉	41 (education, professional training, entertainment, cultural and sports activities)	5426660	June 19, 2006	November 9, 2006	Logo, brand name used in our products

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索锐  SHIIN	35 (advertisement, industry, industrial management, office business)	5154823	February 13, 2006	August 14, 2006	Logo, brand name used in our products
狄索	25 (apparel, shoes and hats)	4959565	October 24, 2005	January 19, 2006	Logo, brand name used in our products
DESIL	25 (apparel, shoes and hats)	4957882	October 24, 2005	January 19, 2006	Logo, brand name used in our products
J&D	25 (apparel, shoes and hats)	4957883	October 24, 2005	January 19, 2006	Logo, brand name used in our products
D.SO	25 (apparel, shoes and hats)	4957884	October 24, 2005	January 19, 2006	Logo, brand name used in our products
JD	25 (apparel, shoes and hats)	4957885	October 24, 2005	January 19, 2006	Logo, brand name used in our products
劲都JINDUREN	26 (lace and decorated border, embroidery, buttons, needles, artificial flowers)	4833668	August 12, 2005	October 25, 2005	Logo, brand name used in our products
	25 (apparel, shoes and hats)	4650774	May 12, 2005	July 29, 2005	Logo, brand name used in our products
劲都JINDUREN	318(leather (work), artificial leather (work), fur, suitcase and travelling bag, umbrella and parasol, walking stick, saddle and harness etc.)	5054599	May 12, 2005	July 29, 2005	Logo, brand name used in our products

V·LOV takes all necessary precautions to protect our intellectual property.  Aside from registering our trademarks with the PRC Trademark Bureau to protect our intellectual property, our marketing team also diligently conducts market research and patrols our POS stores and other marketplaces to ensure that our intellectual property are not being violated. In the event of any infringement upon our intellectual property rights, we will pursue all available legal rights and remedies.

Governmental Regulations

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Dividend Distribution

The principal laws, rules and regulations governing dividends paid by Yinglin Jinduren are embodied in the Company Law of the PRC (1993), as amended in 2006 (the “Company Law”). Under the Company Law, Yinglin Jinduren may pay dividends only out of its accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, Yinglin Jinduren is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its statutory surplus reserve fund until the accumulative amount of such reserve reaches 50% of its respective registered capital. These reserves are not distributable as cash dividends. As of September 30, 2008, the accumulated balance of our statutory reserve funds reserves amounted to RMB 7.18 million (US$0.91 million) and the accumulated profits of our consolidated PRC entities that were available for dividend distribution amounted to RMB 49.12 million (US$7.03 million).

Fabric Safety

We are required to comply with central, provincial and local regulations governing fabric safety.   In order to address these compliance issues, we have established an advanced fabric testing center to ensure that our products meet certain quality and safety standards established by the governmental authorities.  Our testing center located in our Jinjiang facility runs routine checks on our products for flammability, durability, chemical content, static properties, color retention and various other properties.  In addition, we work closely with our distributors so that they understand our testing and inspection process.

Enterprise Taxation

Pursuant to the PRC Enterprise Income Tax Law (the "New Tax Law") passed by the Tenth National People's Congress on 16 March 2007, the new PRC income tax rates for domestic and foreign enterprises are unified at 25% effective January 1, 2008. The enactment of the New Tax Law is not expected to have any significant financial effect on the amounts accrued in the balance sheet in respect of taxation payable and deferred taxation.

Value Added Tax

The Provisional Regulations of the People’s Republic of China Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994.  Under these regulations and the Implementing Rules of the Provisional Regulations of the People’s Republic of China Concerning Value Added Tax, value added tax is imposed on goods sold in or imported into the PRC and on processing, repair and replacement services provided within the PRC.

Value added tax payable in the PRC is charged on an aggregated basis at a rate of 13 or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided but excluding, in respect of both goods and services, any amount paid in respect of value added tax included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and service in the same financial year.

Business Tax

With effect from January 1, 1994, business that provides services, assigns intangible assets or sells immovable property became liable to business tax at a rate ranging from 3 to 5% of the charges of the services provided, intangible assets assigned or immovable property sold, as the case may be.

Environmental Protection Regulations

In accordance with the Environmental Protection Law of the PRC adopted by the Standing Committee of the NPC on 26th December, 1989, the bureau of environmental protection of the State Council sets the national guidelines for the discharge of pollutants. The provincial and municipal governments of provinces, autonomous regions and municipalities may also set their own guidelines for the discharge of pollutants within their own provinces or districts in the event that the national guidelines are inadequate.

A company or enterprise which causes environmental pollution and discharges other polluting materials which endanger the public should implement environmental protection methods and procedures into their business operations. This may be achieved by setting up a system of accountability within the company’s business structure for environmental protection; adopting effective procedures to prevent environmental hazards such as waste gases, water and residues, dust powder, radioactive materials and noise arising from production, construction and other activities from polluting and endangering the environment. The environmental protection system and procedures should be implemented simultaneously with the commencement of and during the operation of construction, production and other activities undertaken by the company. Any company or enterprise which discharges environmental pollutants should report and register such discharge with relevant bureaus of environmental protection and pay any fines imposed for the discharge. A fee may also be imposed on the company for the cost of any work required to restore the environment to its original state. Companies which have caused severe pollution to the environment are required to restore the environment or remedy the effects of the pollution within a prescribed time limit.

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If a company fails to report and/or register the environmental pollution caused by it, it will receive a warning or be penalized. Companies which fail to restore the environment or remedy the effects of the pollution within the prescribed time will be penalized or have their business licenses terminated. Companies or enterprises which have polluted and endangered the environment must bear the responsibility for remedying the danger and effects of the pollution, as well as to compensate any losses or damages suffered as a result of such environmental pollution.

Foreign Exchange Controls

Major reforms have been introduced to the foreign exchange control system of the PRC since 1993.

On 28 December 1993, the People’s Bank of China (“PBOC”), with the authorization of the State Council issued the Notice on Further Reform of the Foreign Exchange Control System which came into effect on 1 January 1994. Other new regulations and implementation measures include the Regulations on the Foreign Exchange Settlement, Sale and Payments which were promulgated on 20 June 1996 and took effect on 1 July 1996 and which contain detailed provisions regulating the settlement, sale and payment of foreign exchange by enterprises, individuals, foreign organizations and visitors in the PRC and the regulations of the PRC on Foreign Exchange Control which were promulgated on 1 January 1996 and took effect on 1 April 1996 and which contain detailed provisions in relation to foreign exchange control.

The foreign exchange earnings of all PRC enterprises, other than those foreign investment enterprises (“FIE”), who are allowed to retain a part of their regular foreign exchange earnings or specifically exempted under the relevant regulations, are to be sold to designated banks. Foreign exchange earnings obtained from borrowings from foreign institutions or issues of shares or bonds denominated in foreign currency need not be sold to designated banks, but must be kept in foreign exchange bank accounts of designated banks unless specifically approved otherwise.

At present, control of the purchase of foreign exchange is relaxed. Enterprises within the PRC which require foreign exchange for their ordinary trading and non-trading activities, import activities and repayment of foreign debts may purchase foreign exchange from designated banks if the application is supported by the relevant documents. Furthermore, FIEs may distribute profit to their foreign investors with funds in their foreign exchange bank accounts kept with designated banks. Should such foreign exchange be insufficient, enterprises may purchase foreign exchange from designated banks upon the presentation of the resolutions of the directors on the profit distribution plan of the particular enterprise.

On January 24, 2005, the State Administration of Foreign Exchange (“SAFE”)  promulgated the Circular of the State Administration of Foreign Exchange Concerning Relevant Issues on Improving Foreign Exchange Administration for Merger and Acquisitions with Foreign Entities (the “Circular”). The Circular provides for, inter alia, strict supervision and control by SAFE and its local branches/offices of capital contribution examination, foreign currency registration for share transfers, registration of shareholders’ loan, remittance of profits out of the PRC, re-investment of profits, and share transfers by foreign invested enterprises established in the manner of acquisitions of PRC enterprises by foreign enterprises with PRC residents as shareholders. On April 8, 2005, Notice concerning the Relevant Issues for the Registration of Overseas Investments by Domestic Residents and Foreign Exchange Registration for Foreign Acquisition was promulgated by SAFE which further requires that PRC residents who have contributed their domestic assets or shares into the overseas companies and thus hold the shares of such overseas companies directly or indirectly, shall conduct supplemental foreign exchange registration with the local foreign exchange authority, even if the relevant acquisition of the domestic company had been completed prior to 24 January 2005.

Without such supplemental registration, the PRC residents are prohibited to conduct foreign investment and conduct other foreign exchange business under capital item, and the foreign exchange registration for the foreign invested company will not be preceded by the local foreign exchange authority. If the foreign exchange registration for the foreign investment company was made by false or misleading information and representation, the foreign invested company shall be liable for the profits remitted out of the PRC and other transactions under the capital item since the registration date. The PRC resident who is the largest shareholder in the overseas invested companies directly or indirectly is also required to go through registration for modification or record with the local foreign exchange authority within 30 days from the date of any increase/decrease of capital, share transfer, merger/splitting, overseas share investment, and foreign guarantees concerning domestic assets of such overseas invested companies (“material issues”). Failure to conduct the above supplemental registration, registration for modification or record of the material issues with the local foreign exchange authority fully could adversely affect the foreign invested company’s ability to remit its profits, liquidation, share transfer and capital decreasing fees abroad, and could be punished as foreign exchange evasion.

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Seasonality

Chinese consumers’ spending behaviors are typically stable year to year; they are typically affected by seasonal shopping patterns within the year.  Sales are particularly higher before the Chinese New Year holiday in early spring, the Labor Day holiday in early May, the summer months and the National Day holiday in early October.

We have typically experienced seasonal fluctuations in sales volume due to the seasonal fluctuations experienced by the majority of our customers.  These seasonal fluctuations typically result in sales increases in the first and second quarters and sales decreases in the third and fourth quarters of each year.  The mix of product sales may vary considerably from time to time as a result of changes in seasonal and geographic demand for particular types of casual wear and accessories.  In addition, unexpected and abnormal changes in climate may affect sales of our products that are timed for release during a particular season.

Fluctuations in our sales may also result from a number of other factors including:

·   the timing of our competitors’ launch of new products;

·   consumer acceptance of our new and existing products;

·   changes in the overall clothing industry growth rates;

·   economic and demographic conditions that affect consumer spending and retail sales;

·   the mix of products ordered by our distributors;

·   the timing of the placement and delivery of distributor orders; and

·   variation in the expenditure necessary to support our business.

As a result, we believe that comparisons of our operating results between any interim periods may not be meaningful and that these comparisons may not be an accurate indicator of our future performance.

Employees

The following table sets forth the number of our employees for each of our areas of operations and as a percentage of our total workforce as of December 31, 2008:

	Number of Employees	% of Employees
Production Development	230		62.33	%
Sales & Marketing and Quality Assurance	47		12.74	%
Production Management	40		10.84	%
Purchasing	7		1.90	%
Finance	10		2.70	%
Management & Administration	14		3.79	%
Research & Development	21		5.69	%
TOTAL	369		100	%

We are in full compliance with Chinese labor laws and regulations and are committed to providing safe and comfortable working conditions and accommodations for our employees.

Labor Costs. The manufacture of garments is a labor-intensive business, and that is why we outsource most of our manufacturing to contract manufacturers. We rely on in-house skilled labor and talents to design, develop and sell our products.  Generally, we offer one to three months of training to new workers to better understand our brand and improve their relevant skills during the training period.  Management expects that our access to reasonably priced and competent labor will continue into the foreseeable future.

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Working Conditions and Employee Benefits.  We believe in the importance of maintaining our social responsibilities, and we are committed to providing employees with a safe, clean, comfortable working environment and accommodations. Our employees also are entitled to time off during public holidays. In addition, we frequently monitor contract manufacturers’ working conditions to ensure their compliance with related labor laws and regulations. We are in full compliance with our obligations to provide pension benefits to our workers, as mandated by the PRC government. We strictly comply with the Chinese labor laws and regulations, and offer reasonable wages, life insurance and medical insurance to our workers.

Compliance with Environmental Laws

Based on the present nature of our operations, we do not believe that environmental laws and the cost of compliance with those laws have or will have a material impact on us or our operations.

CORPORATE INFORMATION

Both of our principal executive offices are located in Fujian Province, China. The principal executive office for marketing and research and development is located at No 1749-1751 Xiangjiang Road in Shishi City, Fujian Province, China.  The principal executive office for accounting and financial services is located at Fengsheng Mansion 9th Floor, Annan Road, Quanzhou City, Fujian Province, China.  The Company’s main telephone number is 0595-88554555 and its fax number is 0595-88611838.

WHERE YOU CAN FIND MORE INFORMATION

Because we are subject to the requirements of the Securities Exchange Act, we file reports, proxy statements and other information with the SEC.  You may read and copy these reports, proxy statements and other information at the public reference room maintained by the SEC at its Public Reference Room, located at 100 F Street, N.E. Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at (800) SEC-0330.  In addition, we are required to file electronic versions of those materials with the SEC through the SEC’s EDGAR system. The SEC also maintains a web site at http://www.sec.gov, which contains reports, proxy statements and other information regarding registrants that file electronically with the SEC.

RISK FACTORS

You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision with regard to our securities. The statements contained in or incorporated into this prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following events described in these risk factors actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Industry

Our sales are influenced by general economic cycles. A prolonged period of depressed consumer spending would have a material adverse effect on our profitability.

Apparel is a cyclical industry that is dependent upon the overall level of consumer spending.  The global economy is currently experiencing a downturn.  Purchases of trendy apparel and accessories tend to decline in periods of uncertainty regarding future economic prospects, when consumer spending, particularly on discretionary items, and disposable income decline.  Many factors affect the level of consumer spending in the apparel industries, including, among others: prevailing economic conditions, levels of employment, salaries and wage rates, energy costs, interest rates, the availability of consumer credit, taxation and consumer confidence in future economic conditions.  During periods of economic uncertainty, we may not be able to maintain or increase our sales to existing customers, make sales to new customers, maintain sales levels at our existing POS, or maintain or improve our margins from operations as a percentage of net sales.  Our customers anticipate and respond to adverse changes in economic conditions and uncertainty by reducing inventories and canceling orders.  A prolonged period of depressed consumer spending would have a material adverse effect on our profitability.

Intense competition in the worldwide apparel industry could reduce our sales and prices.

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We face a variety of competitive challenges from other apparel producers both in China and other countries.  Some of these competitors have greater financial and marketing resources than we do and may be able to adapt to changes in consumer preferences or retail requirements more quickly, devote greater resources to the marketing and sale of their products or adopt more aggressive pricing policies than we can.  As a result, we may not be able to compete successfully with them if we cannot continue enhancing our marketing and management strategies, quality and value or responding appropriately to consumers needs.

Competition from companies with significantly greater resources than ours, and if we are unable to compete effectively with these companies, our market share may decline and our business could be harmed.

We face intense competition in the apparel industry from other established companies.  A number of our competitors may have significantly greater financial, technological, manufacturing, sales, marketing and distribution resources than we do.  Their greater capabilities in these areas may enable them to better withstand periodic downturns in the apparel industry, compete more effectively on the basis of price and production and more quickly develop new products.  In addition, new companies may enter the markets in which we compete, further increasing competition in the industry.  We believe that our ability to compete successfully depends on a number of factors, including the style and quality of our products and the strength of our brand name, as well as many factors beyond our control.  We may not be able to compete successfully in the future, and increased competition may result in price reductions, reduced profit margins, loss of market share and an inability to generate cash flows that are sufficient to maintain or expand our development and marketing of new products, which would adversely impact the trading price of our common stock.

The worldwide apparel industry is subject to ongoing pricing pressure.

The apparel market is characterized by low barriers to entry for both suppliers and marketers, global sourcing through suppliers located throughout the world, trade liberalization, continuing movement of product sourcing to lower cost countries, ongoing emergence of new competitors with widely varying strategies and resources, and an increasing focus on apparel in the mass merchant channel of distribution.  These factors contribute to ongoing pricing pressure throughout the supply chain.  This pressure has and may continue to:

·   require us to reduce wholesale prices on existing products;

·   result in reduced gross margins across our product lines; and

·   increase pressure on us to further reduce our production costs and our operating expenses. 

Any of these factors could adversely affect our business and financial condition.

Fluctuation in the price, availability and quality of raw materials could increase our cost of goods and decrease our profitability.

We purchase raw materials directly from local fabric and accessory suppliers.  We may also import specialty fabrics to meet specific customer requirements.  We also purchase finished goods from other contract manufacturers.  The prices we charge for our products are dependent in part on the market price for raw materials used to produce them.  The price, availability and quality of our raw materials may fluctuate substantially, depending on a variety of factors, including demand, supply conditions, transportation costs, government regulation, economic climates and other unpredictable factors.  Any raw material price increases could increase our cost of goods and decrease our profitability unless we are able to pass higher prices on to our customers.

For the fiscal year ended December 31, 2007, we relied on one supplier for 14.5% of our total supply purchases. For the fiscal year ended December 31, 2006, we relied on two suppliers for 11.88% and 13.81%, respectively, of our total supply purchases. For the nine months ended September 30, 2008, we relied on two suppliers for 45.85% and 16.3%, respectively, of our total supply purchases.  We do not have any long-term written agreements with any of our suppliers and do not anticipate entering into any such agreements in the near future.  We do not believe that loss on any of these suppliers would have a material adverse effect on our ability to obtain finished goods or raw materials essential to our business because we believe we can locate other suppliers in a timely manner.

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Our continued operations depend on current fashion trends.  If our designs and products do not continue to be fashionable, our business could be adversely affected.

Our success depends in large part on our ability to develop, market and deliver innovative and stylish products that are consistent and build on our brand and image at a pace and intensity competitive with our competition.  The novelty and the design of our VLOV apparel are critical to our success and competitive position, and the inability to continue to develop and offer unique products to our customers could harm our business.  We cannot be certain that trendy apparel and related accessories will continue to be fashionable.  Should the trend steer away from apparel and related accessories such as ours, our sales could decrease and our business could be adversely affected.  In addition, our future designs and plans to expand our product offerings may not be successful, and any unsuccessful designs or product offerings could adversely affect our business.

Our business and the success of our products could be harmed if we are unable to maintain our brand image.

Our success to date has been due in large part to the growth of our brand image.  If we are unable to timely and appropriately respond to changing consumer demand, our brand name and brand image may be impaired.  Even if we react appropriately to changes in consumer preferences, consumers may consider our brand image to be outdated or associate our brand with styles that are no longer popular.  In the past, many apparel companies have experienced periods of rapid growth in revenues and earnings followed by periods of declining sales and losses.  Our business may be similarly affected in the future.

Risks Relating to Our Business

Our limited operating history makes it difficult to evaluate our future prospects and results of operations.

We have a limited operating history. Yinglin Jinduren commenced business in 2004. Accordingly, you should consider our future prospects in light of the risks and uncertainties experienced by early stage companies in evolving industries such as the apparel industry in China. Some of these risks and uncertainties relate to our ability to:

·   maintain our market position;

·   attract additional customers and increase spending per customer;

·   respond to competitive market conditions;

·   increase awareness of our brand and continue to develop customer loyalty;

·   respond to changes in our regulatory environment;

·   maintain effective control of our costs and expenses;

·   raise sufficient capital to sustain and expand our business; and

·   attract, retain and motivate qualified personnel.

If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.

We may be unable to sustain our past growth or manage our future growth, which may have a material adverse effect on our future operating results.

We have experienced rapid growth since our inception, and have increased our net sales from $4.74 million in 2004 to $39.73 million in 2007. We anticipate that our future growth rate will depend upon various factors, including the strength of our brand image, the market success of our current and future products, the success or our growth strategies, competitive conditions and our ability to manage our future growth.  Future growth may place a significant strain on our management and operations. As we continue to grow in our operations, our operational, administrative, financial and legal procedures and controls will need to be expanded. As a result, we may need to train and manage an increasing number of employees, which could distract our management team from our business. Our future success will depend substantially on the ability of our management team to manage our anticipated growth. If we are unable to anticipate or manage our growth effectively, our future operating results could be adversely affected.

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Our business could be harmed if we fail to maintain proper inventory levels.

We place orders with our contract manufacturers for most of our products when we receive all of our customers’ orders.  We do this to minimize purchasing costs, the time necessary to fill customer orders and the risk of non-delivery. We also maintain an inventory of certain products that we anticipate will be in greater demand. However, we may be unable to sell the products we have ordered in advance from manufacturers or that we have in our inventory. Inventory levels in excess of customer demand may result in inventory write-downs, and the sale of excess inventory at discounted prices could significantly impair our brand image and have a material adverse effect on our operating results and financial condition. Conversely, if we underestimate consumer demand for our products or if our manufacturers fail to supply the quality products that we require at the time we need them, we may experience inventory shortages. Inventory shortages might delay shipments to customers, negatively impact retailer and distributor relationships, and diminish brand loyalty.

We rely on our distributors to operate our retail network.

Our distributors operate, directly or indirectly via third parties, our V·LOV POS. We do not own or operate any V·LOV retail stores ourselves. We depend on our distributors’ regional retail experience and economies of scale. We may not be able to expand the geographical coverage of our existing distributors, or be able to engage new distributors who have strong network and retail experience, which may substantially impair our sales targets. We rely on our distributors in the management and expansion of the V·LOV retail sales network. Even though we provide retail policies and guidelines, training, advertising and marketing support, our distributors might not carry out our visions and satisfy the needs of our business. Our sales to distributors also may not correlate directly to the demand for our products by end customers. If our distributors mismanage and do not effectively expand our retail network, our business and our reputation can be adversely affected.

We rely on contract manufacturing of our products.  Our inability to secure production sources meeting our quality, cost, working conditions and other requirements, or failures by our contractors to perform, could harm our sales, service levels and reputation.

We source our products from independent manufacturers who purchase fabric and other raw materials. As a result, we must locate and secure production capacity. We depend on independent manufacturers to maintain adequate financial resources, secure a sufficient supply of raw materials, and maintain sufficient development and manufacturing capacity in an environment characterized by continuing cost pressure and demands for product innovation and speed-to-market. In addition, we do not have material long-term contracts with any of our independent manufacturers, and these manufacturers generally may unilaterally terminate their relationship with us at any time.

Our dependence on contract manufacturing could subject us to difficulty in obtaining timely delivery of products of acceptable quality. A manufacturer's failure to deliver products to us in a timely manner or to meet our quality standards could cause us to miss the delivery date requirements of our wholesale customers. In addition, any interference with our ability to receive delivery from those manufacturers, such as conditions at ports or issues that otherwise affect transportation and warehousing providers, could cause delayed delivery of product. Additionally, if we experience a significant increase in demand, or if we need to replace any of the manufacturers that we currently use, we may have to expand our third party manufacturing capacity. We cannot be assured that this capacity will be available to us, or that if available it will be available on terms that are acceptable to us. Failing to make timely deliveries may cause our customers to cancel orders, refuse to accept deliveries, impose non-compliance charges through invoice deductions or other charge-backs, demand reduced prices or reduce future orders, any of which could harm our sales and margins.

Our success depends on the continued protection of our trademark and other proprietary intellectual property rights.

Our trademark and other intellectual property rights are important to our success and competitive position, and the loss of or inability to enforce trademark and other proprietary intellectual property rights could harm our business. We devote substantial resources to the establishment and protection of our trademark and other proprietary intellectual property rights in China. Our efforts to establish and protect our trademark and other proprietary intellectual property rights may not be adequate to prevent imitation or counterfeiting of our products by others or to prevent others from seeking to block sales of our products. Unauthorized copying of our products or unauthorized use of our trademarks or other proprietary rights may not only erode sales of our products but may also cause significant damage to our brand names and our ability to effectively represent ourselves to our customers.

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Our business could suffer from the financial instability of our distributors.

We sell our product to certain distributors on open account with 30 to 60 day payment terms, but these arrangements are not always possible.  Financial difficulties of our distributors could result in losses for our company.

The loss of our incoming Chief Executive Officer, Chief Designer or other key management personnel would have an adverse impact on our future development and could impair our ability to succeed.

Our performance is substantially dependent upon the expertise of our incoming Chief Executive Officer, Mr. Qingqing Wu, our Chief Designer, Mr. Fengfei Zeng, and other key management personnel.  Mr. Wu and Mr. Zeng spend all of their working time on our company's business. It may be difficult to find qualified individuals to replace Mr. Wu and Mr. Zeng or other key management personnel if we were to lose any one or more of them. The loss of Mr. Wu, Mr. Zeng or any of our key management personnel could have a material adverse effect on our business, development, financial condition, and operating results.  Furthermore, most members of our design team, with the exception of Mr. Zeng, are not currently under contract. Mr. Zeng does not have a non-competition clause in his contract, however, so there is nothing to restrict him from leaving V·LOV and going to work for a competitor.

Our quarterly revenues and operating results fluctuate as a result of a variety of factors, including seasonal fluctuations in demand for denim and related apparel, and accessories delivery date delays, timing of new POS openings.

Our quarterly revenues and operating results have varied significantly in the past and can be expected to fluctuate in the future due to a number of factors, many of which are beyond our control.  For example, sales of our products have historically been somewhat seasonal in nature with the strongest sales generally occurring during the Chinese New Year holiday in early spring, Labor Day holiday in early May, summer months, and National Day holiday in early October.  Delays in scheduling or pickup of products by our wholesale customers could negatively impact our net sales and results of operations for any given quarter.  The timing of new POS openings and the amount of revenue contributed by new POS could also impact our net sales and results of operations for any given quarter.  As a result of these specific and other general factors, our operating results will likely vary from quarter to quarter and the results for any particular quarter may not be necessarily indicative of results for the full year.  Any shortfall in revenues or net income from levels expected by securities analysts and investors could cause a decrease in the trading price of our common stock.

We depend on our distributors for our sales. A significant adverse change in our relationship with a distributor or in a distributor’s performance or financial position could harm our business and financial condition.

For the year ended December 31, 2007, our five largest distributors represented approximately 70.41% of our total net sales. A decision by a major distributor, whether motivated by competitive considerations, strategic shifts, financial requirements or difficulties, economic conditions or otherwise, to decrease its purchases from us or to change its manner of doing business with us, could adversely affect our business and financial condition. In addition, while we have long-standing relationships, we do not have long term contracts with any of our distributors. We identify suitable distributors and enter into distributorship agreements, generally for a term of up to 12 months, renewable on a year to year basis upon satisfying certain criteria.

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We do not believe that there is any material risk of loss of any of these distributors during the next 12 months. We also believe that the unexpected loss of these distributors could have material adverse effect on our earnings or financial condition.  While we believe that we could replace these distributors within 12 months, the loss of which will not have material adverse effect on our financial condition in the long term.  None of our affiliates are officers, directors, or material shareholders of any of these distributors.

We will be required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act.

Failure to timely comply with the requirements of Section 404 or any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on the trading price of our debt and equity securities.

We currently are not an “accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. Beginning with our Annual Report for the year ended December 31, 2008, Section 404 of the Sarbanes-Oxley Act of 2002 requires us to include an internal control report with our Annual Report on Form 10-K. That report must include management’s assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year.  This report must also include disclosure of any material weaknesses in internal control over financial reporting that we have identified.  Additionally, for the fiscal year ended December 31, 2009 our independent registered public accounting firm will be required to issue a report and their evaluation of the operating effectiveness of our internal control over financial reporting.  Our assessment requires us to make subjective judgments and our independent registered public accounting firm may not agree with our assessment.

Achieving compliance with Section 404 within the prescribed period may require us to incur significant costs and expend significant time and management resources.  If we are not able to complete our assessments as required under Section 404 in a timely manner, we and our independent registered public accounting firm would be unable to conclude that our internal control over financial reporting is effective. As a result, investors could lose confidence in our reported financial information, which could have an adverse effect on the trading price of our securities. In addition, our independent registered public accounting firm may not conclude that our internal control over financial reporting is operating effectively.  We will continue to consistently improve our internal control over the financial reporting with our best efforts and we plan to engage assistance from outside experts in doing so.

We must successfully maintain and/or upgrade our information technology systems.

We rely on various information technology systems to manage our operations, and we regularly evaluate these systems against our current and expected requirements.  Although we have no current plans to implement modifications or upgrades to our systems, we will eventually be required to make changes to legacy systems and acquiring new systems with new functionality.  We are considering additional investments in updating our current system to help us improve our internal control system and to meet compliance requirements under Section 404.  We are also continuing to develop and update our internal information systems on a timely basis to meet our business expansion needs.  Any information technology system disruptions, if not anticipated and appropriately mitigated, could have an adverse effect on our business and operations.

Business interruptions could adversely affect our business.

Our operations and the operations of our suppliers and distributors are vulnerable to interruption by fire, earthquake, hurricanes, power loss, telecommunications failure and other events beyond our control. In the event of a major natural disaster, we could experience business interruptions, destruction of facilities and loss of life. In the event that a material business interruption occurs that affects us or our suppliers or distributors, deliveries could be delayed and our business and financial results could be harmed.

We must attract more consumers within our targeted profile and female consumers to our brand.

Our V·LOV brand sales are weighted towards male consumers 15 to 34 years of age. If we are not successful in attracting consumers within our demographic profile and more female consumers to our brands, our results of operation and our ability to grow will be adversely affected.

Risks Related to Our Corporate Structure

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We conduct our business through Yinglin Jinduren by means of contractual arrangements. If the Chinese government determines that these contractual arrangements do not comply with applicable regulations, our business could be adversely affected.If the PRC regulatory bodies determine that the agreements that establish the structure for operating our business in China do not comply with PRC regulatory restrictions on foreign investment, we could be subject to severe penalties. In addition, changes in such Chinese laws and regulations may materially and adversely affect our business.

There are uncertainties regarding the interpretation and application of PRC laws, rules and regulations, including but not limited to the laws, rules and regulations governing the validity and enforcement of the contractual arrangements between Korea Jinduren and Yinglin Jinduren. Although we have been advised by our PRC counsel, that based on their understanding of the current PRC laws, rules and regulations, the structure for operating our business in China (including our corporate structure and contractual arrangements with Yinglin Jinduren and its owners) comply with all applicable PRC laws, rules and regulations, and do not violate, breach, contravene or otherwise conflict with any applicable PRC laws, rules or regulations, we cannot assure you that the PRC regulatory authorities will not determine that our corporate structure and contractual arrangements violate PRC laws, rules or regulations. If the PRC regulatory authorities determine that our contractual arrangements are in violation of applicable PRC laws, rules or regulations, our contractual arrangements will become invalid or unenforceable. In addition, new PRC laws, rules and regulations may be introduced from time to time to impose additional requirements that may be applicable to our contractual arrangements. For example, the PRC Property Rights Law that became effective on October 1, 2007 may require us to register with the relevant government authority the security interests on the equity interests in Yinglin Jinduren granted to us under the equity pledge agreements that are part of the contractual arrangements. If we are required to register such security interests, failure to complete such registration in a timely manner may result in such equity pledge agreements to be unenforceable against third party claims.

The Chinese government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses and requiring actions necessary for compliance. In particular, licenses and permits issued or granted to us by relevant governmental bodies may be revoked at a later time by higher regulatory bodies. We cannot predict the effect of the interpretation of existing or new Chinese laws or regulations on our businesses. We cannot assure you that our current ownership and operating structure would not be found in violation of any current or future Chinese laws or regulations. As a result, we may be subject to sanctions, including fines, and could be required to restructure our operations or cease to provide certain services. Any of these or similar actions could significantly disrupt our business operations or restrict us from conducting a substantial portion of our business operations, which could materially and adversely affect our business, financial condition and results of operations.

If we, Korea Jinduren or Yinglin Jinduren are determined to be in violation of any existing or future PRC laws, rules or regulations or fail to obtain or maintain any of the required governmental permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including:

·   revoking the business and operating licenses of our PRC consolidated entities;

·   discontinuing or restricting the operations of our PRC consolidated entities;

·   imposing conditions or requirements with which we or our PRC consolidated entities may not be able to comply;

·   requiring us or our PRC consolidated entities to restructure the relevant ownership structure or operations;

·   restricting or prohibiting our use of the proceeds from our initial public offering to finance our business and operations in China; or

·   imposing fines.

The imposition of any of these penalties would severely disrupt our ability to conduct business and have a material adverse effect on our financial condition, results of operations and prospects.

Our contractual arrangements with Yinglin Jinduren and its owners may not be as effective in providing control over these entities as direct ownership.

We have no equity ownership interest in Yinglin Jinduren, and rely on contractual arrangements to control and operate the company and its businesses. These contractual arrangements may not be as effective in providing control over the company as direct ownership. For example, Yinglin Jinduren could fail to take actions required for our business despite its contractual obligation to do so. If Yinglin Jinduren fails to perform under its agreements with us, we may have to rely on legal remedies under Chinese law, which may not be effective. In addition, we cannot assure you that the owners of Yinglin Jinduren will act in our best interests.

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Because we rely on the consulting services agreement with Yinglin Jinduren for our revenue, the termination of this agreement will severely and detrimentally affect our continuing business viability under our current corporate structure.

We are a holding company and do not have any assets or conduct any business operations other than the contractual arrangements between Korea Jinduren, our indirect wholly owned subsidiary, and Yinglin Jinduren. As a result, we currently rely entirely for our revenues on dividends payments from Korea Jinduren after it receives payments from Yinglin Jinduren pursuant to the consulting services agreement which forms a part of the contractual arrangements. The consulting services agreement may be terminated by written notice of Korea Jinduren or Yinglin Jinduren in the event that: (a) Yinglin Jinduren causes a material breach of the agreement, provided that if the breach does not relate to a financial obligation of the breaching party, that party may attempt to remedy the breach within 14 days following the receipt of the written notice; (b) one party becomes bankrupt, insolvent, is the subject of proceedings or arrangements for liquidation or dissolution, ceases to carry on business, or becomes unable to pay its debts as they become due; (c) Korea Jinduren terminates its operations; or (d) circumstances arise which would materially and adversely affect the performance or the objectives of the agreement. Additionally, Korea Jinduren may terminate the consulting services agreement without cause. Because neither we nor our direct and indirect subsidiaries own equity interests of Yinglin Jinduren, the termination of the consulting services agreement would sever our ability to continue receiving payments from YinlinJinduren under our current holding company structure. While we are currently not aware of any event or reason that may cause the consulting services agreement to terminate, we cannot assure you that such an event or reason will not occur in the future. In the event that the consulting services agreement is terminated, this may have a severe and detrimental effect on our continuing business viability under our current corporate structure, which in turn may affect the value of your investment.

We rely principally on dividends paid by our consolidated operating entity to fund any cash and financing requirements we may have, and any limitation on the ability of our consolidated PRC entities to pay dividends to us could have a material adverse effect on our ability to conduct our business.

We are a holding company, and rely principally on dividends paid by our consolidated PRC operating entity for cash requirements, including the funds necessary to service any debt we may incur. In particular, we rely on earnings generated by Yinglin Jinduren, which are passed on to us through Korea Jinduren. If any of our consolidated operating subsidiaries incurs debt in its own name in the future, the instruments governing the debt may restrict dividends or other distributions on its equity interest to us. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements Korea Jinduren currently have in place with Yinglin Jinduren, in a manner that would materially and adversely affect our ability to pay dividends and other distributions on our equity interest.

Furthermore, applicable PRC laws, rules and regulations permit payment of dividends by our consolidated PRC entity only out of its retained earnings, if any, determined in accordance with PRC accounting standards. Under PRC laws, rules and regulations, our consolidated PRC entities are required to set aside at least 10.0% of their after-tax profit based on PRC accounting standards each year to their statutory surplus reserve fund until the accumulative amount of such reserves reach 50.0% of their respective registered capital. As a result, our consolidated PRC entity is restricted in its ability to transfer a portion of its net income to us whether in the form of dividends, loans or advances. As of September 30, 2008, our restricted reserves totaled RMB 7.18 million (US$0.91 million) and we had retained earnings of RMB 49.12 million (US$7.03 million). Our restricted reserves are not distributable as cash dividends. Any limitation on the ability of our consolidated operating subsidiaries to pay dividends to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

Management members of Yinglin Jinduren have potential conflicts of interest with us, which may adversely affect our business and your ability for recourse.

Mr. Qingqing Wu, our incoming Chief Executive Officer, is also the Chairman Yinglin Jinduren. Mr. Yushan Zheng, who is our Chief Financial Officer, is the Chief Financial Officer of Yinglin Jinduren. Mr. Zhifan Wu, who is one fo our directors, is the Executive Director of Yinglin Jinduren. Conflicts of interests between their respective duties to our company and Yinglin Jinduren may arise. As our directors and executive officers, they have a duty of loyalty and care to us under U.S. and Hong Kong law when there are any potential conflicts of interests between our company and Yinglin Jinduren. We cannot assure you, however, that when conflicts of interest arise, every one of them will act completely in our interests or that conflicts of interests will be resolved in our favor. For example, they may determine that it is in Yinglin Jinduren’s interests to sever the contractual arrangements with Korea Jinduren, irrespective of the effect such action may have on us. In addition, any one of them could violate his or her legal duties by diverting business opportunities from us to others, thereby affecting the amount of payment that Yinglin Jinduren is obligated to remit to us under the consulting services agreement.

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In the event that you believe that your rights have been infringed under the securities laws or otherwise as a result of any one of the circumstances described above, it may be difficult or impossible for you to bring an action against Yinglin Jinduren or our officers or directors who are members of Yinglin Jinduren’s management, all of whom reside within China. Even if you are successful in bringing an action, the laws of China may render you unable to enforce a judgment against the assets of Yinglin Jinduren and its management, all of which are located in China.

Risks Related to Doing Business in China

Yinglin Jinduren subject to restrictions on making payments to us.

We are a holding company incorporated in Nevada and do not have any assets or conduct any business operations other than our indirect investments in Yinglin Jinduren. As a result of our holding company structure, we rely entirely on payments from that company under the contractual arrangements with our indirect wholly owned subsidiary, Korea Jinduren. The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. See “Government control of currency conversion may affect the value of your investment.” Furthermore, if our affiliated entity in China incurs debt on their own in the future, the instruments governing the debt may restrict their ability to make payments. If we are unable to receive all of the revenues from our operations through these contractual arrangements, we may be unable to pay dividends on our ordinary shares.

Because our assets are located overseas, shareholders may not receive distributions that they would otherwise be entitled to if we were declared bankrupt or insolvent.

All of our assets are located in the PRC. Because our assets are located overseas, our assets may be outside of the jurisdiction of U.S. courts to administer if we are the subject of an insolvency or bankruptcy proceeding. As a result, if we declared bankruptcy or insolvency, our shareholders may not receive the distributions on liquidation that they would otherwise be entitled to if our assets were to be located within the U.S., under U.S. bankruptcy law.

Adverse changes in economic and political policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could adversely affect our business.

All of our business operations are currently conducted in the PRC, under the jurisdiction of the PRC government.  Accordingly, our results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in China.  China’s economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, and control of foreign exchange and allocation of resources.  While the PRC economy has experienced significant growth in the past 20 years, growth has been uneven across different regions and among various economic sectors of China.  The PRC government has implemented various measures to encourage economic development and guide the allocation of resources.  Some of these measures benefit the overall PRC economy, but may also have a negative effect on us.  For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.  Since early 2004, the PRC government has implemented certain measures to control the pace of economic growth.  Such measures may cause a decrease in the level of economic activity in China, which in turn could adversely affect our results of operations and financial condition.

Unprecedented rapid economic growth in China may increase our costs of doing business, and may negatively impact our profit margins and/or profitability.

Our business depends in part upon the availability of relatively low-cost labor and materials.  Rising wages in China may increase our overall costs of production.  In addition, rising raw material costs, due to strong demand and greater scarcity, may increase our overall costs of production.  If we are not able to pass these costs on to our customers in the form of higher prices, our profit margins and/or profitability could decline.

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because our subsidiaries are incorporated in non-U.S. jurisdictions, we conduct substantially all of our operations in China, and all of our officers reside outside the United States.

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Although we are incorporated in Nevada, we conduct substantially all of our operations in China through Yinglin Jinduren.  All of our officers and directors reside outside the United States and some or all of the assets of those persons are located outside of the United States.  As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in China in the event that you believe that your rights have been infringed under the securities laws or otherwise.  Even if you are successful in bringing an action of this kind, the laws of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a corporation doing business entirely within the United States.

Governmental control of currency conversion may affect the value of your investment.

The Chinese government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in RMB. Under our current structure, our income is primarily derived from payments from Yinglin Jinduren. Shortages in the availability of foreign currency may restrict the ability of our Chinese subsidiaries and our affiliated entity to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from China State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies. The Chinese government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our stockholders.

Fluctuation in the value of RMB may have a material adverse effect on your investment.

The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Our revenues and costs are mostly denominated in RMB, while a significant portion of our financial assets are denominated in U.S. dollars. We rely entirely on fees paid to us by our affiliated entity in China. Any significant fluctuation in the value of RMB may materially and adversely affect our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, our stock in U.S. dollars. For example, an appreciation of RMB against the U.S. dollar would make any new RMB denominated investments or expenditures more costly to us, to the extent that we need to convert U.S. dollars into RMB for such purposes. An appreciation of RMB against the U.S. dollar would also result in foreign currency translation losses for financial reporting purposes when we translate our U.S. dollar denominated financial assets into RMB, as RMB is our reporting currency.

 Dividends we receive from our subsidiary located in the PRC may be subject to PRC withholding tax.

The recently enacted PRC Enterprise Income Tax Law, or the EIT Law, and the implementation regulations for the EIT Law issued by the PRC State Council, became effective as of January 1, 2008. The EIT Law provides that a maximum income tax rate of 20% is applicable to dividends payable to non-PRC investors that are “non-resident enterprises,” to the extent such dividends are derived from sources within the PRC, and the State Council has reduced such rate to 10% through the implementation regulations. We are a Nevada holding company and substantially all of our income is derived from the operations of Yinglin Jinduren located in the PRC, which is contractually obligated to pay its quarterly profits to our WFOE. Therefore, dividends paid to us by our WFOE in China may be subject to the 10% income tax if we are considered as a “non-resident enterprise” under the EIT Law. If we are required under the EIT Law and its implementation regulations to pay income tax for any dividends we receive from our WFOE, it may have a material and adverse effect on our net income and materially reduce the amount of dividends, if any, we may pay to our shareholders.

We face risks related to health epidemics and other outbreaks.

Our business could be adversely affected by the effects of an epidemic outbreak, such as the SARS epidemic in April 2003. Any prolonged recurrence of such adverse public health developments in China may have a material adverse effect on our business operations. For instance, health or other government regulations adopted in response may require temporary closure of our stores or offices. Such closures would severely disrupt our business operations and adversely affect our results of operations. We have not adopted any written preventive measures or contingency plans to combat any future outbreak of SARS or any other epidemic.

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Risks Related to an Investment in Our Securities

Our common stock has limited liquidity.

Our common stock is traded on the Over-the-Counter Bulletin Board. It is thinly traded compared to larger more widely known companies in the same industry. Thinly traded common stock can be more volatile than stock trading in an active public market. We cannot predict the extent to which an active public market for our common stock will develop or be sustained.

Our stock is categorized as a penny stock.  Trading of our stock may be restricted by the SEC’s penny stock regulations which may limit a shareholder’s ability to buy and sell our stock.

Our stock is categorized as a penny stock. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

We expect to experience volatility in our stock price, which could negatively affect shareholders’ investments.

The market price for shares of our common stock may be volatile and may fluctuate based upon a number of factors, including, without limitation, business performance, news announcements or changes in general market conditions.

Other factors, in addition to the those risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to:

·   receipt of substantial orders or order cancellations of products;

·   quality deficiencies in services or products;

·   international developments, such as technology mandates, political developments or changes   in economic policies;

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·   changes in recommendations of securities analysts;

·   shortfalls in our backlog, revenues or earnings in any given period relative to the   levels expected by securities analysts or projected by us;

·   government regulations, including stock option accounting and tax regulations;

·   energy blackouts;

·   acts of terrorism and war;

·   widespread illness;

·   proprietary rights or product or patent litigation;

·   strategic transactions, such as acquisitions and divestitures;

·   rumors or allegations regarding our financial disclosures or practices; or

·   earthquakes or other natural disasters concentrated in Fujian, China where a significant  portion of our operations are based. 

In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities.  Due to changes in the volatility of our common stock price, we may be the target of securities litigation in the future.  Securities litigation could result in substantial costs and divert management’s attention and resources.

To date, we have not paid any cash dividends and no cash dividends will be paid in the foreseeable future.

We do not anticipate paying cash dividends on our common stock in the foreseeable future and we may not have sufficient funds legally available to pay dividends.  Even if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends.  We presently intend to retain all earnings for our operations.

Our common shares are not currently traded at high volume, and you may be unable to sell at or near ask prices or at all if you need to sell or liquidate a substantial number of shares at one time.

We cannot predict the extent to which an active public market for its common stock will develop or be sustained.  However, we do not rule out the possibility of applying for listing on the NYSE Alternext (formerly known as the American Stock Exchange) or Nasdaq Capital Market or other markets.

Our common shares are currently traded, but currently with low volume, based on quotations on the “Over-the-Counter Bulletin Board”, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small or non-existent.  This situation is attributable to a number of factors, including the fact that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.  As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.  We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will be sustained.

Shareholders should be aware that, according to SEC Release No. 34-29093, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse.  Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.  Our management is aware of the abuses that have occurred historically in the penny stock market.  Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the future volatility of our share price.

28

Our corporate actions are substantially controlled by our principal shareholders and affiliated entities.

Our principal shareholders, which includes our officers and directors, and their affiliated entities, own approximately 59.98% of our outstanding shares of common stock. These shareholders, acting individually or as a group, could exert substantial influence over matters such as electing directors and approving mergers or other business combination transactions.  In addition, because of the percentage of ownership and voting concentration in these principal shareholders and their affiliated entities, elections of our board of directors will generally be within the control of these shareholders and their affiliated entities. While all of our shareholders are entitled to vote on matters submitted to our shareholders for approval, the concentration of shares and voting control presently lies with these principal shareholders and their affiliated entities. As such, it would be difficult for shareholders to propose and have approved proposals not supported by management. There can be no assurances that matters voted upon by our officers and directors in their capacity as shareholders will be viewed favorably by all of our shareholders.

The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.

Our Articles of Incorporation, as amended, contain a provision permitting us to eliminate the liability of our directors for monetary damages to our company and shareholders to the extent provided by Nevada law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup.  These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.

Legislative actions, higher insurance costs and potential new accounting pronouncements may impact our future financial position and results of operations.

There have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and there may potentially be new accounting pronouncements or additional regulatory rulings that will have an impact on our future financial position and results of operations. The Sarbanes-Oxley Act of 2002 and other rule changes as well as proposed legislative initiatives following the Enron bankruptcy are likely to increase general and administrative costs and expenses. In addition, insurers are likely to increase premiums as a result of high claims rates over the past several years, which we expect will increase our premiums for insurance policies. Further, there could be changes in certain accounting rules.  These and other potential changes could materially increase the expenses we report under generally accepted accounting principles, and adversely affect our operating results.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent material misstatements.

We are subject to reporting obligations concerning our internal controls, under the U.S. securities laws.  The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management report on such company’s internal controls over financial reporting in its annual report, which contains management’s assessment of the effectiveness of our internal controls over financial reporting.  In addition, an independent registered public accounting firm must report on the effectiveness of these controls beginning in 2009.  Our management may conclude that our internal controls over our financial reporting are not effective.  Moreover, even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed.  Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future.  Effective internal controls, particularly those related to sales revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent material misstatements, or in certain extreme cases, fraud.  As a result, our failure to achieve and maintain effective internal controls over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our stock. Furthermore, we anticipate that we will incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.

29

SUMMARY CONSOLIDATED FINANCIAL DATA

The following tables summarize consolidated financial data regarding the business of VLOV and should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements of VLOV and the related notes included with those financial statements.  The summary consolidated financial information as of September 30, 2008 and 2007 (unaudited), and for the fiscal years ended December 31, 2007 and 2006 have been derived from the consolidated financial statements for VLOV.  All monetary amounts are expressed in U.S. Dollars unless otherwise indicated.

(Amounts in thousands and in USD)

	Nine  Months Ended September 30,				Twelve Months Ended December 31,
	2008		2007		2007	2006
	(unaudited)		(unaudited)
Income statement data:
Sales	$40,013	$	30,216	$	39,727	$18,989
Cost of Sales	25,620		18,996		24,939	12,385
Gross Profit	14,393		11,220		14,788	6,604
Total Operating Expenses	5,043		2,296		3,230	2,351
Operating Income	9,350		8,924		11,558	4,253
Total Other Income (Expenses)	(37)		2		8	1
Earnings Before Tax	9,313		8,926		11,566	4,254
Income Tax / Deferred Benefit	2,364		2,946		3,817	1,404
Net Income	6,949		5,980		7,749	2,850

Footnotes

The reverse acquisition transaction under the Exchange Agreement is deemed to be a reverse acquisition, where the Company (the legal acquirer) is considered the accounting acquiree and BVI (the legal acquiree) is considered the accounting acquirer.  Certain pro forma financial information for the Exchange Transaction is included in Exhibit 99.2 of this Report.

Balance Sheet Data

(Amounts in thousands and in USD)

				As of December 31,
		As of September 30, 2008		2007	2006
Consolidated Balance Sheet Data:		(Unaudited)
Cash and Cash Equivalents	$	4,721	$	2,758	1,982
Working Capital		8,400		1,381	5,266
Total Assets		13,744		13,660	9,386
Total Liabilities		4,046		11,217	3,106
Total Shareholders’ Equity		9,698		2,443	6,280

30

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition of VLOV for the fiscal years ended December 31, 2007 and  2006, and for the nine months ended September 30, 2008 and 2007 should be read in conjunction with the Selected Consolidated Financial Data, the BVI financial statements, and the notes to those financial statements that are included elsewhere in this Current Report on Form 8-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Form 8-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

OVERVIEW

V·LOV is a leading apparel producer that designs, develops, manufactures, distributes and sells high fashion apparel and accessories to fashion conscious consumers in the PRC.  We market and distribute our products into the China market by entering into distribution agreements with independent agents, each of whom is granted rights to market and sell our products in a defined market or territory.  We currently have agreements with 14 distributors throughout northern, central and southern China.  After distributors place purchase orders for our products, we manufacture and deliver our products to our distributors.  Our distributors currently own and operate 689 POS across the PRC, including counters, concessions and free standing stores and store-in-stores.  We maintain and exercise control over advertising and marketing activities from our headquarters in Fujian, China; where we set the tone for integrity, consistency and direction of the V·LOV brand image throughout China.

CRITICAL ACCOUNTING POLICIES

Certain of the Company’s accounting policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances.

While our significant accounting policies are more fully described in Note 1 to our consolidated financial statements appearing at Exhibit 99.1, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis:

Revenue Recognition

Revenue from the sales of goods is recognized on the transfer of significant risks and rewards of ownership, which generally coincides with the time when the goods are delivered and the title has passed to the customers. Revenue excludes value-added tax and is arrived at after deduction of trade discounts and allowances.

Accounts receivable

Accounts receivable, which are unsecured, are stated at the amount the Group expects to collect. The Group maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Group evaluates the collectability of its accounts receivable based on a combination of factors, including customer credit-worthiness and historical collection experience. Management reviews the receivable aging and adjusts the allowance based on historical experience, financial condition of the customers and other relevant current economic factors. As of September 30, 2008 and 2007 and December 31, 2007 and 2006, all of the trade receivable balances were aged less than 90 days and have been collected in full subsequent to the balance sheet date. Therefore, the management determined no allowance for uncollectible amounts is required.

Recently Adopted Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board ("FASB") issued interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes.  FIN 48 prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes.  Tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods.  FIN 48 is effective for fiscal years beginning after December 15, 2006 and the provisions of FIN 48 are applied to all tax positions under Statement No. 109 upon initial adoption.  The cumulative effect of applying the provisions of this interpretation are reported as an adjustment to the opening balance of retained earnings for that fiscal year.  The Group adopted FIN 48 effective January 1, 2007.  The adoption of FIN 48 did not require an adjustment to the opening balance of retained earnings as of January 1, 2007.

31

New Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 for financial assets and liabilities are effective for the Group’s fiscal years beginning January 1, 2008 and the provisions of FAS 157 for non financial assets and liabilities except for items recognized at fair value on a recurring basis are effective for the fiscal year beginning January 1, 2009. The Group is currently evaluating the impact of the provisions for non financial assets and liabilities. The Group has evaluated the provisions of FAS 157 for financial assets and liabilities and there is no material impact on the Group’s financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities including an Amendment of FASB Statement No. 115” (“FAS 159”). FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of FAS 159 are effective for the Group’s fiscal year beginning January 1, 2008. The Group has evaluated the impact of the provisions of FAS 159 and there is no material impact on the Group’s financial position or results of operations.

In December 2007, the FASB issued SFAS 160 “Accounting for Noncontrolling Interests”, which clarifies the classification of noncontrolling interests in statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests. SFAS 160 will be effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact of this standard on our Financial Statements; however, we do not expect that the adoption of SFAS 160 will have a material impact on our financial condition or results of operations.

In December 2007, the FASB issued SFAS 141(R) “Applying the Acquisition Method”, which clarifies the accounting for a business combination and requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. SFAS 141(R) will be effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact of this standard on our Financial Statements; however, we do not expect that the adoption of SFAS 141(R) will have a material impact on our financial condition or results of operations.

RESULTS OF OPERATIONS

Comparison of Nine Month Periods Ended September 30, 2008 and September 30, 2007

Results of Operations 

		Nine Month Periods Ended September 30,
		2008				2007
		(Amounts in thousands, in U.S. Dollars, except for percentages)
Sales	$	40,013	100.00	%	$	30,216	100.00	%
Gross Profit	$	14,393	35.97	%	$	11,220	37.13	%
Operating Expense	$	5,043	12.60	%	$	2,296	7.60	%
Income From Operations	$	9,350	23.37	%	$	8,924	29.5	3%
Other Expenses / (Income)	$	37	0.09	%	$	(2)	(0.01)	%
Income tax expenses	$	2,364	5.91	%	$	2,946	9.75	%
Net Income	$	6,949	17.37	%	$	5,980	19.79	%

32

Sales

Sales for the nine months ended September 30, 2008 were $40,013,000, an increase of 32.42% from $30,216,000 for 2007.  We generate revenue primarily from the production and sale of garments in the domestic Chinese markets through our 689 POS spread across 10 provinces.  The increase in our sales was primarily attributable to our marketing efforts under the VLOV brand and the rapid expansion of our sales network.

The following table sets forth a breakdown of our total sales revenue, by provinces, for the periods indicated:

	Nine Month Periods Ended September 30,
	2008					2007
	(Amounts in thousands, in U.S. Dollars, except for percentages)
	$		% of total sales revenue			$		% of total sales revenue			Growth in 2008 compared with 2007
Beijing	$	1,308		3.27	%	$	619		2.05	%		111.31	%
Zhejiang	$	10,544		26.35	%	$	7,153		23.67	%		47.41	%
Shandong	$	4,188		10.47	%	$	3,299		10.92	%		26.95	%
Jiangxi	$	6,119		15.29	%	$	4,080		13.50	%		49.98	%
Yunnan	$	3,699		9.24	%	$	2,406		7.96	%		53.74	%
Shanxi	$	2,377		5.94	%	$	1,211		4.01	%		96.28	%
Liaoning	$	2,093		5.23	%	$	1,783		5.90	%		17.39	%
Hubei	$	5,087		12.71	%	$	4,202		13.91	%		21.06	%
Henan	$	2,224		5.56	%	$	1,761		5.83	%		26.29	%
Guangxi	$	2,190		5.47	%	$	1,964		6.50	%		11.51	%
Others	$	184		0.47	%	$	1,738		5.75	%		(89.41)	%
Total Net Sales	$	40,013		100.00	%	$	30,216		100.00	%		32.42	%

Cost of Sales and Gross Profit Margin

The following table sets forth the components of our cost of sales and gross profit both in absolute amount and as a percentage of total net sales for the periods indicated. 

		Nine Month Periods Ended September 30,
		2008				2007
		(Amounts in thousands, in U.S. Dollars, except for percentages)
Total Net Sales	$	40,013	100.0	%	$	30,216	100.0	%
O.E.M. Finished Goods	$	19,781	49.44	%	$	2,363	7.82	%
Raw Materials	$	3,867	9.66	%	$	12850	42.53	%
Labor	$	557	1.39	%	$	469	1.55	%
Outsource Production Costs	$	832	2.08	%	$	2,902	9.60	%
Other and Overhead	$	583	1.46	%	$	412	1.36	%
Total Cost of Sales	$	25,620	64.03	%	$	18,996	62.87	%
Gross Profit	$	14,393	35.97	%	$	11,220	37.13	%

33

Raw materials cost and outsource production cost accounted for 9.66% and 2.08%, respectively,of our total net sales for the period ended September 30, 2008, compared to 42.53% and 9.60%, respectively, in the nine months ended September 30, 2007. As previously mentioned, we decided to modify our focus from outsourcing to O.E.M. manufacturing during this period.  And as a result of this decision, the O.E.M. cost during this period increased from 7.82% of our total net sales for the nine-month period ended September 30, 2007 to 49.44% of our total net sales for the same period ended September 30, 2008.

Labor cost accounted for 1.39% of our total net sales for the first nine months in 2008, slightly down from 1.55% compared to the same period in 2007.  In the interim, overhead and other expenses remained at 1.46% and 1.36% of our total net sales for both the nine month period ended September 30, 2008 and 2007 respectively.

Total cost of sales for the nine months ended September 30, 2008 was $25,620,000, an increase of 34.87% from $18,996,000 for the same period in 2007. As a percentage of total net sales, our cost of sales increased to approximately 64.03% of total net sales for the nine months ended 2008, up slightly from approximately 62.87% of total net sales for the nine months ended in 2007. Consequently, gross margin as a percentage of total net sales decreased slightly to 35.97% for the nine months ended September 30, 2008 from 37.13% for the same period in 2007.Our gross margin decreased mainly due to the increase of the cost of materials.

The following table sets forth our total net sales, cost of sales, gross profit and gross margin of the geographic market segments for the periods indicated.

		Nine Months Ended September 30,
		2008								2007
		Net Sales		Cost of sales		Gross profit	Gross margin			Net Sales		Cost of sales		Gross profit	Gross margin
		(Amounts in thousands, in U.S. Dollars, except for percentages)
Beijing	$	1,308	$	854	$	454	34.71	%	$	619	$	381	$	238	38.45	%
Zhejiang	$	10,544	$	6,703	$	3,841	36.43	%		7,153	$	4,470	$	2,683	37.51	%
Shandong	$	4,188	$	2,701	$	1,487	35.51	%		3,299	$	2,062	$	1,237	37.47	%
Jiangxi	$	6,119	$	3,924	$	2,195	35.87	%		4,080	$	2,518	$	1,562	38.28	%
Yunnan	$	3,699	$	2,383	$	1,316	35.58	%		2,406	$	1,472	$	934	38.82	%
Shanxi	$	2,377	$	1,534	$	843	35.46	%		1,211	$	762	$	449	37.08	%
Liaoning	$	2,093	$	1,351	$	742	35.45	%	$	1,783	$	1,110	$	673	37.75	%
Hubei	$	5,087	$	3,237	$	1,850	36.37	%		4,202	$	2,614	$	1,588	37.79	%
Henan	$	2,224	$	1,415	$	809	36.38	%		1,761	$	1,084	$	677	38.44	%
Guangxi	$	2,190	$	1,401	$	789	36.03	%		1,964	$	1,198	$	766	39.00	%
Others	$	184	$	117	$	67	36.41	%		1,738	$	1,325	$	413	23.76	%
Total	$	40,013	$	25,620	$	14,393	35.97	%		30,216	$	18,996	$	11,220	37.13	%

Overall gross margin for the nine months ended September 30, 2008 was 35.97%, which decreased slightly from 37.13% for the same nine month period in 2007.The cost of our materials increased and we were not able to pass off such increase to our customers and therefore our overall gross margin decreased slightly as a result.

Selling, General and Administrative Expenses

	Nine Months Ended September 30,
	2008					2007
	$		% of Total Net Sales			$		% of Total Net Sales
	(Amounts in thousands, in U.S. Dollars, except for percentages)
Gross Profit	$	14,393		35.97	%	$	11,220		37.13	%
Operating Expenses:
Selling Expenses		2,965		7.41	%		1,306		4.32	%
General and Administrative Expenses		2,078		5.19	%		990		3.28	%
Total		5,043		12.60	%		2,296		7.60	%
Income from Operations		9,350		23.37	%		8,924		29.53	%

34

Selling expenses for the nine months ended September 30, 2008 increased by 127.03% from $1,306,000 for the same period in 2007 to $2,965,000 in 2008.  The increase was mainly due to an increase in promotional and advertising expenses from $1,029,000 for the nine months ended September 30, 2007 to $2,533,000 for the nine months ended September 30, 2008.

General and administrative expenses increased by 109.89% from $990,000 for the nine month period in 2007 to $2,078,000 for the same period in 2008.  The increase was mainly due to a significant amount spent on research and development from $731,000 for the nine month period in 2007 to $1,764,000 for the nine month period in 2008.

Interest Expenses 

Interest expenses were $50,000 for the nine months ended September 30, 2008 compared to $33,000 for the same period in 2007. This increase was mainly due to increase in interest rate on the short-term loan in the amount of $585,000 to supplement our working capital.

Income Tax Expenses

Income tax expenses for September 30, 2007 and 2008 amounted to $2,946,000 and $2,364,000, respectively, and our income tax rates were 33% and 25% during 2007 and 2008 respectively. The decrease in income tax expenses was attributable to a decrease in tax rate for the nine months ended September 30, 2008.

Net Income

 Net income for the nine months ended September 30, 2008 was $6,949,000, an increase of 16.20% from $5,980,000for the same period in 2007. This increase was mainly attributable to an increase in our net sales driven by the increase demand in consumable market and a decrease in income tax rate.

Comparison of Years Ended December 31, 2007 and December 31, 2006

The following table sets forth the results of our operations for the periods indicated as a percentage of net sales:

Results of Operations 

	Year Ended December 31,
	2007				2006
	(Amounts in thousands, in U.S. Dollars, except for percentages)
Sales	$	39,727	100.00	%	$	18,989	100.00	%
Gross Profit	$	14,788	37.22	%	$	6,604	34.78	%
Operating Expense	$	3,230	8.13	%	$	2,351	12.38	%
Income From Operations	$	11,558	29.09	%	$	4,253	22.40	%
Other Expenses	$	(8)	(0.02)	%	$	(1)	(0.01)	%
Income tax expenses	$	3,817	9.61	%	$	1,404	7.39	%
Net Income	$	7,749	19.51	%	$	2,850	15.01	%

35

Sales

Sales for the year ended December 31, 2007 were $39,727,000, an increase of 109.21% from $18,989,000 for 2006.  We generate revenue primarily from the production and sale of garments in the domestic Chinese markets through our 689 POS spread across 10 provinces.  The increase in our sales was primarily attributable to PRC’s strong economic growth and the expansion of our marketing efforts under our VLOV brand which has penetrated into the market in the past few years.

The following table sets forth a breakdown of our total sales revenue, by provinces, for the periods indicated:

	Year Ended December 31,
	2007					2006
	(Amounts in thousands, in U.S. Dollars, except for percentages)
	$		% of total sales revenue			$		% of total sales revenue			Growth in 2007 compared with 2006
Beijing	$	1,264		3.18	%	$	641		3.38	%		97.19	%
Zhejiang	$	9,538		24.01	%	$	4,818		25.37	%		97.97	%
Shandong	$	4,074		10.25	%	$	1,946		10.25	%		109.35	%
Jiangxi	$	5,928		14.92	%	$	2,855		15.04	%		107.64	%
Yunnan	$	3,563		8.97	%	$	1,972		10.38	%		80.68	%
Shanxi	$	2,113		5.32	%	$	1,108		5.83	%		90.70	%
Liaoning	$	2,072		5.22	%	$	998		5.26	%		107.62	%
Hubei	$	4,869		12.26	%	$	2,387		12.57	%		103.98	%
Henan	$	2,195		5.53	%	$	1,102		5.80	%		99.18	%
Guangxi	$	2,121		5.34	%	$	1,130		5.95	%		87.70	%
Others	$	1,990		5.00	%	$	32		0.17	%		6118.75	%
Total Net Sales	$	39,727		100.00	%	$	18,989		100.00	%		109.21	%

Cost of Sales and Gross Profit Margin

The following table sets forth the components of our cost of sales and gross profit both in absolute amount and as a percentage of total net sales for the periods indicated. 

		Year Ended December 31,
		2007				2006
		(Amounts in thousands, in U.S. Dollars, except for percentages)
Total Net Sales	$	39,727	100.00	%	$	18,989	100.00	%
OEM, Finished Goods	$	3,223	8.11	%	$	2,462	12.97	%
Raw Materials	$	16,657	41.93	%	$	7,288	38.38	%
Labor	$	644	1.62	%	$	461	2.43	%
Outsource Production Costs	$	3,874	9.75	%	$	1,759	9.26	%
Other and Overhead	$	541	1.36	%	$	415	2.19	%
Total Cost of Sales	$	24,939	62.78	%	$	12,385	65.22	%
Gross Profit	$	14,788	37.22	%	$	6,604	34.78	%

Raw materials cost accounted for 41.93% of our total net sales in 2007, compared to 38.38% of our total net sales in 2006. The increase in the percentage of raw materials is mainly due to the increased portion of outsource production which comprised of raw materials cost and outsource production cost, and the cost of raw material slightly increased in 2007 compared with 2006.

Labor cost accounted for 1.62% of our total net sales in 2007, a decrease of 0.81% compared to 2.43% of our total net sales in 2006.  Overhead and other expenses accounted for 1.36% of our total net sales in 2007, a decrease of 0.83% compared to 2.19% of total net sales in 2006.  The decrease in the percentage of the cost of total net sales was mainly due to the increase of total net sales in 2007 while some of these costs are fixed in nature.

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 OEM accounted for 8.11% of our total net sales in 2007, a decrease of 4.86% compared to 12.97% of our total net sales in 2006. This decrease was mainly due to the focus on our own production and outsourced production in 2007. The volume increased in our own production and outsourced production was larger than volume of increase of OEM products.

Total cost of sales for the year ended December 31, 2007 was $24,939,000, an increase from $12,385,000 in 2006. As a percentage of total net sales, our cost of sales decreased to approximately 62.78% of total net sales for 2007, down from approximately 65.22% of total net sales in 2006.  Consequently, the gross margin as a percentage of total net sales increased to approximately 37.22% for 2007 from approximately 34.78% for 2006. The increase in gross margin was attributable to the bulk purchase of raw materials which we purchased at a lower price from our suppliers in 2007.

The following table sets forth our total net sales, cost of sales, gross profit and gross margin of the geographic market segments for the periods indicated.

		Year Ended December 31,
		2007								2006
		Net Sales		Cost of sales		Gross profit	Gross margin			Net Sales		Cost of sales		Gross profit	Gross margin
		(Amounts in thousands, in U.S. Dollars, except for percentages)
Beijing	$	1,264	$	799	$	465	36.79	%	$	641	$	420	$	221	34.48	%
Zhejiang	$	9,538	$	5,924	$	3,614	37.89	%	$	4,818	$	3,109	$	1,709	35.47	%
Shandong	$	4,074	$	2,548	$	1,526	37.46	%	$	1,946	$	1,258	$	688	35.35	%
Jiangxi	$	5,928	$	3,701	$	2,227	37.57	%	$	2,855	$	1,846	$	1,009	35.34	%
Yunnan	$	3,563	$	2,183	$	1,380	38.73	%	$	1,972	$	1,314	$	658	33.37	%
Shanxi	$	2,113	$	1,350	$	763	36.11	%	$	1,108	$	730	$	378	34.12	%
Liaoning	$	2,072	$	1,291	$	781	37.69	%	$	998	$	656	$	342	34.27	%
Hubei	$	4,869	$	3,018	$	1,851	38.02	%	$	2,387	$	1,572	$	815	34.14	%
Henan	$	2,195	$	1,350	$	845	38.50	%	$	1,102	$	727	$	375	34.03	%
Guangxi	$	2,121	$	1,292	$	829	39.09	%	$	1,130	$	732	$	398	35.22	%
Others	$	1,990	$	1,483	$	507	25.48	%	$	32	$	21	$	11	34,38	%
Total	$	39,727	$	24,939	$	14,788	37.22	%	$	18,989	$	12,385	$	6,604	34.78	%

Selling, General and Administrative Expenses

	Year Ended December 31,
	2007					2006
	$		% of Total Net Sales			$		% of Total Net Sales
	(Amounts in thousands, in U.S. Dollars, except for percentages)
Gross Profit	$	14,788		37.22	%	$	6,604		34.78	%
Operating Expenses:
Selling Expenses	$	1,847		4.65	%	$	1,697		8.94	%
General and Administrative Expenses	$	1,383		3.48	%	$	654		3.44	%
Total	$	3,230		8.13	%	$	2,351		12.38	%
Income from Operations	$	11,558		29.09	%	$	4,253		22.40	%

Selling expenses in 2007 increased by $150,000 from $1,697,000 in 2006 to $1,847,000 in 2007. The increase was mainly due to the exhibitions we held in order to promote our new products more extensively in 2007.

General and administrative expenses increased by $729,000 from $654,000 in 2006 to $1,383,000 in 2007. The increase was mainly due to our focus on product design and market research. We allocated more of our resources on research and development to develop new and trendy fashion apparels in 2007.

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 Interest Expenses 

Interest expenses were $46,000 in 2007 compared to $17,000 in 2006. This increase was mainly due to the increase of interest rate and the increase of our short term loan by $291,000 from $257,000 in 2006 to $548,000 in 2007.

Income Tax Expenses

Income tax expenses for 2006 and 2007 amounted to $1,404,000 and $3,817,000 respectively. There was no change in our income tax rate in 2007. As a result, the increase of income tax expense in 2007 was mainly due to higher taxable income generated.

Net Income

Net income in 2007 was $7,749,000, an increase of $4,899,000 from $2,850,000 in 2006. This increase was mainly attributable to the successful execution of our marketing strategies in 2007.

LIQUIDITY AND CAPITAL RESOURCES

Nine Months Ended September 30, 2008

As of September 30, 2008, we had cash and cash equivalents of $4,721,000, other current assets of $7,660,000 and current liabilities of $3,981,000. We presently finance our operations primarily from the cash flow from our operations, and we anticipate that this will continue to be our primary source of funds to finance our short-term cash needs. If we require additional capital to expand or enhance our existing facilities, we will consider debt or equity offerings or institutional borrowing as potential means of financing.

Net cash provided by operating activities for the nine months ended September 30, 2008 was $4,785,000 compared with net cash provided by operating activities of $8,404,000 for the same period in 2007. This decrease was mainly attributable to decreased inventories of $4,280,000, increased accounts receivable of $2,032,000, decreased accounts payable of $1,971,000, a decrease in income and other tax payable of $2,793,000 as a result of payment of long-outstanding debts and income tax payable.

Net cash used in investing activities was approximately $52,000 for the nine months ended September 30, 2008, compared with $67,000 provided by investing activities for the same period in 2007. This decrease in net cash from investing activities was mainly due to the payment for purchase of office equipment.

Net cash used in financing activities was $3,051,000 for the nine months ended September 30, 2008, compared with $187,000 net cash provided by financing activities for the same period in 2007. The decrease in net cash from financing activities was mainly due to an amount of $3,219,000 paid in dividends during the period.

As of September 30, 2008, the inventories had decreased to $657,000 compared with $3,439,000 as of September 30, 2007. Finished goods decreased to $242,000 as of September 30, 2008 from $2,202,000 as of September 30, 2007 resulting from increasing product supplies on OEM production. Most of the finished products were delivered from contract factory to customers directly. Therefore, finished goods have decreased as of September 30, 2008.

As of September 30, 2008, we had accounts receivable of $6,890,000, compared with $4,333,000 as of September 30, 2007. The debtor turnover ratio increased to 39 days as of September 30, 2008 from 28 days as of September 30, 2007. The increase in accounts receivables was mainly due to increase in sales amount and delay of repayment by our customers. Although the debtors turnover ratio increased by 11 days, the average settlement days was still within the credit period we granted to our customers that is less than 90 days.

As of September 30, 2008, we had accounts payables of $1,623,000, compared with $4,450,000 as of September 30, 2007. The decrease was mainly due to repayment of long-outstanding debts during the nine months ended September 30, 2008. As of September 30, 2007, around one-third of accounts payables were aged over 90 days. With increasing cash inflows during the period, we had settled the long-outstanding debts and most of our accounts payables as of September 30, 2008 were aged less than 90 days.

As of September 30, 2008, we had accrued expenses and other payables of $1,112,000, compared with $644,000 as of September 30, 2007. The increase was mainly due to the increase of provision for advertisement subsidies to distributors by $524,000 from $486,000 as of September 30, 2007 to $1,010,000 as of September 30, 2008.

Year Ended December 31, 2007

As of December 31, 2007, we had cash and cash equivalents of $2,758,000, other current assets of $9,597,000 and current liabilities of $10,974,000. We presently finance our operations primarily from the cash flow from our operations, and we anticipate that this will continue to be our primary source of funds to finance our short-term cash needs. If we require additional capital to expand or enhance our existing facilities, we will consider debt or equity offerings or institutional borrowing as potential means of financing.

Net cash provided in operating activities for 2007 was $6,947,000 compared with net cash provided by operating activities of $1,273,000 in 2006. This increase was mainly attributable to an increase in our net income as a result of our general business expansion.

Net cash provided by investing activities was approximately $69,000 in 2007, compared with $26,000 in 2006. This increase in 2007 was mainly due to a decrease in capital expenditure on purchase of property, plant and equipment.

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Net cash used in financing activities was $6,663,000 in 2007, compared with $482,000 net cash provided by financing activities in 2006. The decrease in net cash provided by financing activities was as a result of dividend payments of $6,855,000.

As of December 31, 2007, we had inventories of $4,708,000, compared with $3,677,000 as of December 31, 2006. The increase of inventories was mainly due to the increase of finished goods to $2,251,000 as of December 31, 2007 from $1,073,000 as of December 31, 2006. The increase of finished goods was mainly due to increase of sales as of December 31, 2007.

As of December 31, 2007, the accounts receivable was amounted to $4,514,000, increased by 133% from $1,936,000 as of December 31, 2006. The increase was mainly due to the increase in sales. The sales in the year ended December 31, 2007 was $39,727,000, compared with $18,989,000 in the same period ended in 2006, which surged by more than 100%.

As of December 31, 2007, we had accounts payables of $3,406,000, compared with $1,823,000 as of December 31, 2006, which increased by 87%. The increase in accounts payables was mainly in line with the scale of operations.

As of December 31, 2007, we had accrued expenses and other payables of $714,000, compared with $478,000 as of December 31, 2006. The increase was mainly due to the increase of provision for advertisement subsidies to distributors by $297,000 from $272,000 as of December 31, 2006 to $569,000 as of December 31, 2007.

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

RELATED PARTY TRANSACTIONS

For a description of our related party transactions, see the section of this Current Report entitled “Certain Relationships and Related Transactions.”

DESCRIPTION OF PROPERTY

Fujian offices and facilities

Our offices and our facilities are located in Fujian Province, China. The table below provides a general description of our facilities:

Location	Principal Activities	Area (sq. meters)	Lease Expiration Date
Yinglin Dongpu Village, Yilin Town, Jinjiang City, Fujian PRC 362200	Products distribution	2,859 square meters	N/A (property owned by V·LOV)
No. 1 Building, W. Xiangjiang Rd., Shishi City, Fujian, PRC 3627000	Office for marketing and research and development	2,500 square meters	December 31, 2008
Fengsheng Mansion 9th Floor Annan Road, Quanzhou City Fujian, PRC 362000	Office for accounting and financial services	331.5 square meters	July 9, 2009

The Company leases its two offices in Fujian Province under property lease agreements that expire in December 31, 2008 and July 9, 2009, with an option to renew the leases.  Minimum future commitments under the lease agreements payable as of December 31, 2008 are as follows:

Year Ended December 31	Amount
2009	$	7,130

Rental expense was $26,334 and $35,869 during 2007 and 2008 respectively. We believe that our existing facilities are well maintained and in good operating condition.

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SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership Prior To Change Of Control

The following table sets forth information regarding the beneficial ownership of our common stock as of February 12, 2009, for each of the following persons, immediately prior to the transactions contemplated by the Exchange Agreement:

·   each of our directors and officers;

·   all of the directors and officers as a group; and

·   each person who is known by us to own beneficially five percent or more of our common stock.

Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding on February 12, 2009.   

Common Stock Beneficially Owned
Executive officers and directors:	Number of Shares beneficially owned (1)		Percentage of class beneficially owned after the Transaction  (2)
Matthew Hayden (3)		20,000		17.94	%
All directors and executive officers as a group (one person)		20,000		17.94	%
5% Shareholders:
Pope Investments II LLC (4)		56,000		50.22	%
Ancora Greater China Fund, LP (5)		24,000		21.52	%
MMH Group, LLC (3)		20,000		17.94	%

(1)	Unless otherwise indicated in the footnotes to the table, each shareholder shown on the table has sole voting and investment power with respect to the shares beneficially owned by him or it.
(2)	Based on 111,500 shares of Common Stock outstanding as of February 12, 2009.

(3)	Shares are held in the name of MMH Group, LLC. Mr. Hayden is the Managing Partner and sole stockholder of MMH Group, LLC, and the Chief Executive Officer, Chief Financial Officer, Secretary and Director of the Company immediately prior to the closing of the Exchange Agreement. The address for Mr. Hayden and MMH Group, LLC is 7582 Windermere Court, Lake Worth, Florida 33467..
(4)	The address for Pope Investments II, LLC is 5100 Popular Avenue, Suite 805, Memphis, Tennessee 38137.
(5)	The address for Ancora Greater China Fund, LP is One Chagrin Highlands, 2000 Auburn Drive, Suite 300, Cleveland, Ohio 44122.

Security Ownership After Change Of Control

40

The following table sets forth information regarding the beneficial ownership of our common stock as of February 13, 2009, for each of the following persons, after giving effect to the transaction under the Exchange Agreement:

·   each of our incoming directors and each of the executive officers in the “Management—Executive Compensation” section of this report;

·   all directors and executive officers as a group; and

·   each person who is known by us to own beneficially five percent or more of our common stock.

Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding on February 13, 2009.

	Common Stock Beneficially Owned
Incoming executive officers and directors: (1)	Number of Shares beneficially owned (2)		Percentage of class beneficially owned after the Transaction (3)
Qingqing Wu (4)		9,596,496		59.98	%
Yushan Zheng		0		0	%
Jianwei Shen		0		0	%
Zhifan Wu		0		0	%
Yuzhen Wu		0		0	%
All directors and executive officers as a group (five persons)		9,596,496		59.98	%

5% Shareholders:
Bestgrain Limited (4)	9,956,496	59.98	%

(1) Unless otherwise indicated, the address of the beneficial owner is No 1749-1751 Xiangjiang Road,  Shishi City, Fujian Province, China.

(2)	Unless otherwise indicated in the footnotes to the table, each shareholder shown on the table has sole voting and investment power with respect to the shares beneficially owned by him or it.
(3)	Based on 16,000,000 shares of Common Stock outstanding as of February 13, 2009, immediately after the closing of the .
(4)	The address of Bestgrain Limited is 18A Man Hing Commercial Building, 79-83 Queen’s Road Central, Hong Kong. Mr. Qingqing Wu is the director and sole shareholder of Bestgrain Limited, thus Mr. Wu indirectly owns the shares held by Bestgrain Limited through his sole ownership of Bestgrain Limited.

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DIRECTORS AND EXECUTIVE OFFICERS

Appointment of New Directors and Officers

In accordance with the Exchange Agreement, upon closing, Mr. Qingqing Wu was appointed as the Chairman of the board of directors, and will hold the seat until the next annual shareholder meeting can be held and until his successor is duly elected and qualified. Mr. Matthew Hayden will resign as a director of the Company ten days following the mailing of an information statement to the Company’s stockholders in compliance with Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Upon Mr. Hayden resignation, Mr. Jianwei Shen, Mr. Zhifan Wu and Mr. Yuzhen Wu will be appointed as directors of the Company, and will hold the seats until the next annual shareholder meeting can be held and until their successors are duly elected and qualified.

Furthermore, on the earlier of February 18, 2009 or immediately after the filing of the Company's annual report on Form 10-K for fiscal 2008, Matthew Hayden will resign as our Chief Executive Officer, President, Secretary and Chief Financial Officer, and in his place, Mr. Qingqing Wu will become the President, Chief Executive Officer, Chief Operating Officer and Secretary, and Mr. Yushan Zheng as Chief Financial Officer and Treasurer. Descriptions of our incoming directors and officers can be found below in the section titled “Current Management.”

The following table sets forth the names and ages of the incoming directors and executive officers:

Name	Age	Position
Qingqing  Wu *	38	President, Chief Executive Officer, Chief Operating Officer, Secretary and Chairman of the Board
Yushan Zheng *	46	Chief Financial Officer and Treasurer
Jianwei Shen	52	Director
Zhifan Wu	42	Director
Yuzhen Wu	30	Director

* Denotes an executive officer.

Biographical Information

The following is a brief account of the education and business experience of the incoming directors and executive officers during at least the past five years, indicating the person's principal occupation during the period, and the name and principal business of the organization by which he or she was employed.

 Qingqing Wu graduated from Xiamen Jimei School of Light Industry in 1990 with a major in apparel design and received a Masters in Business Administration degree from Tsing-Hua University in 2007. Mr. Wu worked as a designer at Huacai Apparel Factory in Jinjiang County from 1990-1992. Between 1992 and 1994, Mr. Wu served as the Director of Design and Assistant to General Manager at Shidali Apparel Co., Ltd. in Jinjiang City. In November 1994, Mr. Wu founded Yinglin Jinduren. Mr. Wu also serves as the Standing Director of the First Committee of the Association of Fabric & Apparel in Jinjiang City.

Yushan Zheng graduated from Jiangxi University of Finance & Economics in 1987 with a major in industrial economics.  Mr. Zheng worked as the Director of Finance Department and served as the Chief Accounting Officer of Xianyou Electrical Machine Co., Ltd. in Fujian Province from 1987 till 2000. Between 2000 and 2004, Mr. Zheng served as the Manager of Auditors at Huada Certified Tax Agent Firm in Putian City.  From 2004 to 2009, Mr. Zheng served as the Manager of Finance Department and acted as the Chief Financial Officer of Sanyuan Metal Co., Ltd. and Sanchuan Aluminum Co., Ltd., respectively, in Fujian Province.  Starting from February 2009 until present, Mr. Zheng has been serving as the Chief Financial Officer of Yinglin Jinduren.  Mr. Zheng is a Chinese Certified Public Accountant and a Certified Tax Agent.   

Dr. Jianwei Shen holds a Doctorate of Economics and Management from China Agricultural University, a Doctorate of Philosophy from Hohenheim University in Germany, a Master Degree in Economics and Management from Beijing Agricultural University, and a Bachelor’s Degree in Agricultural Economics from Beijing Agricultural University.  Since 2006, Dr. Shen is an independent director and a member of the Audit Committee of the China Essence Group Ltd., a company listed on the Singapore Exchange (Main Board).  From 2002 to 2005, he served as a project manager at Fujian Fuma Foods Group Co., and he worked as a project manager at Beijing Dasbro Co. Ltd from 1993 to 2000.  Dr. Shen is also a member of the Specialist Advisors to the City of Jinjiang, Fujian.  ADr. Shen also provides strategic corporate advisory services to Yinglin Jinduren.

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Zhifan Wu serves as the manager of Yinglin Jinduren’s Purchasing Department, a position he has held since March 2006.  Mr. Wu worked as the purchasing assistant at Huangbao Apparel Co., Ltd. from 1996 to 2000.  From March 2000 to 2005, Mr. Wu served as the manager of the Purchasing Department in Huangbao Apparel Co., Ltd.

Yuzhen Wu graduated from Huaqiao University in 1998 with a major in Business Management. Mr. Wu has been working at Yinglin Jingduren since 1998. From 1998 to 2001, Mr. Wu worked as the workshop director. From 2001 to 2003, Mr. Wu worked as the production manager overseeing all production arrangements and process. Mr. Wu served as the vice general manager between 2003 and 2006, and as director of the general production management since 2006.  

Family Relationships

Other than Mr. Qingqing Wu and Mr. Zhifan Wu, who are brothers, there are no family relationships between or among any of the incoming directors or executive officers.

Involvement in Certain Legal Proceedings

There are no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our incoming officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony. Nor are any of the officers or directors of any corporation or entity affiliated with us so enjoined.

Board of Directors

At the expiration of the 10-day period following the delivery and/or mailing of the Schedule 14f-1 Information Statement to our stockholders as required under Rule 14(f)-1, our board of directors will comprise of 4 members, all of whom, except for Dr. Jianwei Shen, are management members of Yinglin Jinduren. All directors serve in this capacity until their terms expire or until their successors are duly elected and qualified. Our bylaws provide that the authorized number of directors is between 1 and 13.

Mr. Qingqing has been appointed as the Chairman of the board of directors. In this capacity he is responsible for meeting with our Chief Financial Officer to review our financial and operating results, agendas and minutes of board and committee meetings, and presiding at the meetings of the committees of the board.

Our board of directors held no formal meetings during the most recently completed fiscal year. All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the corporate laws of the State of Nevada and our By-laws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

Board Committees; Director Independence

As of this date, our board of directors has not appointed an audit committee or compensation committee as we are not currently required to have such committees.  We have, however, charters adopted for audit and disclosure committees. The functions ordinarily handled by these committees are currently handled by our entire board of directors.  Our board of directors intends, however, to review our governance structure and institute board committees as necessary and advisable in the future, to facilitate the management of our business.

Based upon information submitted by Dr. Jianwei Shen, the board of directors has determined that he is “independent” under the listing standards of NYSE Alternext US LLC (formerly the American Stock Exchange) and under the NASDAQ rules.

Code of Ethics

We have adopted a code of ethics that applies to our officers, directors and employees, including our chief executive officer, senior executive officers, principal accounting officer, and other senior financial officers. A copy of our code of ethics will be provided to any person without charge, upon written request sent to us at our offices located at No 1749-1751 Xiangjiang Road,  Shishi City, Fujian Province, China.

Compensation Committee Interlocks and Insider Participation

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No interlocking relationship exists between our board of directors and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the past.

EXECUTIVE COMPENSATION

Director Compensation

Currently, we do not pay any compensation to members of our board of directors for their service on the board.  However, we intend to review and consider future proposals regarding board compensation.

Executive Compensation

The following summary compensation table indicates the cash and non-cash compensation earned during the fiscal years ended December 31, 2008 and 2007 by the Chief Executive Officer and each of our other two highest paid executives of our predecessor, if any, of Sino Charter whose total compensation exceeded $100,000 during the fiscal years ended December 31, 2008 and 2007.

SUMMARY COMPENSATION TABLE

Name and principal position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compen- sation ($)		Nonquali-fied Deferred Compen-sation Earnings ($)		All Other Compen-sation ($)		Total ($)
Matthew Hayden, outgoing CEO, President, Secretary, CFO and Treasurer (1)		2008 2007		0 0		0 0		0 0		0 0		0 0		0 0		0 0	$ $	0 0
Bradley Miller, former CEO, President, Secretary, CFO and Treasurer (2)		2008 2007		0 0		0 0		0 0		0 0		0 0		0 0		0 0	$ $	0 0

(1) Mr. Matthew Hayden became the Company’s President, Chief Executive Officer, Secretary Chief Financial Officer,and Treasurer on August 1, 2008, and he will resign from all of these executive officer positions on the earlier of February 18, 2009 or immediately after the filing of the Company's 10-K for fiscal 2008.

(2) Mr. Bradley Miller became the Company’s President, Chief Executive Officer, Secretary Chief Financial Officer,and Treasurer on October 30, 2006, and he resigned from all of these executive officer positions on August 1, 2008.

The following summary compensation table indicates the cash and non-cash compensation earned from Yinglin Jinduren during the fiscal years ended December 31, 2008 and 2007 by the incoming Chief Executive Officer and each of our other two highest paid incoming executives whose total compensation exceeded $100,000 during the fiscal years ended December 31, 2008 and 2007.

SUMMARY COMPENSATION TABLE

Name and principal position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compen- sation ($)		Nonquali-fied Deferred Compen-sation Earnings ($)		All Other Compen-sation ($)		Total ($)
Qingqing Wu, incoming CEO, President, Secretary, and Chief Operating Officer (1)		2008 2007		0 0		0 0		0 0		0 0		0 0		0 0		0 0	$ $	0 0

(1) Mr. Qingqing Wu is our incoming Chief Executive Officer, President, Secretary and Chief Operating Officer and will take his offices concurrently with Mr. Hayden's resignation.

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None of our executive officers received, nor do we have any arrangements to pay out, any bonus, stock awards, option awards, non-equity incentive plan compensation, or non-qualified deferred compensation.

Potential Payments Upon Termination or Change-in-Control

SEC regulations state that we must disclose information regarding agreements, plans or arrangements that provide for payments or benefits to our executive officers in connection with any termination of employment or change in control of the company. We currently have no employment agreements with any of our executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer's responsibilities following a change-in-control. As a result, we have omitted this table.

Employment Agreements

We currently have no employment agreements with any of our incoming executive officers

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transactions of Yinglin Jinduren

Set forth below are the related party transactions between Yinglin Jinduren’s stockholders, officers and/or directors, and Yinglin Jinduren as of the date set forth on the table.

	(Amount in Thousands)
	September 30, 2008		December 31, 2007		December 31, 2006
	(Unaudited)
Amounts due from a director:
Mr. Qingqing Wu (1) (2)	$	0	$	156	$	146
Amount due to a director:
Mr. Qingqing Wu (1) 3)		2		1		1

(1)	The amount due to/from a director was unsecured, interest-free and repayable on demand.
(2)	The amount due from Mr. Wu is for Yinglin Jinduren in connection with the normal course of business.

(3)   The amount due to Mr. Wu is from Peng Xiang for its general expenses.

Yinglin Jinduren has also licensed four trademarks from Mr. Qingqing Wu, although none of these trademarks are currently used in  connection with any products.

LEGAL PROCEEDINGS

We are not currently involved in any material legal proceedings, nor have we been involved in any such proceedings that have had or may have a significant effect on our company. We are not aware of any other material legal proceedings pending against us.

MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY

AND RELATED SHAREHOLDER MATTERS

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Market Information

Our common stock is not listed on any stock exchange.  Our common stock is traded over-the-counter on the Over-the-Counter Bulletin Board under the symbol “SICI.OB”.  The following table sets forth the high and low bid information for our common stock for each quarter since we have been listed on the Over-the Counter Bulletin Board, as reported by the Over-the-Counter Bulletin Board.  The bid prices reflect inter-dealer quotations, do not include retail markups, markdowns or commissions and do not necessarily reflect actual transactions.

	Low		High
2008 (1)
Quarter ended December 31, 2008	$	0.05	$	0.05
Quarter ended September 30, 2008	$	0.13	$	0.13
Quarter ended June 30, 2008	$	0.10	$	0.10

As of February 11, 2009, the closing sales price for shares of our common stock was $1.07 per share on the Over-The-Counter Bulletin Board.

Holders

As of February 6, 2009, there were approximately 28 shareholders of record of our common stock based upon the records of the shareholders provided by our transfer agent.  Our transfer agent is Transfer Online, whose address is 317 SW Alder Street, Portland, OR 97204 and telephone number is 503-227-2950.

Dividends

We have never paid cash dividends on our common stock.  We intend to keep future earnings, if any, to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.  Our future payment of dividends will depend on our earnings, capital requirements, expansion plans, financial condition and other relevant factors that our board of directors may deem relevant.  Our retained earnings deficit currently limits our ability to pay dividends.

RECENT SALES OF UNREGISTERED SECURITIES

Reference is made to Item 3.02 of this Current Report on Form 8-K for a description of recent sales of unregistered securities, which is hereby incorporated by reference.

DESCRIPTION OF SECURITIES

The following information describes our capital stock and provisions of our articles of incorporation and our bylaws, all as in effect upon the Closing of the Exchange Transaction.  This description is only a summary.  You should also refer to our articles of incorporation, bylaws and articles of amendment which have been incorporated by reference or filed with the SEC as exhibits to this Current Report on Form 8-K.

General

Our authorized capital stock consists of 100,000,000 shares of common stock at a par value of $0.00001 per share and 100,000,000 shares of preferred stock at a par value of $$0.00001 per share.

Common Stock

Holders of common stock are entitled to one vote for each share on all matters submitted to a shareholder vote.  Holders of common stock do not have cumulative voting rights.  Subject to preferences that may be applicable to any then-outstanding preferred stock, holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds.  In the event of our liquidation, dissolution or winding up, subject to preferences that may be applicable to any then-outstanding preferred stock, each outstanding share entitles its holder to participate in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock.

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Holders of common stock have no conversion, preemptive or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock.  The rights of the holders of common stock are subject to any rights that may be fixed for holders of preferred stock, when and if any preferred stock is authorized and issued.  All outstanding shares of common stock are duly authorized, validly issued, fully paid and non-assessable.

Preferred Stock

Our board of directors, without further shareholder approval, may issue preferred stock in one or more classes or series as the board may determine from time to time.  Each such class or series shall be distinctly designated.  All shares of any one class or series of the preferred stock shall be alike in every particular, except that there may be different dates from which dividends thereon, if any, shall be cumulative, if made cumulative.  The voting powers, designations, preferences, limitations, restrictions and relative rights thereof, if any, may differ from those of any and all other series outstanding at any time.  Our board of directors has express authority to fix (by resolutions adopted prior to the issuance of any shares of each particular class or series of preferred stock) the number of shares, voting powers, designations, preferences, limitations, restrictions and relative rights of each such class or series.  The rights granted to the holders of any series of preferred stock could adversely affect the voting power of the holders of common stock and issuance of preferred stock may delay, defer or prevent a change in our control.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Nevada Law

 Section 78.7502 of the Nevada Revised Statutes permits a corporation to 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, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation 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 the action, suit or proceeding if he:

(a) is not liable pursuant to Nevada Revised Statute 78.138, or

(b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

In addition, Section 78.7502 permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he:

(a) is not liable pursuant to Nevada Revised Statute 78.138; or

(b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.

To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.

Section 78.752 of the Nevada Revised Statutes allows a corporation to purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.

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Other financial arrangements made by the corporation pursuant to Section 78.752 may include the following:

(a) the creation of a trust fund;

(b) the establishment of a program of self-insurance;

(c) the securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation; and

(d) the establishment of a letter of credit, guaranty or surety

No financial arrangement made pursuant to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court.

Any discretionary indemnification pursuant to NRS 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined by a court that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

(a) by the stockholders;

(b) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;

(c) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion, or 

(d) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.

Charter Provisions and Other Arrangements of the Registrant

Pursuant to the provisions of the State of Nevada’s Revised Business Statutes, Sino Charter has adopted the following indemnification provisions in its Bylaws for its directors and officers:

.01   Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgment, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action proceeding, had reasonable cause to believe that such person's conduct was unlawful.

.02   Derivative Action The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in the Corporation's favor by reason of the fact that such person is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees) and amount paid in settlement actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to amounts paid in settlement, the settlement of the suit or action was in the best interests of the Corporation; provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of such person's duty to the Corporation unless and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. The termination of any action or suit by judgment or settlement shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation.

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.03   Successful Defense. To the extent that a Director, Trustee, Officer, employee or Agent of the Corporation has been successful on the merits or otherwise, in whole or in part in defense of any action, suit or proceeding referred to in Paragraphs .01 and ..02 above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.

.04   Authorization. Any indemnification under Paragraphs .01 and .02 above (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director, Trustee, Officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Paragraphs .01 and .02 above. Such determination shall be made (a) by the Board of Directors of the Corporation by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (b) is such a quorum is not obtainable, by a majority vote of the Directors who were not parties to such action, suit or proceeding, or (c) by independent legal counsel (selected by one or more of the Directors, whether or not a quorum and whether or not disinterested) in a written opinion, or (d) by the Shareholders. Anyone making such a determination under this Paragraph .04 may determine that a person has met the standards therein set forth as to some claims, issues or matters but not as to others, and may reasonably prorate amounts to be paid as indemnification.

.05   Advances. Expenses incurred in defending civil or criminal action, suit or proceeding shall be paid by the Corporation, at any time or from time to time in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in Paragraph .04 above upon receipt of an undertaking by or on behalf of the Director, Trustee, Officer, employee or agent to repay such amount unless it shall ultimately be by the Corporation is authorized in this Section.

.06   Nonexclusivity. The indemnification provided in this Section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, bylaw, agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, Trustee, Officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.

.07   Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability assessed against such person in any such capacity or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability.

.08   "Corporation" Defined. For purposes of this Section, references to the "Corporation" shall include, in addition to the Corporation, an constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its Directors, Trustees, Officers, employees or agents, so that any person who is or was a Director, Trustee, Officer, employee or agent of such constituent corporation or of any entity a majority of the voting stock of which is owned by such constituent corporation or is or was serving at the request of such constituent corporation as a Director, Trustee, Officer, employee or agent of the corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section with respect to the resulting or surviving Corporation as such person would have with respect to such constituent corporation if its separate existence had continued.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”) may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company’s Articles of Incorporation, the Nevada Revised Business Statutes 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.

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Item 3.02 Unregistered Sales of Equity Securities

As more fully described in Items 1.01 and 2.01 above, in connection with the Exchange Agreement, on the Closing Date, we issued [_____] shares of our common stock to the BVI Shareholders in exchange for 100% of the capital stock of Peng Xiang. Reference is made to the disclosures set forth under Items 1.01 and 2.01 of this Current Report on Form 8-K, which disclosures are incorporated herein by reference.  The issuance of the common stock to the BVI Shareholders pursuant to the Exchange Agreement was exempt from registration under the Securities Act pursuant to Section 4(2) and Regulation D or S thereof.  We made this determination based on the representations of the BVI Shareholders which included, in pertinent part, that such shareholders were "accredited investors" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, and that such shareholders were acquiring our common stock, for investment purposes for their own respective accounts and not as nominees or agents, and not with a view to the resale or distribution thereof, and that each member understood that the shares of our common stock may not be sold or otherwise disposed of without registration under the Securities Act or an applicable exemption therefrom.

On February 12, 2009, we completed an offering of 514,000 shares of our common stock at a price of $0.10 per share to three purchasers. The total amount received from this offering was $51,400. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act. The Company made this determination based on the representations of Investors, which included, in pertinent part, that such shareholders were either (a) "accredited investors" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, or (b) not a "U.S. person" as that term is defined in Rule 902(k) of Regulation S under the Act, and that such Investor was acquiring our common stock, for investment purposes for their own respective accounts and not as nominees or agents, and not with a view to the resale or distribution thereof, and that each Investor understood that the shares of our common stock may not be sold or otherwise disposed of without registration under the Securities Act or an applicable exemption therefrom.

On February 12, 2009, we completed an offering of 814,500 shares of our common stock at a price of $0.001 per share to 4 purchasers. The total amount received from this offering was $814.50. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act. The Company made this determination based on the representations of Investors, which included, in pertinent part, that such shareholders were either (a) "accredited investors" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, or (b) not a "U.S. person" as that term is defined in Rule 902(k) of Regulation S under the Act, and that such Investor was acquiring our common stock, for investment purposes for their own respective accounts and not as nominees or agents, and not with a view to the resale or distribution thereof, and that each Investor understood that the shares of our common stock may not be sold or otherwise disposed of without registration under the Securities Act or an applicable exemption therefrom.

In November 2006, we issued 10,000,000 shares of common stock pursuant to the exemption from registration contained in section 4(2) of the Securities Act. This was accounted for as a sale of common stock.

Item 4.01 Changes in Registrant's Certifying Accountant.

Effective on September 22, 2008, Williams & Webster, P.S. was dismissed as the Company’s certifying independent accountant engaged to audit the Company’s financial statements. Williams & Webster audited the Company’s financial statements for the fiscal year ended November 11, 2007 and 2006 and it reviewed the Company’s unaudited financial statements for the fiscal quarters ended February 28, 2007, May 31, 2007 and August 31, 2007. The report of Williams & Webster on the financial statements of the Company as of and for the year ended November 11, 2007 did not contain an adverse opinion, or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting principles, except for an explanatory paragraph regarding the financial statements being prepared assuming that the Company will continue as a going concern.

During the Company’s fiscal year ended November 11, 2007 and the subsequent interim period through the date of the dismissal of Williams & Webster, there were no disagreements with Williams & Webster on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Williams & Webster would have caused them to make reference to this subject matter of the disagreements in connection with their report, nor were there any "reportable events" as such term as described in Item 304(a)(1)(iv) of Regulation S-B, promulgated under the Securities Exchange Act of 1934, as amended ("Regulation S-B").

The Company had requested Williams & Webster to furnish it with a letter addressed to the SEC (the “SEC Letter”) stating whether it agrees with the statements made above by the Company. A copy of the SEC letter will be filed as an amendment to this Form 8-K when received from Moore Stephens.

Effective on September 22, 2008, Malone and Bailey, CPA, whose address is 10350 Richmond Avenue, Suite 800, Houston, Texas 77042, was engaged to serve as the Company's new independent certifying accountant to audit the Company's financial statements.

Prior to engaging Malone and Bailey, the Company had not consulted Malone and Bailey regarding the application of accounting principles to a specified transaction, completed or proposed, the type of audit opinion that might be rendered on the Company’s financial statements or a reportable event, nor did the Company consult with Malone and Bailey regarding any disagreements with its prior auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the prior auditor, would have caused it to make a reference to the subject matter of the disagreements in connection with its reports.

The dismissal of Williams & Webster as the Company’s certifying independent accountant and the engagement of Malone and Bailey as its new certifying independent accountant were both approved by the Company's board of directors.

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Item 5.01 Changes in Control of Registrant.

As more fully described in Items 1.01 and 2.01 above, on February 13, 2009, in a reverse acquisition, we acquired a business engaged in the design, sourcing, marketing and distribution of high fashion apparel and clothing products in China, by executing the Exchange Agreement by and among the Company, Peng Xiang and the BVI Shareholders. Peng Xiang owns 100% of the equity in Korea Jinduren.  In turn, Korea Jinduren controls Yinglin Jinduren through a series of contractual arrangements.

Under the Exchange Agreement, on the Closing Date, we acquired all of the issued and outstanding shares of Peng Xiang through the issuance of 14,560,000 restricted shares of our common stock to the BVI Shareholders.  Immediately prior to the Exchange Transaction, we had 1,440,000 shares of common stock issued and outstanding.  Immediately after the issuance of the shares to the BVI Shareholders, we had 16,000,000 shares of common stock issued and outstanding.  As a result of this Exchange Transaction, the BVI Shareholders became our controlling shareholders and Peng Xiang became our wholly owned subsidiary.

In connection with the Closing of the Exchange, and as explained more fully in Item 2.01 above under the section titled “Management” and in Item 5.02 below, on the earlier of February 18, 2009 or immediately after the filing of the Company's annual report on Form 10-K for fiscal 2008, Mr. Matthew Hayden will resign as Chief Executive Officer, President, Chief Financial Officer, Secretary and Treasurer of Sino Charter, and Mr. Qingqing Wu will become the Company’s Chief Executive Officer, President, Secretary and Chief Operating Officer, and Mr. Yushan Zheng will become Chief Financial Officer and Treasurer. On February 13, 2009, Mr. Wu was also appointed as a member of the Company’s board of directors. In addition, upon the Company’s compliance with the provisions of Section 14(f) of the Securities Act of 1933, as amended, and Rule 14(f)-1 thereunder, the appointments of Dr. Jianwei Shen, Mr.  Zhifan Wu and Mr. Yuzhen Wu as new members of the Company’s board of directors will also become effective. The Schedule 14f-1 Information Statement will be filed and mailed to the Company’s stockholders shortly after the filing of this Form 8-K current report.

The closing of the transaction under the Exchange Agreement, which resulted in the change of control of the registrant, occurred on February 13, 2009. A copy of the Exchange Agreement is included as Exhibit 2.1 to this current report.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective February 13, 2009, Mr. Qingqing Wu was appointed as a member of the Company’s board of directors. In addition, upon the Company’s compliance with the provisions of Section 14(f) of the Securities Act of 1933, as amended, and Rule 14(f)-1 thereunder, the appointments of Dr. Jianwei Shen, Mr. Zhifan Wu and Yuzhen Wu as new members of the Company’s board of directors and Mr. Hayden's resignation from the Company's board of directors will also become effective.

Other than Mr. Qingqing Wu and Mr. Zhifan Wu, who are brothers, Dr. Jianwei Shen and Mr. Yuzhen  Wu have no family relationships with any of the Company’s other executive officers or directors. Other than the transactions in connection with the Exchange, as described above in Item 2.01, no transactions occurred in the last two years to which the Company was a party in which the above-mentioned officers and/or directors had or is to have a direct or indirect material interest. Related party transactions involving Mr. Qingqing Wu are described in Item 2.01 above. 

Descriptions of the business backgrounds and any compensation arrangements with the newly appointed or proposed directors and officers can be found in Item 2.01 above, in the sections titled “Management” and “Executive Compensation, and such descriptions are incorporated herein by reference.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On February 13, 2009, our board of directors adopted resolution by unanimous written consent to amend Article III of our Bylaws in order to allow shareholders to take action by written consent of at least a majority of the voting power, unless an action requires a different proportion of voting power, in which case that proportion of written consents shall be required. Previously, our Bylaws only permitted shareholder action by unanimous written consent. A copy of the amended Article III of the Bylaws is included as Exhibit 3.3 to this current report on Form 8-K.

Additionally on February 13, 2009, the board of directors adopted resolution by unanimous written consent to change the Company’s fiscal year end from November 30 to December 31.

Item 5.06 Change in Shell Company Status.

As explained more fully in Item 2.01 above, Sino Charter was a "shell company" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately before the closing of the Exchange. As a result of the Exchange, Peng Xiang became the wholly owned subsidiary of Sino Charter and V·LOV became Sino Charter’s main operational business. Consequently, registrant believes that the Exchange has caused it to cease to be a shell company. For information about the Exchange, please see the information set forth above under Item 2.01 of this current report, which information is incorporated herein by reference.

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Item 9.01 Financial Statement and Exhibits.

Reference is made to the reverse acquisition transaction under the Exchange Agreement, as described in Item 1.01, which is incorporated herein by reference.  As a result of the closing of the reverse acquisition transaction, our primary operations consist of the business and operations of V·LOV, which are conducted by Yinglin Jinduren in China.  In the reverse acquisition transaction, Sino Charter is the accounting acquiree and Peng Xiang is the accounting acquirer.  Accordingly, we are presenting the financial statements of Peng Xiang and its consolidated entities.

(a) Financial Statements of the Business Acquired

The audited consolidated financial statements of Peng Xiang for the years ended December 31, 2006 and 2007 and the unaudited consolidated financial statements for the nine months ended September 30, 2008 and 2007, including the notes to such financial statements, are incorporated herein by reference to Exhibit 99.1 of this Current Report.

(b) Pro Forma Financial Information

Incorporated by reference to Exhibit 99.2 attached hereto.

(d) Exhibits

INDEX TO EXHIBITS

Exhibit Number	Description
2.1	Share Exchange Agreement*
3.1	Articles of Incorporation of Sino Charter, Inc. (Nevada) (1)
3.2	Bylaws of Sino Charter, Inc. (1)
3.3	Amendment to the Bylaws of Sino Charter, Inc.*
4.1	Specimen Stock Certificate of Sino Charter, Inc. (1)
14.1	Code of Ethics of Sino Charter, Inc. (2)
10.1	Consulting Services Agreement*
10.2	Operating Agreement*
10.3	Equity Pledge Agreement*
10.4	Option Agreement*
10.5	Voting Rights Proxy Agreement*
99.1	Audited consolidated financial statements of Peng Xiang Peng Fei Investments Limited for the years ended December 31, 2007 and 2006 and unaudited consolidated financial statements for the nine months ended September 30, 2008 and 2007, and accompanying notes to the consolidated financial statements*
99.2	Unaudited Pro Forma Consolidated Financial Statements*
99.3	Audited Committee Charter (2)
99.4	Disclosure Committee Charter (2)

* Filed Herewith.

(1) Previously filed with our Registration Statement on Form SB-2 on February 9, 2007.

(2) Previously filed with our Annual Report on Form 10K on March 7, 2008

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SIGNATURES

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

SINO CHARTER, INC.
By:	/s/ Matthew Hayden
	Matthew Hayden
	Chairman and Chief Executive Officer

Dated: February 13, 2009

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EX-2.1

SHARE EXCHANGE AGREEMENT

by and among

Peng Xiang Peng Fei Investments Limited (“Peng Xiang“)

and

the Shareholders of Peng Xiang,

on the one hand;

and

Sino Charter Inc. (“Sino Charter”),

a Nevada corporation,

and

the Majority Stockholders of Sino Charter,

on the other hand

February 13, 2009

SHARE EXCHANGE AGREEMENT

This Share Exchange Agreement, dated as of February 13, 2009 (this “Agreement”), is made and entered into by and among Peng Xiang Peng Fei Investments Limited, an international business company incorporated in the British Virgin Islands (“Peng Xiang”), and the shareholders of Peng Xiang (“Peng Xiang Shareholders”) listed on the Signature Pages for Peng Xiang Shareholders that are attached hereto, on the one hand; and Sino Charter Inc., a Nevada corporation (“Sino Charter”), and the stockholders of  Sino Charter listed on Signature Page for Sino Charter Stockholders that is attached hereto (the “Sino Charter Stockholders”), on the other hand.

RECITALS

WHEREAS, on February 13, 2009, the Board of Directors of Sino Charter has adopted resolutions approving Sino Charter’s acquisition of the equity interests of Peng Xiang held by the Peng Xiang Stockholders (the “Acquisition”) by means of a share exchange with the Peng Xiang Shareholders, upon the terms and conditions hereinafter set forth in this Agreement;

WHEREAS, the Peng Xiang Shareholders own all of the equity interest (in shares of capital stock or otherwise) of Peng Xiang (the “Peng Xiang Equity Interest”);

WHEREAS, the Sino Charter Stockholders are the majority stockholders of Sino Charter which hold, collectively, an amount of shares of Sino Charter common stock which represents approximately 89.7% of the issued and outstanding capital stock of Sino Charter;

WHEREAS, the Sino Charter Stockholders will enter into this Agreement for the purpose of making certain covenants, indemnifications and agreements;

WHEREAS, upon consummation of the transactions contemplated by this Agreement, Peng Xiang will become a 100% wholly-owned subsidiary of Sino Charter; and

WHEREAS, it is intended that the terms and conditions of this Agreement comply in all respects with Section 368(a)(1)(B) and/or Section 351 of the Code and the regulations corresponding thereto, so that the Acquisition shall qualify as a tax free reorganization under the Code, and that this share exchange transaction shall qualify as a transaction in securities exempt from registration or qualification under the Securities Act of 1933, as amended and in effect on the date of this Agreement.

AGREEMENT

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1

THE ACQUISITION

1.1           The Acquisition. Upon the terms and subject to the conditions hereof, at the Closing (as hereinafter defined) the parties shall do the following:

(a)           The Peng Xiang Shareholders will each sell, convey, assign, transfer and deliver to Sino Charter certificates representing the Peng Xiang Equity Interest held by each Peng Xiang Shareholder as set forth in Column II of Annex I hereto, which in the aggregate shall constitute 100% of the issued and outstanding equity interests of Peng Xiang, accompanied by a properly executed and authenticated stock power or instrument of like tenor.

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(b)           As consideration for the acquisition of the Peng Xiang Equity Interests, Sino Charter will issue to each Peng Xiang Shareholder, in exchange for such Peng Xiang’s portion of the Peng Xiang Equity Interests, the number of shares of common stock set forth opposite such party’s name in Column IV on Annex I attached hereto (collectively, the “Sino Charter Shares”).  The Sino Charter Shares issued shall equal approximately 91% of the outstanding shares of Sino Charter’s common stock at the time of Closing.  For example, if there are 16,000,000 shares of Sino Charter’s common stock outstanding immediately prior to the Closing, then there shall be 14,560,000 shares of Sino Charter’s common stock issued to the Peng Xiang Shareholders at Closing.

1.2           Closing Date. The closing of the Acquisition (the “Closing”) shall take place on February 13, 2009, or on such other date as may be mutually agreed upon by the parties. Such date is referred to herein as the “Closing Date.”

1.3           Taking of Necessary Action; Further Action. If, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement, the Peng Xiang Shareholders, Peng Xiang, the Sino Charter Stockholders, and/or Sino Charter (as applicable) will take all such lawful and necessary action.

1.4           Certain Definitions. The following capitalized terms as used in this Agreement shall have the respective definitions:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Contract” means any contract, lease, license, indenture, note, bond, agreement, permit, concession, franchise or other instrument.

“FINRA” means Financial Industry Regulatory Authority.

“Knowledge” means the actual knowledge of the officers, directors or advisors of the referenced party.

 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” means a adverse effect on either referenced party or the combined entity resulting from the consummation of the transaction contemplated by this Agreement, or on the financial condition, results of operations or business, before or after the consummation of the transaction contemplated in this Agreement, which as a whole is or would be considered material to an investor in the securities of Sino Charter.

“Non-U.S. Person” means any person who is not a U.S. Person or is deemed not to be a U.S. Person under Rule 902(k)(2).

“Person” means any individual, corporation, partnership, joint venture, trust, business association, organization, governmental authority or other entity.

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“Restricted Period” shall have the meaning set forth in Section 3.4(b)(vi).

“Securities Act” means the Securities Act of 1933, as amended.

“Tax Returns” means all federal, state, local and foreign returns, estimates, information statements and reports relating to Taxes.

“Tax” or “Taxes” means any and all applicable central, federal, provincial, state, local, municipal and foreign taxes, including, without limitation, gross receipts, income, profits, sales, use, occupation, value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, assessments, governmental charges and duties together with all interest, penalties and additions imposed with respect to any such amounts and any obligations under any agreements or arrangements with any other person with respect to any such amounts and including any liability of a predecessor entity for any such amounts.

“Trading Day” means a day on which the principal Trading Market is open for trading.

“Trading Market” means the following markets or exchanges on which Sino Charter’s common stock is listed or quoted for trading on the date in question: the NYSE Alternext US Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“Transaction” means the transactions contemplated by this Agreement, including the share exchange.

“United States” means and includes the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.

“U.S. Person”as defined in Regulation S means: (i) a natural person resident in the United States; (ii) any partnership or corporation organized or incorporated under the laws of the United States; (iii) any estate of which any executor or administrator is a U.S. Person; (iv) any trust of which any trustee is a U.S. Person; (v) any agency or branch of a foreign entity located in the United States; (vi) any nondiscretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person; (vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated and (if an individual) resident in the United States; and (viii) a corporation or partnership organized under the laws of any foreign jurisdiction and formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts).

1.5           Tax Consequences.  It is intended that the terms and conditions of this Agreement comply in all respects with Section 368(a)(1)(B) and/or Section 351 of the Code and the regulations corresponding thereto, so that the Acquisition shall qualify as a tax-free reorganization under the Code.

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ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF PENG XIANG

Except as otherwise disclosed herein or in a disclosure schedule attached hereto, Peng Xiang hereby represents and warrants to Sino Charter and the Sino Charter Stockholders as of the date hereof and as of the Closing Date (unless otherwise indicated) as follows:

2.1           Organization. Peng Xiang has been duly incorporated, validly exists as a corporation, and is in good standing under the laws of its jurisdiction of incorporation, and has the requisite power to carry on its business as now conducted.  Set forth on Schedule 2.1 of the disclosure schedules is a list of those jurisdictions in which Peng Xiang presently conducts its business, owns, holds and operates its properties and assets.

2.2           Capitalization. The authorized capital stock of Peng Xiang consists of 50,000 ordinary shares, US$1.00 par value, of which at the Closing, no more than 10,000 shares shall be issued and outstanding.  All of the issued and outstanding shares of capital stock of Peng Xiang, as of the Closing, are duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights.  There are no voting trusts or any other agreements or understandings with respect to the voting of Peng Xiang’s capital stock.  Except as set forth in the preceding sentence, no other class of capital stock or other security of Peng Xiang is authorized, issued, reserved for issuance or outstanding.  There are no authorized or outstanding options, warrants, equity securities, calls, rights, commitments or agreements of any character by which Peng Xiang or any of the Peng Xiang Shareholders is obligated to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of capital stock or other securities of Peng Xiang.  There are no outstanding contractual obligations (contingent or otherwise) of Peng Xiang to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, Peng Xiang.

2.3           Subsidiaries. As of the Closing, Peng Xiang has no direct or indirect subsidiaries, except as disclosed in Schedule 2.3 of the disclosure schedules hereto (collectively the “Peng Xiang Subsidiaries,” and each a “Peng Xiang Subsidiary”).  Each Peng Xiang Subsidiary is an entity duly organized, validly existing and in good standing under the laws of its respective jurisdiction of formation and has the requisite corporate power and authority to own, lease and to carry on its business as now being conducted.  Peng Xiang owns all of the shares of each Peng Xiang Subsidiary, and there are no outstanding options, warrants, subscriptions, conversion rights or other rights, agreements or commitments obligating any Peng Xiang Subsidiary to issue any additional shares of common stock or ordinary stock, as the case may be, of such subsidiary, or any other securities convertible into, exchangeable for or evidence the right to subscribe for or acquire from any Peng Xiang Subsidiary any shares of such subsidiary.

2.4           Certain Corporate Matters. Peng Xiang is duly qualified to do business as a corporation and is in good standing under the laws of the British Virgin Islands, and in each other jurisdiction in which the ownership of its property or the conduct of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect on Peng Xiang’s financial condition, results of operations or business.  Peng Xiang has full corporate power and authority and all authorizations, licenses and permits necessary to carry on the business in which it is engaged and to own and use the properties owned and used by it.

2.5           Authority Relative to this Agreement.  Peng Xiang has the requisite power and authority to enter into this Agreement and to carry out its respective obligations hereunder.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by Peng Xiang have been duly authorized by Peng Xiang’s Board of Directors and no other actions on the part of Peng Xiang are necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Peng Xiang and constitutes a valid and binding agreement, enforceable against Peng Xiang in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity.

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2.6           Consents and Approvals; No Violations. Except for applicable requirements of federal securities laws and state securities or blue-sky laws, no filing with, and no permit, authorization, consent or approval of, any third party, public body or authority is necessary for the consummation by Peng Xiang of the transactions contemplated by this Agreement. Neither the execution and delivery of this Agreement by Peng Xiang nor the consummation by Peng Xiang of the transactions contemplated hereby, nor compliance by them with any of the provisions hereof, will (a) conflict with or result in any breach of any provisions of the charter or bylaws (or operating agreement) of Peng Xiang or any Peng Xiang Subsidiary, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, Contract, agreement or other instrument or obligation to which Peng Xiang or any Peng Xiang Subsidiary is a party or by which any of their respective properties or assets may be bound, or (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Peng Xiang or any Peng Xiang Subsidiary, or any of its properties or assets, except in the case of clauses (b) and (c) for violations, breaches or defaults which are not in the aggregate material to Peng Xiang taken as a whole.

2.7           Books and Records. The books and records of Peng Xiang delivered to Sino Charter prior to the Closing fully and fairly reflect the transactions to which Peng Xiang is a party or by which it or its properties are bound, and there shall be no material difference between the unaudited combined financial statements of Peng Xiang given to Sino Charter and the Sino Charter Stockholders and the actual reviewed US GAAP results of Peng Xiang for the nine-month period ended September 30, 2008.

2.8           Intellectual Property. Peng Xiang has no knowledge of any claim that, or inquiry as to whether, any product, activity or operation of Peng Xiang infringes upon or involves, or has resulted in the infringement of, any trademarks, trade-names, service marks, patents, copyrights or other proprietary rights of any other person, corporation or other entity; and no proceedings have been instituted, are pending or are threatened.

2.9           Litigation. Except as disclosed in Schedule 2.9 of the disclosure schedules hereto, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the Knowledge of Peng Xiang, threatened against or affecting Peng Xiang or any of its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Sino Charter Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither Peng Xiang nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the Knowledge of Peng Xiang, there is not pending or contemplated, any investigation by the Commission involving Peng Xiang or any current or former director or officer of Peng Xiang.

2.10           Legal Compliance. To the best Knowledge of Peng Xiang, after due investigation, no claim has been filed against Peng Xiang or any of the Peng Xiang Subsidiaries alleging a violation of any applicable laws and regulations of foreign, federal, state and local governments and all agencies thereof. Peng Xiang and each of the Peng Xiang Subsidiaries holds all of the material permits, licenses, certificates or other authorizations of foreign, federal, state or local governmental agencies required for the conduct of their respective businesses as presently conducted.

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2.11           Contracts. Except as disclosed in Schedule 2.11 of the disclosure schedules hereto, there are no Contracts that are material to the business, properties, assets, condition (financial or otherwise), results of operations or prospects of the Peng Xiang.  Peng Xiang is not in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which they are a party or by which they or any of their properties or assets are bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

2.12           Material Changes. Since January 1, 2009, except as disclosed in Schedule 2.12 of the disclosures schedules hereto: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) Peng Xiang has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice, and (B) liabilities not required to be reflected in Peng Xiang’s financial statements pursuant to GAAP, (iii) Peng Xiang has not altered its method of accounting, (iv) Peng Xiang has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) Peng Xiang has not issued any equity securities to any officer, director or Affiliate.

2.13           Labor Relations.  No labor dispute exists or, to the Knowledge of Peng Xiang and the Peng Xiang Shareholders, is imminent with respect to any of the employees of Peng Xiang which could reasonably be expected to result in a Material Adverse Effect.  None of Peng Xiang’s or Peng Xiang Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with Peng Xiang or such Peng Xiang Subsidiary, and neither Peng Xiang nor any of the Peng Xiang Subsidiaries is a party to a collective bargaining agreement, and Peng Xiang and the Peng Xiang Subsidiaries believe that their relationships with their employees are good.  No executive officer, to the Knowledge of Peng Xiang and the Peng Xiang Shareholders, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject Peng Xiang or any of the Peng Xiang Subsidiaries to any liability with respect to any of the foregoing matters.  Peng Xiang and the Peng Xiang Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

2.14           Title to Assets.  Peng Xiang and the Peng Xiang Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of Peng Xiang and the Peng Xiang Subsidiaries, in each case free and clear of all Liens, except for Liens that do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by Peng Xiang and the Peng Xiang Subsidiaries and Liens for the payment of Taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by Peng Xiang and the Peng Xiang Subsidiaries are held by them under valid, subsisting and enforceable leases with which Peng Xiang and the Peng Xiang Subsidiaries are in compliance.

2.15           Transactions with Affiliates and Employees.  None of the officers or directors of Peng Xiang and, to the Knowledge of Peng Xiang and the Peng Xiang Shareholders, none of the employees of Peng Xiang is presently a party to any transaction with Peng Xiang or any Peng Xiang Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Knowledge of Peng Xiang and the Peng Xiang Shareholders, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000, other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of Peng Xiang and (iii) other employee benefits.

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2.17           Certain Fees.  Except as disclosed in Schedule 2.17 of the disclosure schedules hereto, no brokerage or finder’s fees or commissions are or will be payable by Peng Xiang to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.

2.18           Registration Rights.  No Person has any right to cause (or any successor) to effect the registration under the Securities Act of any securities of Peng Xiang (or any successor).

2.19           Application of Takeover Protections.  Peng Xiang has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under Peng Xiang’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable as a result of Peng Xiang fulfilling its obligations or exercising its rights under this Agreement.

2.20           Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, Peng Xiang and each Subsidiary has timely filed all necessary Tax Returns and has paid or accrued all Taxes shown as due thereon, and Peng Xiang has no Knowledge of a tax deficiency which has been asserted or threatened against Peng Xiang or any Peng Xiang Subsidiary.

2.21           No General Solicitation.  Neither Peng Xiang nor any person acting on behalf of Peng Xiang has offered or sold securities in connection herewith by any form of general solicitation or general advertising.

2.22           Foreign Corrupt Practices.  Neither Peng Xiang, nor to the Knowledge of Peng Xiang and the Peng Xiang Shareholders, any agent or other person acting on behalf of Peng Xiang , has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by Peng Xiang (or made by any person acting on its behalf of which Peng Xiang is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

2.23           Obligations of Management. Each officer and key employee of Peng Xiang and its Subsidiaries is currently devoting substantially all of his or her business time to the conduct of business of Peng Xiang and its Subsidiaries.  Neither Peng Xiang nor any of its Subsidiaries is aware that any officer or key employee of Peng Xiang or any Subsidiary is planning to work less than full time at Peng Xiang or any Subsidiary, as applicable, in the future.  No officer or key employee is currently working or, to Peng Xiang’s or any Peng Xiang Shareholder’s Knowledge, plans to work for a competitive enterprise, whether or not such officer or key employee is or will be compensated by such enterprise.

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2.25           Minute Books. The minute books of Peng Xiang and the Peng Xiang Subsidiaries made available to Sino Charter contain a complete summary of all meetings and written consents in lieu of meetings of directors and stockholders since the time of incorporation.

2.26           Employee Benefits.  Except as set forth on Schedule 2.29 of the disclosure schedules hereto, neither Peng Xiang nor any Subsidiary has (nor for the two years preceding the date hereof has had) any plans which are subject to ERISA.  “ERISA” means the Employee Retirement Income Security Act of 1974 or any successor law and the regulations and rules issued pursuant to that act or any successor law.

2.27           Money Laundering Laws.  The operations of Peng Xiang are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the money laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental body (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Peng Xiang with respect to the Money Laundering Laws is pending or, to the knowledge of Peng Xiang, threatened.

2.28           Disclosure. The representations and warranties and statements of fact made by Peng Xiang and its Subsidiaries in this Agreement are, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE PENG XIANG SHAREHOLDERS

Except as otherwise disclosed herein or in a disclosure schedule attached hereto, the Peng Xiang Shareholders each hereby represent and warrant to Sino Charter as follows:

3.1           Ownership of the Peng Xiang Equity Interest.  Peng Xiang Shareholders own, beneficially and of record, good and marketable title to the amount of the Peng Xiang Equity Interest, free and clear of all security interests, liens, adverse claims, encumbrances, equities, proxies, options or voting agreements.  Peng Xiang Shareholders represent that they each have no right or claims whatsoever to any equity interests of Peng Xiang, other than the Peng Xiang Equity Interest and do not have any options, warrants or any other instruments entitling any of them to exercise or purchase or convert into additional equity interests of Peng Xiang. At the Closing, the Peng Xiang Shareholders will convey to Sino Charter good and marketable title to the Peng Xiang Equity Interests, free and clear of any security interests, liens, adverse claims, encumbrances, equities, proxies, options, shareholders’ agreements or restrictions.

3.2           Authority Relative to this Agreement. This Agreement has been duly and validly executed and delivered by the Peng Xiang Shareholders and constitutes a valid and binding agreement of such person, enforceable against such person in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity.

3.3           Purchase of Restricted Securities for Investment. The Peng Xiang Shareholders each acknowledge that the Sino Charter Shares will not be registered pursuant to the Securities Act or any applicable state securities laws, that the Sino Charter Shares will be characterized as “restricted securities” under federal securities laws, and that under such laws and applicable regulations the Sino Charter Shares cannot be sold or otherwise disposed of without registration under the Securities Act or an exemption therefrom.  In this regard, each Peng Xiang Shareholder is familiar with Rule 144 promulgated under the Securities Act, as currently in effect, and understands the resale limitations imposed thereby and by the Securities Act.  Further, each Peng Xiang Shareholder acknowledges and agrees that:

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(a)           Each Peng Xiang Shareholder is acquiring the Sino Charter Shares for investment, for such Peng Xiang Shareholder’s own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and each Peng Xiang Shareholder has no present intention of selling, granting any participation in, or otherwise distributing the same.  Each Peng Xiang Shareholder further represents that he, she or it does not have any Contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Sino Charter Shares.

(b)           Each Peng Xiang Shareholder understands that the Sino Charter Shares are not registered under the Securities Act on the ground that the sale and the issuance of securities hereunder is exempt from registration under the Securities Act pursuant to Section 4(2) thereof, and that Sino Charter’s reliance on such exemption is predicated on the each Shareholder’s representations set forth herein.

3.4           Status of Stockholder. Each of the Peng Xiang Shareholders hereby makes the representations and warranties in either paragraph (a) or (b) of this Section 3.4, as indicated on the Signature Page of Peng Xiang Shareholders which is attached and part of this Agreement:

(a)           Accredited Investor Under Regulation D. The Peng Xiang Shareholder is an “Accredited Investor” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act, an excerpt of which is included in the attached Annex II, and such Peng Xiang Shareholder is not acquiring its portion of the Sino Charter Shares as a result of any advertisement, article, notice or other communication regarding the Sino Charter Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(b)           Non-U.S. Person Under Regulation S.  The Peng Xiang Shareholder:

(i)           is not a “U.S. person” as defined by Rule 902 of Regulation S promulgated under the Securities Act, was not organized under the laws of any U.S. jurisdiction, and was not formed for the purpose of investing in securities not registered under the Securities Act;

(ii)           at the time of Closing, the Peng Xiang Shareholder was located outside the United States;

(iii)           no offer of the Sino Charter Shares was made to the Peng Xiang Shareholder within the United States;

(iv)           the Peng Xiang Shareholder is either (a) acquiring the Sino Charter Shares for its own account for investment purposes and not with a view towards distribution, or (b) acting as agent for a principal that has signed this Agreement or has delivered representations and warranties substantially similar to this Section 3.4(b);

(v)           all subsequent offers and sales of the Sino Charter Shares by the Peng Xiang Shareholder will be made outside the United States in compliance with Rule 903 of Rule 904 of Regulation S, pursuant to registration of the Shares under the Securities Act, or pursuant to an exemption from such registration; the Peng Xiang Shareholder understands the conditions of the exemption from registration afforded by section 4(l) of the Securities Act and acknowledges that there can be no assurance that it will be able to rely on such exemption.

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(vi)           the Peng Xiang Shareholder will not resell the Sino Charter Shares to U.S. Persons or within the United States until after the end of the one (1) year period commencing on the date of Closing (the “Restricted Period”);

(vii)           the Peng Xiang Shareholder shall not and hereby agrees not to enter into any short sales with respect to the common stock of Sino Charter at any time after the execution of this Agreement by the Peng Xiang Shareholder  and prior to the expiration of the Restricted Period;

(viii)           in the event of resale of the Sino Charter Shares to non-U.S. Persons outside of the U.S. during the Restricted Period, the Peng Xiang Shareholder shall provide a written confirmation or other written notice to any distributor, dealer, or person receiving a selling concession, fee, or other remuneration in respect of the Shares stating that such purchaser is subject to the same restrictions on offers and sales that apply to the undersigned, and shall require that any such purchase shall provide such written confirmation or other notice upon resale during the Restricted Period;

(ix)           the Peng Xiang Shareholder has not engaged, nor is it aware that any party has engaged, and it will not engage or cause any third party to engage in any “directed selling” efforts (as such term is defined in Regulation S) in the United States with respect to the Sino Charter Shares;

(x)           the Peng Xiang Shareholder is not a “distributor” as such term is defined in Regulation S, and it is not a “dealer” as such term is defined in the Securities Act;

(xi)           the Peng Xiang Shareholder has not taken any action that would cause any of the parties to this Agreement to be subject to any claim for commission or other or remuneration by any broker, finder, or other person; and

(xii)           the Peng Xiang Shareholder hereby represents that it has satisfied fully observed of the laws of the jurisdiction in which it is located or domiciled, in connection with the acquisition of the Sino Charter Shares or this Agreement, including (i) the legal requirements of the Peng Xiang Shareholder’s jurisdiction for the purchase and acquisition of the Sino Charter Shares, (ii) any foreign exchange restrictions applicable to such purchase and acquisition, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, which may be relevant to the purchase, holding, redemption, sale, or transfer of the Sino Charter Shares; and further, the Peng Xiang Shareholder agrees to continue to comply with such laws as long as it shall hold the Sino Charter Shares.

(c)           The Peng Xiang Shareholder understands that the Sino Charter Shares are being offered and sold to it in reliance on specific provisions of federal and state securities laws and that the parties to this Agreement are relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understanding of the Peng Xiang Shareholder set forth herein in order to determine the applicability of such provisions.  Accordingly, the Peng Xiang Shareholder agrees to notify Sino Charter of any events which would cause the representations and warranties of the Peng Xiang Shareholder to be untrue or breached at any time after the execution of this Agreement by such Peng Xiang Shareholder and prior to the expiration of the Restricted Period.

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3.5 Investment Risk. The Peng Xiang Shareholder is able to bear the economic risk of acquiring the Sino Charter Shares pursuant to the terms of this Agreement, including a complete loss of such the Peng Xiang Shareholder’s investment in the Sino Charter Shares.

3.6 Restrictive Legends. The Peng Xiang Shareholder acknowledges that the certificate(s) representing the Peng Xiang Shareholder’s pro rata portion of the Sino Charter Shares shall each conspicuously set forth on the face or back thereof a legend in substantially the following form, corresponding to the stockholder’s status as set forth in Section 3.4 and the signature pages hereto:

REGULATION D LEGEND:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

REGULATION S LEGEND:

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION; HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

3.7           Disclosure.  The representations and warranties and statements of fact made by Peng Xiang Shareholders in this Agreement are, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SINO CHARTER

Except as otherwise disclosed herein or in a disclosure schedule attached hereto, Sino Charter hereby represents and warrants to Peng Xiang and the Peng Xiang Shareholders as of the date hereof and as of the Closing Date (unless otherwise indicated), as follows:

4.1           Organization and Qualification.  Sino Charter is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Sino Charter is not, to its Knowledge, in violation nor default of any of the provisions of its certificate or articles of incorporation, bylaws or other organizational or charter documents (collectively the “Charter Documents”).  Sino Charter is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

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4.2           Authorization; Enforcement.  Sino Charter has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder.  The execution and delivery of this Agreement by Sino Charter and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Sino Charter and no further action is required by Sino Charter, the Board of Directors or Sino Charter’s stockholders in connection therewith other than in connection with the Required Approvals, as defined in Section 4.4.  This Agreement has been (or upon delivery will have been) duly executed by Sino Charter and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of Sino Charter enforceable against Sino Charter in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

4.3           No Conflicts.  The execution, delivery and performance by Sino Charter of this Agreement and the consummation by Sino Charter of the other transactions to which it is a party and as contemplated hereby do not and will not: (i) conflict with or violate any provision of Sino Charter’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of Sino Charter, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Sino Charter debt or otherwise) or other understanding to which Sino Charter is a party or by which any property or asset of Sino Charter is bound or affected, or (iii) subject to the Required Approvals, as defined by Section 4.4, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which Sino Charter is subject (including federal and state securities laws and regulations), or by which any property or asset of Sino Charter is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

4.4           Filings, Consents and Approvals.  Sino Charter is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by Sino Charter of this Agreement, other than the filing of a Current Report on Form 8-K and Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

4.5           Issuance of the Sino Charter Shares.  The Sino Charter Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed on or by Sino Charter other than restrictions on transfer provided for in this Agreement.

4.6           Capitalization.  The capitalization of Sino Charter is as set forth on Schedule 4.6, which Schedule 4.6 shall also include the number of shares of Sino Charter’s common stock owned beneficially, and of record, by Affiliates of Sino Charter as of the date hereof, if any.  Other than as set forth in Schedule 4.6, Sino Charter has not issued any capital stock since its most recently filed periodic report under the Exchange Act.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement.  There are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Sino Charter’s common stock, or Contracts, commitments, understandings or arrangements by which Sino Charter or any Sino Charter Subsidiary is or may become bound to issue additional shares of Sino Charter’s common stock or Common Stock Equivalents.  The issuance of the Sino Charter Shares will not obligate Sino Charter to issue shares of Sino Charter’s common stock or other securities to any Person (other than the Peng Xiang Shareholders) and will not result in a right of any holder of Sino Charter securities to adjust the exercise, conversion, exchange or reset price under any of such securities.  All of the outstanding shares of capital stock of Sino Charter are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder or Sino Charter’s board of directors is required for the issuance of the Sino Charter Shares.  There are no stockholders agreements, voting agreements or other similar agreements with respect to Sino Charter’s capital stock to which Sino Charter is a party or, to the Knowledge of Sino Charter, between or among any of Sino Charter’s stockholders. “Common Stock Equivalents” means any securities of Sino Charter or the Sino Charter Subsidiaries which would entitle the holder thereof to acquire at any time Sino Charter’s common stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive Sino Charter’s common stock.

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4.7           SEC Reports; Financial Statements.  Sino Charter has filed all reports, schedules, forms, statements and other documents required to be filed by Sino Charter under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as Sino Charter was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  To the Knowledge of Sino Charter, as of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The financial statements of Sino Charter included in the SEC Reports (“Financial Statements”) comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of Sino Charter as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

4.8           Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof or in connection herewith: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) Sino Charter has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in Sino Charter’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) Sino Charter has not altered its method of accounting, (iv) Sino Charter has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) Sino Charter has not issued any equity securities to any officer, director or Affiliate.  Sino Charter does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Sino Charter Shares contemplated by this Agreement or as set forth on Schedule 4.8, no event, liability or development has occurred or exists with respect to Sino Charter or its Sino Charter Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by Sino Charter under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.

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4.9           Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the Knowledge of Sino Charter, threatened against or affecting Sino Charter or any of its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Sino Charter Shares, or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither Sino Charter nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the Knowledge of Sino Charter, there is not pending or contemplated, any investigation by the Commission involving Sino Charter or any current or former director or officer of Sino Charter.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by Sino Charter under the Securities Act.

4.10           Labor Relations.  No labor dispute exists or, to the Knowledge of Sino Charter, is imminent with respect to any of the employees of Sino Charter which could reasonably be expected to result in a Material Adverse Effect.  None of Sino Charter’s employees is a member of a union that relates to such employee’s relationship with Sino Charter, and Sino Charter is not a party to a collective bargaining agreement, and Sino Charter believes that its relationships with their employees are good.  No executive officer, to the Knowledge of Sino Charter, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other Contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject Sino Charter to any liability with respect to any of the foregoing matters.  Sino Charter is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.11           Compliance.  To its Knowledge, Sino Charter: (i) is not in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by Sino Charter under), nor has Sino Charter received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is not n violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

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4.12           Regulatory Permits.  Sino Charter possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and Sino Charter has not received any notice of proceedings relating to the revocation or modification of any Material Permit.

4.13           Title to Assets.  Sino Charter has good and marketable title in all personal property owned by it that is material to the business of, in each case free and clear of all Liens, except for Liens that do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by Sino Charter and Liens for the payment of Taxes, the payment of which is neither delinquent nor subject to penalties.  Sino Charter does not own any real property.  Any real property and facilities held under lease by Sino Charter, if any, is held by Sino Charter under valid, subsisting and enforceable leases with which Sino Charter is in compliance.

4.14           Patents and Trademarks.  Sino Charter has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or material for use in connection with their business and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Sino Charter has not received a notice (written or otherwise) that any of the Intellectual Property Rights used by Sino Charter violates or infringes upon the rights of any Person.  To the Knowledge of Sino Charter, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  Sino Charter has taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.15           Transactions with Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of Sino Charter and, to the Knowledge of Sino Charter, none of the employees of Sino Charter is presently a party to any transaction with Sino Charter (other than for services as employees, officers and directors), including any Contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Knowledge of Sino Charter, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000, other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of Sino Charter and (iii) other employee benefits.

4.16           Sarbanes-Oxley; Internal Accounting Controls.  Sino Charter is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date.  Sino Charter maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Sino Charter has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for Sino Charter and designed such disclosure controls and procedures to ensure that information required to be disclosed by Sino Charter in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  Sino Charter’s certifying officers have evaluated the effectiveness of Sino Charter’s disclosure controls and procedures as of the end of the period covered by Sino Charter’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  Sino Charter presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officer about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in Sino Charter’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, Sino Charter’s internal control over financial reporting.

 

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4.17           Certain Fees.  No brokerage or finder’s fees or commissions are or will be payable by Sino Charter to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.

4.18           Issuance of Sino Charter Shares. Assuming the accuracy of the Peng Xiang Shareholders’ representations and warranties set forth in Section 3, no registration under the Securities Act is required for the offer and issuance of the Sino Charter Shares by Sino Charter to the Peng Xiang Shareholders as contemplated hereby. The issuance of the Sino Charter Shares hereunder does not contravene the rules and regulations of the applicable Trading Market.

4.19           Investment Company. Sino Charter is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

4.20           Listing and Maintenance Requirements.  Sino Charter’s common stock is currently quoted on FINRA’s Over-the-Counter Bulletin Board Quotation Service (“OTC Bulletin Board”) and Sino Charter has not, in the 24 months preceding the date hereof, received any notice from the OTC Bulletin Board or FINRA or any trading market on which Sino Charter’s common stock is or has been listed or quoted to the effect that Sino Charter is not in compliance with the quoting, listing or maintenance requirements of the OTCBB or such other trading market.  Sino Charter is, and has no reason to believe that it will not, in the foreseeable future continue to be, in compliance with all such quoting, listing and maintenance requirements.

4.21           Application of Takeover Protections.  Sino Charter has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under Sino Charter’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Peng Xiang Shareholders as a result of the Peng Xiang Shareholders and Sino Charter fulfilling their obligations or exercising their rights under this Agreement, including without limitation as a result of Sino Charter’s issuance of the Sino Charter Shares and the Peng Xiang Shareholders’ ownership of the Sino Charter Shares.

4.22           No Integrated Offering. To the Knowledge of Sino Charter and assuming the accuracy of the Peng Xiang Shareholders’ representations and warranties set forth in Section 3, neither Sino Charter, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Sino Charter Shares to be integrated with prior offerings by Sino Charter for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of Sino Charter are listed or designated.

4.23           Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, Sino Charter has filed all necessary Tax Returns and has paid or accrued all Taxes shown as due thereon, and Sino Charter has no knowledge of a tax deficiency which has been asserted or threatened against Sino Charter.

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4.24           No General Solicitation.  Neither Sino Charter nor any person acting on behalf of Sino Charter has offered or sold any of the Sino Charter Shares by any form of general solicitation or general advertising.

4.25           Foreign Corrupt Practices.  Neither Sino Charter, nor to the Knowledge of Sino Charter, any agent or other person acting on behalf of Sino Charter, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by Sino Charter (or made by any person acting on its behalf of which Sino Charter is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

4.26           Accountants.  Sino Charter’s accounting firm is set forth on Schedule 4.26 of the disclosure schedules.  To the Knowledge and belief of Sino Charter, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) expressed its opinion with respect to the financial statements included in Sino Charter’s Annual Report for the year ended November 31, 2007.

4.27           No Disagreements with Accountants and Lawyers.  To the Knowledge of Sino Charter, there are no disagreements of any kind, including but not limited to any disagreements regarding fees owed for services rendered, presently existing, or reasonably anticipated by Sino Charter to arise, between Sino Charter and the accountants and lawyers formerly or presently employed by Sino Charter which could affect Sino Charter’s ability to perform any of its obligations under this Agreement, and Sino Charter is current with respect to any fees owed to its accountants and lawyers.

4.28           Regulation M Compliance.  Sino Charter has not, and to the Knowledge of Sino Charter no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of Sino Charter to facilitate the sale or resale of any of the Sino Charter Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the securities of Sino Charter, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of Sino Charter.

4.29           Money Laundering Laws. The operations of Sino Charter are and have been conducted at all times in compliance with the money laundering statutes of applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Sino Charter with respect to the Money Laundering Laws is pending or, to the best Knowledge of the Sino Charter, threatened.

4.30           Minute Books. The minute books of Sino Charter made available to Peng Xiang and the Peng Xiang Shareholders contain a complete summary of all meetings and written consents in lieu of meetings of directors and stockholders since the time of incorporation.

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4.31           Employee Benefits.  Sino Charter has not (nor for the two years preceding the date hereof has) had any plans which are subject to ERISA.  “ERISA” means the Employee Retirement Income Security Act of 1974 or any successor law and the regulations and rules issued pursuant to that act or any successor law.

4.32           Business Records and Due Diligence.  Prior to the Closing, Sino Charter delivered to Peng Xiang all records and documents relating to Sino Charter, which Sino Charter and possesses, including, without limitation, books, records, government filings, Tax Returns, Charter Documents, corporate records, stock records, consent decrees, orders, and correspondence, director and stockholder minutes, resolutions and written consents, stock ownership records, financial information and records, and other documents used in or associated with Sino Charter and Sino Charter Subsidiaries.

4.33           Contracts.  Except as set forth in Schedule 4.33 of the disclosure schedules hereto, there are no Contracts that are material to the business, properties, assets, condition (financial or otherwise), results of operations or prospects of Sino Charter taken as a whole.  Sino Charter is not in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

4.34           No Undisclosed Liabilities.  Except as otherwise disclosed in Schedule 4.34 of the disclosure schedules, Sino Charter’s Financial Statements or incurred in the ordinary course of business after the fiscal year ended November 30, 2008 (the financial statements of which were filed with the SEC along with Sino Charter’s quarterly report on Form 10-Q on October 20, 2008), Sino Charter has no other undisclosed liabilities whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise.  Sino Charter represents that at the date of Closing, Sino Charter shall have no liabilities or obligations whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise.

4.35           No SEC or FINRA Inquiries. To the Knowledge of Sino Charter, neither Sino Charter nor any of its present officers or directors is, or has ever been, the subject of any formal or informal inquiry or investigation by the SEC or FINRA.

4.36           Shell Company.  Sino Charter is shell company with no substantial business operations

4.37           Disclosure.  The representations and warranties and statements of fact made by Sino Charter in this Agreement are, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.

ARTICLE 5

INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS

5.1           Indemnification.  Subject to the provisions of this Article 5, the Sino Charter Stockholders agree to, jointly and severally, indemnify fully in respect of, hold harmless and defend Peng Xiang, the Peng Xiang Shareholders and each of the officers, agents and directors of Peng Xiang or the Peng Xiang Shareholders against any damages, liabilities, costs, claims, proceedings, investigations, penalties, judgments, deficiencies, including taxes, expenses (including, but not limited to, any and all interest, penalties and expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever) and losses (each, a “Claim” and collectively “Claims”) to which it or they may become subject arising out of or based on either (i) any breach of or inaccuracy in any of the representations and warranties or covenants or conditions made by Sino Charter and/or the Sino Charter Stockholders herein in this Agreement; or (ii) any and all liabilities arising out of or in connection with: (A) any of the assets of Sino Charter prior to the Closing; or (B) the operations of Sino Charter prior to the Closing.  Subject to the provisions of this Article 5, Peng Xiang agrees to indemnify fully in respect of, hold harmless and defend the Sino Charter Stockholders and each of the officers, agents and directors of the Sino Charter Stockholders against any Claims to which it or they may become subject arising out of or based on any breach of or inaccuracy in any of the representations and warranties or covenants or conditions made by Peng Xiang and/or the Peng Xiang Shareholders herein in this Agreement. The party claiming indemnification hereunder is hereinafter referred to as the “Indemnified Party” and the party against whom such claims are asserted hereunder is hereinafter referred to as the “Indemnifying Party.” For Claims occurring prior to July 25, 2008, the Sino Charter Stockholders shall assign all indemnification rights they have pursuant to the Stock Purchase Agreement dated July 25, 2008 by and between Matthew Hayden and MMH Group, LLC on the one hand, and Bradley W. Miller (the “Original Stock Purchase Agreement”), and Peng Xiang and the Peng Xiang Shareholders shall seek indemnification from “Indemnifying Party” as defined in the Original Stock Purchase Agreement.

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5.2           Survival of Representations and Warranties.  Notwithstanding provision in this Agreement to the contrary, the representations and warranties given or made by Sino Charter, Sino Charter Stockholders and Peng Xiang under this Agreement shall survive the date hereof for a period of twenty four (24) months from and after the Closing Date (the last day of such period is herein referred to as the “Expiration Date”), except that any written claim for breach thereof made and delivered prior to the Expiration Date to the party against whom such indemnification is sought shall survive thereafter and, as to any such claim, such applicable expiration will not effect the rights to indemnification of the party making such claim; provided, however, that any representations and warranties that were fraudulently made shall not expire on the Expiration Date and shall survive indefinitely, and claims with respect to fraud by Sino Charter, the Sino Charter Stockholders or Peng Xiang may be made at any time.

5.3           Method of Asserting Claims, Etc.  All Claims for indemnification by any Indemnified Party under this Article V shall be asserted as follows:

(a)           In the event that any Claim or demand for which an Indemnifying Party would be liable to an Indemnified Party hereunder is asserted against or sought to be collected from such Indemnified Party by a third party, said Indemnified Party shall, within ten (10) business days from the date upon which the Indemnified Party has Knowledge of such Claim, notify the Indemnifying Party of such claim or demand, specifying the nature of and specific basis for such claim or demand and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such Claim or demand) (the “Claim Notice”).  The Indemnified Party’s failure to so notify the Indemnifying Party in accordance with the provisions of this Agreement shall not relieve the Indemnifying Party of liability hereunder unless such failure materially prejudices the Indemnifying Party’s ability to defend against the claim or demand.  The Indemnifying Party shall have 30 days from the giving of the Claim Notice (the “Notice Period”) to notify the Indemnified Party:  (i) whether or not the Indemnifying Party disputes the liability of the Indemnifying Party to the Indemnified Party hereunder with respect to such Claim or demand, and (ii) whether or not the Indemnifying Party desires, at the sole cost and expense of the Indemnifying Party, to defend the Indemnified Party against such Claims or demand; provided, however, that any Indemnified Party is hereby authorized prior to and during the Notice Period to file any motion, answer or other pleading which he shall deem necessary or appropriate to protect his interests or those of the Indemnifying Party and not prejudicial to the Indemnifying Party.  In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that he does not dispute liability for indemnification under this Article 5 and that he desires to defend the Indemnified Party against such claim or demand and except as hereinafter provided, the Indemnifying Party shall have the right to defend by all appropriate proceedings, which proceedings shall be promptly settled or prosecuted by him to a final conclusion.  The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party except to the extent that the employment thereof has been specifically authorized by the Indemnifying Party in writing, the Indemnifying Party has failed after a reasonable period of time to assume such defense and to employ counsel or in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Indemnifying Party and the position of such Indemnified Party (a “Material Conflict”).  If requested by the Indemnifying Party and there is no Material Conflict, the Indemnified Party agrees to cooperate with the Indemnifying Party and his counsel in contesting any Claim or demand which the Indemnifying Party elects to contest or, if appropriate and related to the Claim in question, in making any Counterclaim against the person asserting the third party Claim or demand, or any cross-complaint against any person.  No Claim for which indemnity is sought hereunder and for which the Indemnifying Party has acknowledged liability for indemnification under this Article 5 may be settled without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

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(b)           In the event any Indemnified Party should have a Claim against any Indemnifying Party hereunder which does not involve a Claim or demand being asserted against or sought to be collected from him by a third party, the Indemnified Party shall give a Claim Notice with respect to such Claim to the Indemnifying Party.  If, after receipt of a Claim Notice, the Indemnifying Party does not notify the Indemnified Party within the Notice Period that he disputes such Claim, then the Indemnifying Party shall be deemed to have admitted liability for such Claim in the amount set forth in the Claim Notice. 

ARTICLE 6

COVENANTS OF THE PARTIES

6.1           Corporate Examinations and Investigations. Prior to the Closing, each party shall be entitled, through its employees and representatives, to make such investigations and examinations of the books, records and financial condition of Peng Xiang and Sino Charter as each party may request. In order that each party may have the full opportunity to do so, Peng Xiang and Sino Charter, the Peng Xiang Shareholders and the Sino Charter Stockholders shall furnish each party and its representatives during such period with all such information concerning the affairs of Peng Xiang or Sino Charter as each party or its representatives may reasonably request and cause Peng Xiang or Sino Charter and their respective officers, employees, consultants, agents, accountants and attorneys to cooperate fully with each party’s representatives in connection with such review and examination and to make full disclosure of all information and documents requested by each party and/or its representatives. Any such investigations and examinations shall be conducted at reasonable times and under reasonable circumstances, it being agreed that any examination of original documents will be at each party’s premises, with copies thereof to be provided to each party and/or its representatives upon request.

6.2           Cooperation; Consents. Prior to the Closing, each party shall cooperate with the other parties to the end that the parties shall (i) in a timely manner make all necessary filings with, and conduct negotiations with, all authorities and other persons the consent or approval of which, or the license or permit from which is required for the consummation of the Acquisition and (ii) provide to each other party such information as the other party may reasonably request in order to enable it to prepare such filings and to conduct such negotiations.

6.3           Conduct of Business. Subject to the provisions hereof, from the date hereof through the Closing, each party hereto shall (i) conduct its business in the ordinary course and in such a manner so that the representations and warranties contained herein shall continue to be true and correct in all material respects as of the Closing as if made at and as of the Closing and (ii) not enter into any material transactions or incur any material liability not required or specifically contemplated hereby, without first obtaining the written consent of Peng Xiang and the Peng Xiang Shareholders on the one hand and Sino Charter and the holders of a majority of voting stock of Sino Charter common stock on the other hand. Without the prior written consent of Peng Xiang, the Peng Xiang Shareholders, Sino Charter or the Sino Charter Stockholders, except as required or specifically contemplated hereby, each party shall not undertake or fail to undertake any action if such action or failure would render any of said warranties and representations untrue in any material respect as of the Closing.

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6.4           Litigation. From the date hereof through the Closing, each party hereto shall promptly notify the representative of the other parties of any lawsuits, claims, proceedings or investigations which after the date hereof are threatened or commenced against such party or any of its affiliates or any officer, director, employee, consultant, agent or shareholder thereof, in their capacities as such, which, if decided adversely, could reasonably be expected to have a Material Adverse Effect on Sino Charter.

6.5           Notice of Default. From the date hereof through the Closing, each party hereto shall give to the representative of the other parties prompt written notice of the occurrence or existence of any event, condition or circumstance occurring which would constitute a violation or breach of this Agreement by such party or which would render inaccurate in any material respect any of such party’s representations or warranties herein.

6.6           Bylaws. If necessary, Sino Charter shall amend its bylaws to permit the election and/or appointment of additional new directors to Sino Charter’s Board of Directors as set forth in Section 7.1(a) below.

6.7           Confidentiality; Access to Information.

(a)           Confidentiality. Any confidentiality agreement or letter of intent previously executed by the parties shall be superseded in its entirety by the provisions of this Agreement. Each party agrees to maintain in confidence any non-public information received from the other party, and to use such non-public information only for purposes of consummating the transactions contemplated by this Agreement. Such confidentiality obligations will not apply to (i) information which was known to the one party or their respective agents prior to receipt from the other party; (ii) information which is or becomes generally known; (iii) information acquired by a party or their respective agents from a third party who was not bound to an obligation of confidentiality; and (iv) disclosure required by law. In the event this Agreement is terminated as provided in Article 8 hereof, each party will return or cause to be returned to the other all documents and other material obtained from the other in connection with the Transaction contemplated hereby.

(b)           Access to Information.

(i)           Peng Xiang will afford Sino Charter and its financial advisors, accountants, counsel and other representatives reasonable access during normal business hours, upon reasonable notice, to the properties, books, records and personnel of Peng Xiang during the period prior to the Closing to obtain all information concerning the business, including the status of product development efforts, properties, results of operations and personnel of Peng Xiang, as Sino Charter may reasonably request. No information or Knowledge obtained by Sino Charter in any investigation pursuant to this Section 6.8 will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Transaction.

(ii)           Sino Charter will afford Peng Xiang and its financial advisors, underwriters, accountants, counsel and other representatives reasonable access during normal business hours, upon reasonable notice, to the properties, books, records and personnel of Sino Charter during the period prior to the Closing to obtain all information concerning the business, including the status of product development efforts, properties, results of operations and personnel of Sino Charter, as Peng Xiang may reasonably request. No information or knowledge obtained by Peng Xiang in any investigation pursuant to this Section 6.8 will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Transaction.

 

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6.9           Public Disclosure. Except to the extent previously disclosed or to the extent the parties believe that they are required by applicable law or regulation to make disclosure, prior to Closing, no party shall issue any statement or communication to the public regarding the transaction contemplated herein without the consent of the other party, which consent shall not be unreasonably withheld. To the extent a party hereto believes it is required by law or regulation to make disclosure regarding the Transaction, it shall, if possible, immediately notify the other party prior to such disclosure. Notwithstanding the foregoing, the parties hereto agree that Peng Xiang will prepare and file a Current Report on Form 8-K pursuant to the Exchange Act to report the execution of this Agreement.

6.10           Information Statement for Change in Majority of Directors.  As directed by Peng Xiang, Sino Charter and Sino Charter Stockholders will use their best efforts to ensure that Sino Charter’s current sole director will remain a director of Sino Charter until the expiration of the 10-day period beginning on the date of the filing of the information statement relating to a change in majority of directors of Sino Charter with the SEC pursuant to Rule 14f-1 promulgated under the Exchange Act (“Information Statement”), which Information Statement shall be prepared by Peng Xiang and filed by the Peng Xiang Officers on behalf of Sino Charter after the Closing.

6.11           Assistance with Post-Closing SEC Reports and Inquiries. Upon the reasonable request of Peng Xiang, after the Closing Date, each Sino Charter Stockholder shall use its, his or her reasonable best efforts to provide such information available to it, including information, filings, reports, financial statements or other circumstances of Sino Charter occurring, reported or filed prior to the Closing, as may be necessary or required by Sino Charter for the preparation of the post-Closing Date reports that Sino Charter is required to file with the SEC to remain in compliance and current with its reporting requirements under the Securities Act, or filings required to address and resolve matters as may relate to the period prior to the Closing and any SEC comments relating thereto or any SEC inquiry thereof.

6.12           Payment of Sino Charter Liabilities.  Matthew Hayden hereby agrees to pay all of the liabilities of Sino Charter listed in Schedule 4.34 of the disclosures schedules attached hereto in their entirety on or before the expiration of the fourteen (14) day period after the Closing Date.

ARTICLE 7

CONDITIONS TO CLOSING

7.1           Conditions to Obligations of Peng Xiang and the Peng Xiang Shareholders. The obligations of Peng Xiang and the Peng Xiang Shareholders under this Agreement shall be subject to each of the following conditions:

(a)           Closing Deliveries. At the Closing, Sino Charter and/or the Sino Charter Stockholders shall have delivered or caused to be delivered to Peng Xiang and the Peng Xiang Shareholders the following:

 

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(i)           this Agreement duly executed by Sino Charter and the Sino Charter Stockholders;

(ii)           letter of resignation from Sino Charter’s current sole officer, with his resignation as to all of the offices he currently holds with Sino Charter to be effective on February 18, 2009 or immediately following the filing of the Corporation’s Annual Report on Form 10-K for the fiscal year ended November 30, 2008, whichever is earlier, and confirming that he has no claim against Sino Charter in respect of any outstanding remuneration or fees of whatever nature as of the Closing;

(iii)           letter of resignation of Sino Charter’s current sole director, with the resignation of such director to take effect on the expiration of the 10 calendar day period following the date of the delivery of the Information Statement to the Sino Charter stockholders;

(iv)           resolutions duly adopted by the Board of Directors of Sino Charter approving the following events or actions, as applicable:

a. the execution, delivery and performance of this Agreement;

b. the Acquisition and the terms thereof;

c. adoption of bylaws in the form agreed by the parties;

d. fixing the number of authorized directors on the board of directors at four (4);

e. the appointment of Qingqing Wu as Chairman of the board of directors to serve on the Sino Charter board of directors, effective on February 18, 2009 or immediately following the filing of the Corporation’s Annual Report on Form 10-K for the fiscal year ended November 30, 2008, whichever is earlier, and the appointment of Jianwei Shen, Zhifan Wu, and Yuzhen Wu as additional directors to serve on Sino Charter’s board of directors on the date the resignation of Sino Charter’s current sole director becomes effective;

f. the appointment of the following persons as officers of Sino Charter, effective on February 18, 2009 or immediately following the filing of the Corporation’s Annual Report on Form 10-K for the fiscal year ended November 30, 2008, whichever is earlier with the titles set forth opposite his name (the “Peng Xiang Officers”):

Qingqing Wu	Chief Executive Officer, Chief Operating Officer, President, Secretary and Chairman of the Board
Yushan Zheng	Chief Financial Officer and Treasurer

g. the change of the Sino Charter’s fiscal year end from November 30th to December 31st.

 

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(v)           a certificate of good standing for Sino Charter from its jurisdiction of incorporation, dated not earlier than five (5) days prior to the Closing Date;

(vi)           an instruction letter signed by the President of Sino Charter addressed to Sino Charter’s transfer agent of record, in a form reasonably acceptable to Peng Xiang and consistent with the terms of this Agreement, instructing the transfer agent to issue stock certificates representing the Sino Charter Shares to be delivered pursuant to this Agreement registered in the names of the Peng Xiang Shareholders as set forth in Annex I;

(vii)           a shareholder list of Sino Charter as certified by the Sino Charter’s Secretary or transfer agent, dated within ten (10) days of the Closing Date;

(xiii)           a certificate of the Secretary of the Sino Charter, dated as of the Closing Date, certifying as to (i) the incumbency of officers of the Sino Charter executing this Agreement and all exhibits and schedules hereto and all other documents, instruments and writings required pursuant to this Agreement (the “Transaction Documents”), (ii) a copy of the Certificate of Incorporation and By-Laws of the Sino Charter, as in effect on and as of the Closing Date, and (iii) a copy of the resolutions of the Board of Directors of the Sino Charter authorizing and approving the Sino Charter’s execution, delivery and performance of the Transaction Documents, all matters in connection with the Transaction Documents, and the transactions contemplated thereby;

(ix)           all corporate records, board minutes and resolutions, tax and financial records, agreements, seals and any other information or documents reasonably requested by Peng Xiang’s representatives with respect to Sino Charter; and

(x)           such other documents as Peng Xiang and/or the Peng Xiang Shareholders may reasonably request in connection with the transactions contemplated hereby.

(b)           Representations and Warranties to be True. The representations and warranties of Sino Charter herein contained shall be true in all material respects at the Closing with the same effect as though made at such time. Sino Charter and the Sino Charter Stockholders shall have performed in all material respects all obligations and complied in all material respects with all covenants and conditions required by this Agreement to be performed or complied with by them at or prior to the Closing.

(c)           No Assets and Liabilities. At the Closing, Sino Charter shall have no liabilities, debts or payables (contingent or otherwise) other than those liabilities listed in Schedule 4.34 of the disclosure schedules hereto, no tax obligations, no material assets, and except as contemplated in this Agreement, no material changes to its business or financial condition shall have occurred since the date of this Agreement.

(d)           SEC Filings. At the Closing, Sino Charter will be current in all SEC filings required by it to be filed.

(e)           Outstanding Common Stock. Sino Charter shall have at least 100,000,000 shares of its common stock authorized and shall have no more than [16,000,000] shares of its common stock issued and outstanding in the aggregate at the Closing.

(f)           No Adverse Effect.  The business and operations of Sino Charter will not have suffered any Material Adverse Effect.

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7.2           Conditions to Obligations of Sino Charter and the Sino Charter Stockholders. The obligations of Sino Charter and the Sino Charter Stockholders under this Agreement shall be subject to each of the following conditions:

(a)           Closing Deliveries. On the Closing Date, Peng Xiang and/or the Peng Xiang Shareholders shall have delivered to Sino Charter the following:

(i)           this Agreement duly executed by Peng Xiang and the Peng Xiang Shareholders;

(ii)           resolutions duly adopted by the Board of Directors of Peng Xiang authorizing and approving the execution, delivery and performance of this Agreement;

(iii)           certificates representing the Peng Xiang Equity Interests to be delivered pursuant to this Agreement duly endorsed or accompanied by duly executed stock powers or instruments of like tenor; and

(iv)           such other documents as Sino Charter may reasonably request in connection with the transactions contemplated hereby.

(b)           Representations and Warranties True and Correct. The representations and warranties of Peng Xiang and the Peng Xiang Shareholders herein contained shall be true in all material respects at the Closing with the same effect as though made at such time. Peng Xiang and the Peng Xiang Shareholders shall have performed in all material respects all obligations and complied in all material respects with all covenants and conditions required by this Agreement to be performed or complied with by them at or prior to the Closing.

(c)           No Adverse Effect.  The business and operations of Peng Xiang will not have suffered any Material Adverse Effect.

ARTICLE 8

SEC FILING; TERMINATION

8.1           This Agreement may be terminated at any time prior to the Closing:

(a)           by mutual written agreement of Sino Charter and the Peng Xiang Shareholders;

(b)           by either Sino Charter or the Peng Xiang Shareholders if the Transaction shall not have been consummated for any reason by February 13, 2009; provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Transaction to occur on or before such date and such action or failure to act constitutes a breach of this Agreement;

(c)           by either Sino Charter or the Peng Xiang Shareholders if a governmental entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Transaction, which order, decree, ruling or other action is final and non-appealable;

 

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(d)           by the Peng Xiang Shareholders, upon a material breach of any representation, warranty, covenant or agreement on the part of Sino Charter or the Sino Charter Stockholders set forth in this Agreement, or if any representation or warranty of Sino Charter shall have become materially untrue, in either case such that the conditions set forth in Section 7.1 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided, that if such inaccuracy in Sino Charter’s representations and warranties or breach by Sino Charter or the Sino Charter Stockholders is curable by Sino Charter or the Sino Charter Stockholders prior to the Closing Date, then the Peng Xiang Shareholders may not terminate this Agreement under this Section 8.1(d) for thirty (30) days after delivery of written notice from the Peng Xiang Shareholders to Sino Charter and the Sino Charter Stockholders of such breach, provided Sino Charter and the Sino Charter Stockholders continue to exercise commercially reasonable efforts to cure such breach (it being understood that the Peng Xiang Shareholders may not terminate this Agreement pursuant to this Section 8.1(d) if they shall have materially breached this Agreement or if such breach by Sino Charter or the Sino Charter Stockholders is cured during such thirty (30) day period);

(e)           by Sino Charter, upon a material breach of any representation, warranty, covenant or agreement on the part of Peng Xiang or the Peng Xiang Shareholders set forth in this Agreement, or if any representation or warranty of Peng Xiang or the Peng Xiang Shareholders shall have become materially untrue, in either case such that the conditions set forth in Section 7.2 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided, that if such inaccuracy in Peng Xiang’s or the Peng Xiang Shareholders’ representations and warranties or breach by Peng Xiang or the Peng Xiang Shareholders is curable by Peng Xiang or the Peng Xiang Shareholders prior to the Closing Date, then Sino Charter may not terminate this Agreement under this Section 8.1(e) for thirty (30) days after delivery of written notice from Sino Charter to Peng Xiang and the Peng Xiang Shareholders of such breach, provided Peng Xiang and the Peng Xiang Shareholders continue to exercise commercially reasonable efforts to cure such breach (it being understood that Sino Charter may not terminate this Agreement pursuant to this Section 8.1(e) if it shall have materially breached this Agreement or if such breach by Peng Xiang or the Peng Xiang Shareholders is cured during such thirty (30) day period); or

(f)           by Sino Charter Stockholders, upon a material breach of any representation, warranty, covenant or agreement on the part of Peng Xiang or the Peng Xiang Shareholders set forth in this Agreement, or if any representation or warranty of Peng Xiang or the Peng Xiang Shareholders shall have become materially untrue, in either case such that the conditions set forth in Section 7.2 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided, that if such inaccuracy in Peng Xiang’s or the Peng Xiang Shareholders’ representations and warranties or breach by Peng Xiang or the Peng Xiang Shareholders is curable by Peng Xiang or the Peng Xiang Shareholders prior to the Closing Date, then Sino Charter Stockholders may not terminate this Agreement under this Section 8.1(f) for thirty (30) days after delivery of written notice from Sino Charter Stockholders to Peng Xiang and the Peng Xiang Shareholders of such breach, provided Peng Xiang and the Peng Xiang Shareholders continue to exercise commercially reasonable efforts to cure such breach (it being understood that Sino Charter Stockholders may not terminate this Agreement pursuant to this Section 8.1(f) if it shall have materially breached this Agreement or if such breach by Peng Xiang or the Peng Xiang Shareholders is cured during such thirty (30) day period).

8.2           Notice of Termination; Effect of Termination. Any termination of this Agreement under Section 8.1 above will be effective immediately upon (or, if the termination is pursuant to Section 8.1(d), Section 8.1(e) or Section 8.1(f) and the proviso therein is applicable, thirty (30) days after) the delivery of written notice of the terminating party to the other parties hereto. In the event of the termination of this Agreement as provided in Section 8.1, this Agreement shall be of no further force or effect and the Transaction shall be abandoned, except as set forth in Section 8.1, Section 8.2 and Article 9 (General Provisions), each of which shall survive the termination of this Agreement.

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ARTICLE 9

GENERAL PROVISIONS

9.1           Notices. Any and all notices and other communications hereunder shall be in writing and shall be deemed duly given to the party to whom the same is so delivered, sent or mailed at addresses and contact information set forth on the signature pages hereof (or at such other address for a party as shall be specified by like notice) Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) on the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (Pacific Standard Time) on a business day, (b) on the next business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a business day or later than 5:30 p.m. (Pacific Standard Time) on any business day, (c) on the second business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.

9.2           Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. References to Sections and Articles refer to sections and articles of this Agreement unless otherwise stated.

9.3           Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated and the parties shall negotiate in good faith to modify this Agreement to preserve each party’s anticipated benefits under this Agreement.

9.4           Miscellaneous. This Agreement (together with all other documents and instruments referred to herein): (a) constitutes the entire agreement and supersedes all other prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof; (b) except as expressly set forth herein, is not intended to confer upon any other person any rights or remedies hereunder and (c) shall not be assigned by operation of law or otherwise, except as may be mutually agreed upon by the parties hereto.

9.5           Separate Counsel. Each party hereby expressly acknowledges that it has been advised to seek its own separate legal counsel for advice with respect to this Agreement, and that no counsel to any party hereto has acted or is acting as counsel to any other party hereto in connection with this Agreement.

9.6           Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of Los Angeles.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Los Angeles, County of Los Angeles for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an  inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  If either party shall commence an action or proceeding to enforce any provisions of the Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

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9.7           Counterparts and Facsimile Signatures. This Agreement may be executed in two or more counterparts, which together shall constitute a single agreement. This Agreement and any documents relating to it may be executed and transmitted to any other party by facsimile, which facsimile shall be deemed to be, and utilized in all respects as, an original, wet-inked manually executed document.

9.8           Amendment. This Agreement may be amended, modified or supplemented only by an instrument in writing executed by Peng Xiang, Sino Charter, and holders of a majority of the equity interests of Peng Xiang and the holders of a majority of outstanding voting stock of Sino Charter; provided that, the consent of any Peng Xiang or Sino Charter shareholder that is a party to this Agreement shall be required if the amendment or modification would disproportionately affect such shareholder (other than by virtue of their ownership of Peng Xiang or Sino Charter shares, as applicable).

9.9           Parties In Interest. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the parties hereto.

9.10           Waiver. No waiver by any party of any default or breach by another party of any representation, warranty, covenant or condition contained in this Agreement shall be deemed to be a waiver of any subsequent default or breach by such party of the same or any other representation, warranty, covenant or condition. No act, delay, omission or course of dealing on the part of any party in exercising any right, power or remedy under this Agreement or at law or in equity shall operate as a waiver thereof or otherwise prejudice any of such party’s rights, powers and remedies. All remedies, whether at law or in equity, shall be cumulative and the election of any one or more shall not constitute a waiver of the right to pursue other available remedies.

9.11           Expenses. At or prior to the Closing, the parties hereto shall pay all of their own expenses relating to the transactions contemplated by this Agreement, including, without limitation, the fees and expenses of their respective counsel and financial advisers.

[Remainder of Page Left Blank Intentionally]

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IN WITNESS WHEREOF, the parties have executed this Share Exchange Agreement as of the date first written above.

SINO CHARTER:

SINO CHARTER INC.,

a Nevada corporation

By:  ___________________________

Matthew Hayden

Chief Executive Officer and President

Address for Notices:

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

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SIGNATURE PAGE OF SINO CHARTER STOCKHOLDERS

SINO CHARTER STOCKHOLDERS:

Name	Address, Telephone, and FacsimileNumber for Notice:	Signature:
Matthew Hayden	Address:   ______________________ _____________________ _____________________ Tel: _____________________ Fax: _____________________
Ancora Greater China Fund, LP	Address:   ______________________ _____________________ _____________________ Tel: _____________________ Fax: _____________________	By: _________________________ Name: _______________________ Title: ________________________

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SIGNATURE PAGE OF PENG XIANG

PENG XIANG:

PENG XIANG PENG FEI INVESTMENTS LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Peng Xiang Peng Fei Investments Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

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SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS

PENG XIANG SHAREHOLDERS:

BESTGRAIN LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Bestgrain Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 33

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

KEENCHARM LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Keencharm Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 34

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

ORIENT TIME LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Orient Time Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 35

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

MIGHTY SWIM LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Mighty Swim Limited

 Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 36

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

RIGHTEAST LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Righteast Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 37

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

FLYING GOOD LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Flying Good Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 38

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

GOLDUP HOLDINGS LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Goldup Holdings Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 39

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

LOFTY TIME LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Lofty Time Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 40

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

ELLENICA LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Ellenica Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 41

SIGNATURE PAGES OF PENG XIANG SHAREHOLDERS (continued)

KEY ROLE CONSULTANTS LIMITED

By:      _____________________________

Name: _____________________________

Title:   _____________________________

Address for Notices:

Key Role Consultants Limited

Address:   ______________________

_____________________

_____________________

Tel: _____________________

Fax: _____________________

Please Check One:

The Peng Xiang Shareholder hereby certifies that it is:

____ an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or

____ a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Peng Xiang Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b).

SHARE EXCHANGE AGREEMENT

Page 42

ANNEX I

(I)	(II)	(III)
Name of Peng Xiang Shareholders	Peng Xiang Equity Interests Transferred to Sino Charter	Sino Charter Shares Issued to Peng Xiang Shareholders (or Designees)
Bestgrain Limited	6,591	9,596,496
Keencharm Limited	350	509,600
Orient Time Limited	350	509,600
Mighty Swim Limited	400	582,400
Righteast Limited	400	582,400
Flying Good Limited	400	582,400
Goldup Holdings Limited	400	582,400
Lofty Time Limited	409	595,504
Ellenica Limited	500	728,000
Key Role Consultants Limited	200	291,200
Total	10,000	14,560,000

SHARE EXCHANGE AGREEMENT

Page 43

ANNEX II

ACCREDITED INVESTOR DEFINITION

Category A	The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000.
Category B	The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.
Category C	The undersigned is a director or executive officer of Sino Charter which is issuing and selling the securities.
Category D	The undersigned is a bank; a savings and loan association; insurance company; registered investment company; registered business development company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or (c) is a self directed plan with investment decisions made solely by persons that are accredited investors.
Category E	The undersigned is a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940.
Category F	The undersigned is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Securities and with total assets in excess of $5,000,000.
Category G	The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, where the purchase is directed by a “sophisticated investor“ as defined in Regulation 506(b)(2)(ii) under the Act.
Category H	The undersigned is an entity (other than a trust) in which all of the equity owners are “accredited investors” within one or more of the above categories. If relying upon this Category alone, each equity owner must complete a separate copy of this Agreement.

SHARE EXCHANGE AGREEMENT

Page 44

DISCLOSURE SCHEDULES

TO

SHARE EXCHANGE AGREEMENT

SCHEDULE 2.1

(List of Business Jurisdictions)

1.           Hong Kong

2.           People’s Republic of China

3.           British Virgin Islands

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-1

SCHEDULE 2.3

(Subsidiaries)

Korea Jinduren (Int’l) Dress Limited (Hong Kong)

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-2

SCHEDULE 2.9

(Litigation)

None.

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-3

SCHEDULE 2.11

(Contracts)

All of the following agreements have been entered into by and between Korea Jinduren (Int’l) Dress Limited and Jinjiang Yinglin Jinduren Dress Co. Ltd. on December 28, 2005:

1) Consulting Services Agreement

2) Operating Agreement

3) Voting Rights Proxy Agreement

4) Equity Pledge Agreement

5) Option Agreement

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-4

SCHEDULE 2.12

(Material Changes)

On January 6, 2009, Peng Xiang issued 9,000 shares of common stock to its members, as follows:

Entities	Issued Shares
Bestgrain Limited	5,811 shares
Keencharm Limited	315 shares
Orient Time Limited	315 shares
Mighty Swim Limited	360 shares
Righteast Limited	360 shares
Flying Good Limited	400 shares
Goldup Holdings Limited	400 shares
Lofty Time Limited	409 shares
Ellenica Limited	450 shares
Key Role Consultants Limited	180 shares
TOTAL:	9,000 SHARES

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-5

SCHEDULE 2.17

(Certain Fees)

None.

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-6

SCHEDULE 2.26

(Employee Benefit Plans)

None.

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-7

SCHEDULE 4.6

(Sino Charter Stock Issuances)

Other than the issuances of Sino Charter’s restricted common stock to the Peng Xiang Shareholders at the Closing in connection with this Share Exchange Agreement, the following are descriptions of stock issuances for Sino Charter since its most recently filed periodic report under the Exchange Act:

1. In connection with the Securities Purchase Agreements entered into by and between Sino Charter and MMH Group, LLC (“MMH”) dated February 12, 2009, MMH purchased 102,800 shares of Sino Charter’s restricted common stock from Sino Charter.

2. In connection with the Securities Purchase Agreement entered into by and between Sino Charter and Pope Investments II, LLC (“Pope”) dated February 12, 2009, Pope purchased 287,840 shares of Sino Charter’s restricted common stock from Sino Charter.

3. In connection with the Securities Purchase Agreement entered into by and between Sino Charter and Ancora Greater China Fund, L.P. (“Ancora”) dated February 12, 2009, Ancora purchased 123,360 shares of Sino Charter’s restricted common stock from Sino Charter.

4. In connection with the Securities Purchase Agreement entered into by and between Sino Charter and Richardson & Patel LLP (“R&P”) dated February 13, 2009, R&P purchased 334,500 shares of Sino Charter’s restricted common stock from Sino Charter.

5. In connection with the Securities Purchase Agreements entered into by and between Sino Charter and Causeway Bay Capital, LLC (“Causeway”) dated February 13, 2009, Causeway purchased 160,000 shares of Sino Charter’s restricted common stock from Sino Charter.

6. In connection with the Securities Purchase Agreement entered into by and between Sino Charter and High Able Limited (“High Able”) dated February 13, 2009, High Able purchased 160,000 shares of Sino Charter’s restricted common stock from Sino Charter.

7. In connection with the Securities Purchase Agreement entered into by and between Sino Charter and Suzhou Capital Advisors, LLC (“Suzhou”) dated February 13, 2009, Suzhou purchased 160,000 shares of Sino Charter’s restricted common stock from Sino Charter.

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-8

SCHEDULE 4.8

(Sino Charter Stock Issuances to Officers, Directors and/or Affiliates)

1. In connection with the Securities Purchase Agreements dated February 12, 2009 and entered into by and between Sino Charter and MMH Group, LLC (“MMH”), a limited liability company wholly owned by Matthew Hayden, Sino Charter’s current Chief Executive Officer and Sole Director, MMH purchased 102,800 shares of Sino Charter’s restricted common stock from Sino Charter.

2. In connection with the Securities Purchase Agreement dated February 12, 2009 and entered into by and between Sino Charter and Pope Investments II, LLC (“Pope”), a “more than 10% owner” of Sino Charter’s total issued and outstanding common stock prior to the Closing, Pope purchased 287,840 shares of Sino Charter’s restricted common stock from Sino Charter.

3. In connection with the Securities Purchase Agreement dated February 12, 2009 and entered into by and between Sino Charter and Ancora Greater China Fund, L.P (“Ancora”), a “more than 10% owner” of Sino Charter’s total issued and outstanding common stock prior to the Closing, Ancora purchased 123.360 shares of Sino Charter’s restricted common stock from Sino Charter.

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-9

SCHEDULE 4.34

(Sino Charter’s Schedule of Liabilities)

PENDING LIABILITIES

· Upon completion of the Fiscal 2008 Audit for the year ending November 30, 2008 Sino Charter will owe Malone & Bailey, CPA $3,000 in fees earned.

· Upon completion of the 10K filing to complement the audit Sino Charter will owe Albeck Financial Services approximately $1,500.

DISCLOSURE SCHEDULES TO THE

SHARE EXCHANGE AGREEMENT

D-10

EX-3.3

Amendment

to the

Bylaws of Sino Charter Inc.

Article III of the Bylaws is amended and restated in its entirety as follows:

III. ACTIONS BY WRITTEN CONSENT.

.01         By Shareholders

Unless otherwise restricted by the Corporation’s Articles of Incorporation or these Bylaws, any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by shareholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents shall be required.  Whenever such action is taken by written consent, a meeting of shareholders need not be called or notice given.  The shareholders’ written consent may be signed in counterparts, including, without limitation, facsimile counterparts, and shall be filed with the minutes of the proceedings of the shareholders.

.02         By the Board of Directors

Unless otherwise restricted by the Corporation’s Articles of Incorporation or these Bylaws, any action required or permitted to be taken at a meeting of the Board of Directors or of any committee thereof may be taken without a meeting if, before or after the action, a written consent thereto is signed by all of the members of the Board of Directors or of the committee.  The Board of Directors’ or committee’s written consent may be signed in counterparts, including, without limitation, facsimile counterparts, and such written consent shall be filed with the minutes of proceedings of the Board of Directors or the committee.”

EX-10.1

CONSULTING SERVICES AGREEMENT

咨询服务协议

This Consulting Services Agreement (this “Agreement”) is dated December 28, 2005, and is entered into in Jinjiang City, People’s Republic of China (“PRC” or “China”) by and between Korea Jinduren (Int’l) Dress Limited (“Party A”) and Jinjiang Yinglin Jinduren Dress Co., Ltd. (“Party B”). Party A and Party B are referred to collectively in this Agreement as the “Parties.”

本咨询服务协议（“本协议”）由韩国劲都人(国际)服饰有限公司（“甲方”），与晋江市英林劲都人服饰有限公司（“乙方”）协商一致，于2005年12月28日在中国晋江市签订。甲方和乙方 635;称为“各方”。

RECITALS

陈述

(1)   Party A, a company incorporated in Hong Kong, specializes in dress industry and investment;

甲方为在香港设立的公司，专业开展服饰业务和投资；

(2)   Party B, a limited company incorporated in PRC, is engaged in the manufacture and sale of the dress (collectively the “Business”);

乙方为在中国设立的有限公司，从事服装制造和销售(“业务”);

(3)   The Parties desire that Party A provide Party B with consulting and other relevant services in connection with the Business; and

各方期望甲方提供咨询服务和其他与乙方从事业务相关的服务给乙方；与

(4)   The Parties are entering into this Agreement to set forth the terms and conditions under which Party A shall provide consulting and other related services to Party B.

各方签订本协议以确定相关条款和条件，据于此，甲方将向乙方提供咨询以及其他相关服务。

NOW THEREFORE, the Parties agree as follows:

为此，各方签订以下协议，以资双方遵守：

1. DEFINITIONS (定义)

1.1In this Agreement the following terms shall have the following meanings:

本协议中以下词组应具有以下含义：

“Affiliate,” with respect to any Person, shall mean any other Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person.  As used in this definition, “control” shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether by ownership of securities or partnership or other ownership interests, or by contract or otherwise);

“关联人”，指的是对于任何人而言，直接或者间接地予以控制的、或者被其控制、或者共同被他人控制的某人。在本定义中。控制指的是直接或者间接拥有，具有能力直接或者间接影响管理的方向和政策（不管是通过股份所有权还是通过&# 21512;伙或者其他所有权权益，这种安排可以通过合同或者其他形式进行。）

“Consulting Services Fee” shall be as defined in Clause 3.1;

“咨询费”由第3.1条进行定义。

“Indebtedness” shall mean, as to any Person, any one of the following: (i) money borrowed by such Person (including principal, interest, fees and charges) for the deferred purchase price of any property or services, (ii) the face amount of all letters of credit issued to such Person and all drafts drawn thereunder, (iii) all liabilities secured by any Lien on any property owned by such Person, whether or not such liabilities have been assumed by such Person, (iv) the aggregate amount required to be capitalized under any lease for which such Person is the lessee, or (v) all contingent obligations (including, without limitation, all guarantees to third parties) of such Person;

“债务”指的是，对任何人而言，下述情况之一（i）所有因此类人的借款以便还清迟延支付的购买财产价款或者服务费而产生的债务（包括本金，利息，费用和收费），（ii）所有应当由此类人支付的信& #29992;证以及由此出具的票据的票面价值，（iii）任何由设置于此类人拥有的财产之上的留置担保的责任，不管此类人是否承担了这些责任，（iv）此类人作为租赁人应当支付的租约总金额，或（v）所有此类人的或有债务（包括但不限于向所& #26377;第三方作出的担保）；

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under recording or notice statute, and any lease having substantially the same effect as any of the foregoing);

“留置”指的是任何抵押、质押、担保、转让、存款安排、权利负担，留置（法定或者其他），优惠，优先权或者任何其他性质种类的担保安排（包括但不限于任何有条件的出售或者其他所有权保留协议，根据法定形式签发的任何融资或者&# 31867;似的申明或者通知，以及任何与前述安排具有实质性相同效果的租约）。

-2-

Consulting Services Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

“Person” shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization, entity or other organization or any government body;

“人”，指的是任何个人，公司，自愿性的组织，合伙，合资企业，信托，非公司型组织，团体或者其他组织和政府机构。

“PRC” means the People’s Republic of China;

“PRC” 指的是中华人民共和国。

“Services” means the services to be provided under the Agreement by Party A to Party B, as more specifically described in Clause 2.

“服务”指的是本协议下，由甲方向乙方提供的服务，由第二条详细解释。

1.2           The headings in this Agreement shall not affect the interpretation of this Agreement.

本协议中的标题不应当影响对本协议的解释。

2. RETENTION AND SCOPE OF SERVICES (聘用和服务范围)

2.1           Party B hereby agrees to retain the services of Party A, and Party A accepts such appointment, to provide to Party B services in relation to the current and proposed operations of Party B’s business in the PRC pursuant to the terms and conditions of this Agreement (the “Services”).  The Services shall include, without limitation:

乙方在此同意聘用甲方提供服务，并且甲方依据本协议规定的条款，接受聘用，向乙方在中国正在开展或者即将开展的业务提供相关服务（“服务”）。服务包括但不限于：

-3-

Consulting Services Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

(a)           General Business Operation.  Provide general advice and assistance relating to the management and operation of dress industry and other Party B’s business.

一般业务经营。提供和管理、运行服饰业和其他乙方业务相关的咨询服务和协助。

(b)           Human Resources.

人力资源。

(i)           Provide general advice and assistance in relation to the staffing of Party B, including assistance in the recruitment, employment and secondment of management personnel, administrative personnel and staff of Party B;

为乙方的人事提供建议和协助，包括乙方管理人员、行政人员与普通员工的招募、雇用、调等；

(ii)           Provide training of management, staff and administrative personnel;

提供管理层、员工和行政人员的培训；

(iii)           Assist Party B to establish an efficient payroll management system; and

协助乙方建立健全的薪金管理体系；与

(iv)           Provide assistance in the relocation of Party B’s management and staff;

对于乙方管理人员和员工的重新安置提供建议和协助。

(c)           Business Development. Provide advice and assistance in business growth and development of Party B.

业务发展。对乙方的业务发展提供建议和协助。

(d)           Other.  Such other advice and assistance as may be agreed upon by the Parties.

其他。双方同意的建议和协助。

-4-

Consulting Services Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

2.2           Exclusive Services Provider.  During the term of this Agreement, Party A shall be the exclusive provider of the Services.  Party B shall not seek or accept similar services from other providers without the prior written approval of Party A.

排他性的服务提供者。在本协议有效期间，甲方应当是排他性的服务提供者。除非获得了甲方事先书面同意，乙方不可以寻求或者接受来自其他服务提供者类似的服务。

2.3           Intellectual Property Rights Related to the Services.  Party A shall own all intellectual property rights developed or discovered through research and development in the course of providing Services, or derived from the provision of the Services.  Such intellectual property rights shall include patents, trademarks, trade names, copyrights, patent application rights, copyright and trademark application rights, research and technical documents and materials, and other related intellectual property rights including the right to license or transfer such intellectual property rights.  If Party B requires the use of Party A’s intellectual property rights, Party A agrees to grant such intellectual property rights to Party B on terms and conditions to be set forth in a separate agreement.

有关服务的知识产权。在提供服务过程中，甲方应当拥有所有由服务产生的通过开发和研究获得的知识产权。此类知识产权应当包括专利、商标、商号、版权、专利申请权、版权或者商标申请权，研究及技术文件资料，以及其他有关的知识 产权（包括许可、转让此类知识产权的权利）。如果乙方要求使用甲方的知识产权，甲方应当通过和乙方签订独立的协议授予乙方此类权利。

2.4           Pledge.  Party B shall permit and cause the owners of Party B to pledge their equity interests in Party B to Party A for securing the payment of the Consulting Services Fee as required pursuant to this Agreement.

质押。乙方应当允许和促使乙方股权所有人向甲方出质其在乙方的股权以便保证乙方向甲方支付本协议规定的服务费。

3.           PAYMENT (支付)

3.1           General.

普通条款。

(a)           In consideration of the Services to be provided by Party A hereunder, Party B shall pay to Party A a consulting services fee (the “Consulting Services Fee”) during the term of this Agreement, payable in Renminbi (“RMB”) each quarter, equal to all of Party B’s net income for such quarter based on the quarterly financial statements provided under Clause 5.1 below. Such quarterly payment shall be made within fifteen (15) days after receipt by Party A of the financial statements referenced above.

就甲方提供的服务，乙方应当在本协议有效期间向甲方支付咨询服务费（“咨询服务费”）。该费用每季度以人民币支付。依据以下第5.1条规定由乙方提供的季报，该费用应当和乙方该季度净收入相等。该费用应当在甲方 5910;到以上财务报表15天内支付。

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(b)           Party B will permit, from time to time during regular business hours as reasonably requested by Party A, its agents or representatives (including independent public accountants, which may be Party B’s independent public accountants), (i) to conduct periodic audits of the financial books and records of Party B, (ii) to examine and make copies and abstracts from all books, records and documents (including, without limitation, computer tapes and disks) in the possession or under the control of Party B, (iii) to visit the offices and properties of Party B for the purpose of examining such materials described in clause (ii) above, and (iv) to discuss matters relating to the performance by Party B hereunder with any of the officers or employees of Party B having knowledge of such matters.  Party A may exercise the audit rights described herein at any time, provided that Party A provides a ten (10) day written notice to Party B specifying the scope, purpose and duration of such audit.  All such audits shall be conducted in such a manner as not to interfere with Party B’s normal operations.

乙方应当允许，在通常的工作时间，根据甲方或者其代理人或者代表的要求（包含独立的注册会计师，其可能是乙方的独立的注册会计师）(i) 对乙方的账簿和财务记录进行审计，(ii) 对乙方持有的或管理的所有的账簿，财务记录和文件进行摘要，检查和备份（包括但不限于电脑磁盘和磁带），(iii) 造访乙方的办公场所和财产以便对上述（ii）中的材料进行审查，(iv)和乙方了解情况的雇员讨论乙方的经营活动。甲方可以在任何时间行使本条规定的审计权，只要提前十天向乙方提供书面的通知确定审计的范围，目的和持续时间即可。所有此类的审计 981;应当影响乙方一般的经营活动。

3.2           Party B shall not be entitled to set off any amount it may claim is owed to it by Party A against any Consulting Services Fee payable by Party B to Party A unless Party B first obtains Party A’s prior written consent.

乙方不应当把其应当向甲方支付的服务费和甲方可能的欠款自行抵消，除非乙方已获得了甲方的书面同意。

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3.3           The Consulting Services Fee shall be paid in RMB by telegraphic transfer to Party A’s bank account No.______________, or to such other account or accounts as may be specified in writing from time to time by Party A.

咨询服务费应当以人民币通过电汇的方式汇至甲方账户：，或者其他甲方在任何时间通过书面确定的其他账户。

3.4           Should Party B fail to pay all or any part of the Consulting Services Fee due to Party A in RMB under this Clause 3 within the time limits stipulated, Party B shall pay to Party A interest in RMB on the amount overdue based on the three (3) month lending rate for RMB published by the Bank of China on the relevant due date.

如果乙方没有依据本第三条的规定在规定的期间内，以人民币支付全部或者部分人民币服务费，乙方应当向甲方支付未付款的人民币利息；相关利息的支付应当依据中国银行公布的近三月银行同期贷款利率。

3.5           All payments to be made by Party B hereunder shall be made free and clear and without any consideration of tax deduction, unless Party B is required to make such payment subject to the deduction or withholding of tax.

所有本条规定的乙方的支付义务不包含任何扣除和税负考虑，除非乙方被要求在扣除后或者代扣税后进行支付。

4.           FURTHER TERMS OF COOPERATION (进一步合作条款)

All business revenue of Party B shall be directed in full by Party B into a bank account designated by Party A.

所有乙方业务收入应当划入甲方指定的账户。

5.           UNDERTAKINGS OF PARTY A (甲方保证)

Party B hereby agrees that, during the term of the Agreement:

乙方在此同意，在本协议有效期间：

5.1           Information Covenants.  Party B shall provide to Party A:

信息条款。乙方将提供甲方：

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5.1.1           Preliminary Monthly Reports. Within five (5) days after the end of each calendar month the preliminary income statements and balance sheets of Party B made up to as of the end of such calendar month, in each case prepared in accordance with the generally accepted accounting principles of the PRC.

初期月报。每公历月度的满后五天内，乙方依据中国公认会计原则制作的月收入报表和资产负债表。

5.1.2           Final Monthly Reports. Within ten (10) days after the end of each calendar month, a final report from Party B on the financial and business operations of Party B as of the end of such calendar month, setting forth the comparison of financial and operation figures for the corresponding period in the preceding financial year, in each case prepared in accordance with generally accepted accounting principles of the PRC.

最后月报。在每个公历月度结束后十天之内，乙方制作的，用以说明其财务状况、经营成绩、以及与往年同期的比较的报表，该报表依据中国公认会计原则制作。

5.1.3           Quarterly Reports. As soon as available and in any event within forty-five (45) days after each Quarterly Period (as defined below), unaudited consolidated and consolidating statements of income, retained earnings and changes in financial positions of Party B and its subsidiaries for such Quarterly Period, and for the period from the beginning of the relevant fiscal year to such Quarterly Date, and the related consolidated and consolidating balance sheets as of such Quarterly Period, setting forth in each case the actual versus budgeted comparisons and a comparison of the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of Party B’s Chief Financial Officer, and such certificate shall state that the said financial statements fairly represent the consolidated and consolidating financial conditions and results of operations, as the case may be, of Party B and its subsidiaries, in accordance with the general accepted accounting principles of the PRC for such period (subject to normal year-end audit adjustments and the preparation of notes for the audited financial statements).  For the purpose of this Agreement, a “Quarterly Period” shall mean the last day of March, June, September and December of each year, the first of which shall be the first Quarterly Period following the date of this Agreement; provided that if any such Quarterly Period is not a business day in the PRC, then such Quarterly Period shall be the next succeeding business day in the PRC.

季报。在每季度结束后45天内制作的，乙方及其子公司未审计的合并和未合并收入报表，未分配利润和乙方财务状况的变化的报表；如果可能的话，每季度及从每财务年度的开始到季报制作日，相关合并和未合并报表，并&# 19988;以比照形式和去年同期的相关报表列于一处。相关报表应有乙方首席财务官的证明。该证明应当申明相关财务报表依法提供了乙方及其子公司合并及未合并的财务状况和经营业绩，并且该报表的制作符合中国公认会计原则（相关数据应以年度审计的调整和相关已审计的财务报表为准）。在& #26412;协议中，“a Quarterly Period”的含义是：每年三月份，六月份，九月份和十二月份的最后一天，第一次Quarterly Period应当是本协议签订日后的以上月份的最后一天。如果上述日期在中国不是营业日，那么相关日期应推迟到此后的第一个营业日。

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5.1.4           Annual Audited Accounts.  Within 90 days after the end of the financial year, Party B’s annual audited accounts (setting forth in each case the comparison of the corresponding figures for the preceding financial year), shall be prepared in accordance with the generally accepted accounting principles of the PRC.

年度审计。每会计年度结束后九十天之内，乙方年度审计帐目（以比较形式与去年同期进行对比）应以中国公认会计原则制作。

5.1.5           Budgets. At least ninety (90) days prior to the beginning of Party B’s fiscal year, Party B shall prepare a budget in a form satisfactory to Party A (including budgeted statements of income and sources and uses of cash and balance sheets) for each of the four quarters of such fiscal year accompanied by the statement of Party B’s Chief Financial Officer, to the effect that, to the best of his or her knowledge, the budget is a reasonable estimate for the corresponding period.

预算。每财务年度开始前90天，甲方能够接受的乙方准备之预算（包括预算收入、资金来源、用途和资产负债表）。该预算应当包括每财务年度季度预算。该预算应由乙方首席财务官申明以确定根据其所知相关预算是对相&# 20851;期间合理的估计。

5.1.6           Notice of Litigation. Party B shall notify Party A, within one (1) business day of obtaining the knowledge thereof, of (i) any litigation or governmental proceeding pending against Party B which could materially adversely affect the business, operations, property, assets, condition or prospects of Party B, and (ii) any other event which is likely to materially adversely affect the business, operations, property, assets, condition or prospects of Party B.

诉讼通知。在任何情况下，在乙方获知（i）任何尚未了结的诉讼或者政府行政程序即将对乙方的业务、经营、财产或者财务状况或者乙方未来的发展产生重大不利影响，并且（ii）任何其他有可能对乙ਬ 1;上述方面产生重大不利影响的情况后的一天之内，通知甲方。

5.1.7           Other Information.  From time to time, such other information or documents as Party A may reasonably request.

其他情况。其他甲方不时合理要求的信息和文件（财务或者其他方面）。

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5.2           Books, Records and Inspections.  Party B shall keep accurate books and records of its business activities and transactions according with PRC’s generally accepted accounting principles and all other legal requirements.  During an appropriate time and within a reasonable scope requested by Party A, Party B will permit Party A’s officers and designated representatives to visit the premises of Party B and to inspect, under the guidance of Party B’s officers, Party B’s books and records, and to discuss the affairs, finances and accounts of Party B.

账簿、财务记录和审查。乙方应当保留相关账簿和财务记录，该记录应当完整，真实，并且准确地按照中国公认会计原则以及所有法律的要求制作，同时应当包含所有的交易和业务活动。乙方应当允许甲方的高级管理人员和任命的代表，在 合适的时间和间隔，依据甲方合理要求的范围，在乙方高级管理人员的引导下对乙方财产进行检查，审查乙方的账簿和财务记录，并且和乙方高级管理人员讨论乙方的经营、财务和帐目。

5.3           Corporate Franchises.  Party B will do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and maintain its material rights and licenses.

公司特许。乙方应当尽全力，保持其拥有的重大权利、特许和许可的存在和效力。

5.4           Compliance with Laws.  Party B shall abide by all applicable laws, regulations and orders of all relevant governmental administration, in respect to its business and the ownership of its property, including, without limitation, maintenance of valid and proper governmental approvals and licenses necessary to provide the services, unless such noncompliance could not, in the aggregate, have a material adverse effect on the business, operations, property, assets, condition or prospects of Party B.

遵守法律。乙方就其业务、财产所有权（包括但不限于保持有效和合适的政府审批和许可以便提供相关服务）应当遵守所有适用的法律、法规、政府机构的行政命令；除非此类不遵守，总体而言，对乙方的业务、经营、财产和财务状况及未 来发展不会带来重大不利影响。

6.           NEGATIVE COVENANTS (不作为保证)

Party B covenants and agrees that, during the term of this Agreement, without the prior written consent of Party A:

乙方同意并且保证，在本协议有效期间，在没有事先获得甲方书面同意的情况下：

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6.1           Equity.  Party B will not issue, purchase or redeem any equity or debt securities of Party B.

股权。乙方不会发行，购买或者回购任何乙方的股权或者债权凭证。

6.2           Liens.  Party B will not create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible) of Party B whether existing or hereafter acquired, provided that the provisions of this Clause 6.2 shall not prevent the creation, incurrence, assumption or existence of:

担保。乙方不会设定、招致、承担或者忍受任何加诸于其财产（动产或者不动产，有形或者无形）之上的担保权，不管这类财产是现在拥有的还是之后获得的，但是本协议第6.2条没有阻止下列情况的产生、招 致或者承受：

6.2.1           Liens for taxes not yet due, or Liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been established; and

未到期税款的担保，由善意及恰当程序提起争议的税款担保且为此已建立足够的保留; 以及

6.2.2           Liens in respect to Party B’s property or assets imposed by law, which were incurred in the ordinary course of business, and (i) which do not in the aggregate, materially detract from the value of Party B’s property or assets or materially impair the use thereof in the operation of Party B’s business or (ii) which are being contested in good faith by appropriate proceedings and proceedings which have the effect of preventing the forfeiture or sale of the property of assets subject to any such Lien.

在通常业务中产生的，置于乙方财产之上的担保权，并且（i）该担保权不会在总体上重大减损此类财产的价值或者重大损害乙方在业务经营中对其的使用；或者（ii）此类担保通过合适的程序善意地进ඡ 2;，而此类程序依据担保的效力具有防止相关财产转移和出售的效力。

6.3           Consolidation, Merger, Sale of Assets, etc.  Party B will not wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or any part of its property or assets, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business) of any Person, except that (i) Party B may sell inventory in the ordinary course of business and (ii) Party B may sell equipment which is uneconomic or obsolete, in the ordinary course of business.

合并、兼并和资产出售等。乙方不会进行清盘、清算或者解散，或者签订任何兼并合并协议、或者转让、出售、出租或者放弃（或者同意在未来进行任何前述的活动）所有或者其部分财产；不会购买或者另行获取（通过一次或者一系列相关 联的交易行为）任何人的全部或者部分财产（除非通过正常的交易购买、获取任何存货、材料和设备）；除非（i）乙方通过通常的方式出售存货；（ii）乙方在日常业务中出售其多余或者高成本的设备。

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6.4           Dividends.  Party B will not declare or pay any dividends, or return any capital, to its shareholders or authorize or make any other distribution, payment or delivery of property or cash to its shareholders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for a consideration, any shares of any class of its capital stock now or hereafter outstanding (or any options or warrants issued by Party B with respect to its capital stock), or set aside any funds for any of the foregoing purposes.

分红。乙方不会宣布任何红利方案或者支付红利，不会向其股东退返任何资本，不会授权或者直接向股东进行任何分配、支付或者交付任何财产或者现金；回赎、撤资、购买或者直接或者间接通过支付对价的方式获取现在已发行或者以后将 发行的任何种类的资本（或者乙方依据其股本发行之任何期权或者股权凭证），不会为了前述的目的拨留款项。

6.5           Leases.  Party B will not permit the aggregate payments (including, without limitation, any property taxes paid as additional rent or lease payments) by Party B under agreements to rent or lease any real or personal property to exceed US$1 million in any fiscal year of Party B.

租约。乙方不应当使其签订的任何动产不动产租约总额（包括但不限于任何作为租金之外的不动产税费）在任何一个会计年度超过一百万美元。

6.6           Indebtedness.  Party B will not contract, create, incur, assume or suffer to exist any indebtedness, except accrued expenses and current trade accounts payable incurred in the ordinary course of business, and obligations under trade letters of credit incurred by Party B in the ordinary course of business, which are to be repaid in full not more than one (1) year after the date on which such indebtedness is originally incurred to finance the purchase of goods by Party B.

债务。乙方不会签约、产生、招致、承受或者忍受相关债务的存在，除非：此类费用及应付款产生于通常的业务活动中，及产生于日常业务中乙方总还款期在一年以内的信用证（用以乙方购货）。

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6.7           Advances, Investment and Loans.  Party B will not lend money or grant credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any other Person, except that Party B may acquire and hold receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms.

预付款、投资和借款。乙方不得出借、给予信用安排或者提供预付款给任何人，不得购买任何人的股权、义务或者证券及其相关利益，不得向任何人注资；除非：产生于通常的交易并且依照商业惯例是应当支付和履行的 ;，乙方获得因此产生的应收账款。

6.8           Transactions with Affiliates.  Party B will not enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of Party B, other than on terms and conditions substantially as favorable to Party B as would be obtainable by Party B at the time in a comparable arm’s-length transaction with a Person other than an Affiliate and with the prior written consent of Party A.

关联交易。无论是否是通常的交易，乙方不得和乙方的任何关联人进行任何或者一系列相关联的交易。除非获得甲方的书面批准，并且相关交易根据和非关联人进行一般公平交易的比较，对乙方具有重大利益。

6.9           Capital Expenditures.  Party B will not make any expenditure for fixed or capital assets (including, without limitation, expenditures for maintenance and repairs which are capitalized in accordance with generally accepted accounting principles in the PRC and capitalized lease obligations) during any quarterly period which exceeds the aggregate the amount contained in the budget as set forth in Section 5.1.5.

资本支出。在任何季度期间内，乙方不得为任何固定资产或者资本财产（包括但不限于依据中国公认会计原则资本化的维持和修理费支出和资本化的租赁支出）支出超过本协议5.1.5条约定的总计预算额度。

6.10           Modifications to Debt Arrangements, Agreements or Articles of Association.  Party B will not (i) make any voluntary or optional payment or prepayment on or redemption or acquisition for value of (including, without limitation, by way of depositing with the trustee with respect thereto money or securities before due for the purpose of paying when due) any existing Indebtedness or (ii) amend or modify, or permit the amendment or modification of, any provision of any existing Indebtedness or of any agreement (including, without limitation, any purchase agreement, indenture, loan agreement or security agreement) relating to any of the foregoing or (iii) amend, modify or change its Articles of Association or business license, or any agreement entered into by it, with respect to its capital stock, or enter into any new agreement with respect to its capital stock.

对于债权安排、协议或者章程的修改。乙方不会(i) 对于任何现存的债务进行任何自愿的、选择性的支付、预先的支付、回购或者获得。（包括但不限于为到期支付而在受托人处预存钱款或证券）(ii)对于现存的任何债务或者与此有关的任何协议进行修正、修改或者允许这种修正或者修改（包括但不限于任何购买协议、契约& #12289;贷款协议或者担保协议）。(iii)修正、修改或者改变其章程、营业执照、或者任何其签订的有关资本的协议；或者签订与其资本有关的新协议。

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6.11           Line of Business.  Party B will not engage (directly or indirectly) in any business other than those types of business prescribed within the business scope of Party B’s business license except with the prior written consent of Party A.

业务行业。乙方不会（直接或者间接）从事乙方营业执照确定的业务范围以外的业务，除非事先获得了甲方书面的同意。

7.           TERM AND TERMINATION (有效期和终止)

7.1           This Agreement shall take effect on January 1, 2006 and shall remain in full force and effect unless terminated pursuant to Clause 7.2.

本协议自2006年1月1日起生效，除非根据第7.2条终止，本协议应当保留完全的效力和强制力。

7.2           This Agreement may be terminated:

本协议在以下情况下终止:

7.2.1           By either Party giving written notice to the other Party if the other Party has committed a material breach of this Agreement (including, but not limited to, the failure by Party B to pay the Consulting Services Fee) and such breach, if capable of remedy, has not been so remedied within fourteen (14) days, in the case of breach of a non-financial obligation, following the receipt of such written notice;

根据任何一方因为另一方重大违约而发出的书面通知（包括但不限于乙方未支付相关咨询费），并且如果是可以补救的且是非金钱方面的违约，未在收到书面通知后14天内作出补救;

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7.2.2           By either Party giving written notice to the other Party if the other Party becomes bankrupt or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution or ceases to carry on business or becomes unable to pay its debts as they become due;

任何一方向另一方发出书面通知，如果该另一方破产或者进入了清算或者解散程序，不再开展任何业务或者无法支付到期债务;

7.2.3           By either Party giving written notice to the other Party if, for any reason, the operations of Party A are terminated;

任何一方向另一方发出书面通知，如果甲方的业务因为任何原因而终止;

7.2.4           By either Party giving written notice to the other Party if the business license or any other license or approval material for the business operations of Party B is terminated, cancelled or revoked;

任何一方向另一方发出书面通知如果一方的营业执照或者对乙方经营具有重大影响的许可和批准被终止，取消或者撤销;

7.2.5           By either Party giving written notice to the other Party if circumstances arise which materially and adversely affect the performance or the objectives of this Agreement; or

如果因为实际情况发生重大不利变化导致本协议的目标无法实现时，任何一方向另一方发出书面通知; 或

7.2.6           By election of Party A with or without reason.

不管有无原因，根据甲方的选择。

7.3           Any Party electing to terminate this Agreement pursuant to Clause 7.2 shall have no liability to the other Party for indemnity, compensation or damages arising solely from the exercise of such termination right, provided that the expiration or termination of this Agreement shall not affect the continuing obligation of Party B to pay any Consulting Services Fees already accrued or due and payable to Party A.  Upon expiration or termination of this Agreement, all amounts then due and unpaid to Party A by Party B hereunder, as well as all other amounts accrued but not yet payable to Party A by Party B, shall thereby become due and payable by Party B to Party A.

一方有根据第7.2条终止本协议，并不承担仅由于行使该权利而产生的向另一方补偿和赔偿的责任。本协议的到期或者终止不应当影响已经产生的乙方向甲方支付咨询费的责任。在本协议终止或者到期时，本协议规定的任何&# 21040;期未支付以及所有其他已经产生但是未到支付期的钱款，应当就此到期并且由乙方支付。

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8.           PARTY A’S REMEDY UPON PARTY B’S BREACH (甲方因为乙方违约而应得到的救济)

In addition to the remedies provided elsewhere under this Agreement, Party A shall be entitled to remedies permitted under PRC laws, including, without limitation, compensation for any direct and indirect losses arising from the breach and legal fees incurred to recover losses from such breach.

除了本协议其他规定提供的救济外，甲方应当有权获得中国法律规定的其他救济，包括但不限于对产生于此类违约直接或者间接引起的损失的补偿，以及为弥补损失而产生的法律费用。

9.           AGENCY (代理)

The Parties are independent contractors, and nothing in this Agreement shall be construed to constitute either Party to be the agent, partner, legal representative, attorney or employee of the other for any purpose whatsoever.  Neither Party shall have the power or authority to bind the other except as specifically set out in this Agreement.

各方为独立之签约人。并且本协议的任何规定不管任何原因均不得被解释为一方为另一方的代理人、合伙人、法定代表人、代表或者雇员等。除非本协议另有规定，任何一方均无权利或者授权去约束另一方。

10.           GOVERNING LAW AND JURISDICTION (适用法和管辖)

10.1           Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the PRC.

法律适用。本协议的适用法为中华人民共和国法律，并依据其进行解释。

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10.2           Arbitration.  Any dispute arising from, out of or in connection with this Agreement shall be settled through amicable negotiations between the Parties.  Such negotiations shall begin immediately after one Party has delivered to the other Party a written request for such negotiation.  If, within ninety (90) days following the date of such notice, the dispute cannot be settled through negotiations, the dispute shall, upon the request of either Party with notice to the other Party, be submitted to arbitration in China under the auspices of China International Economic and Trade Arbitration Commission (the “CIETAC”).  The Parties shall jointly appoint a qualified interpreter for the arbitration proceeding and shall be responsible for sharing in equal portions the expenses incurred by such appointment.  The arbitration proceeding shall take place in Shanghai, China.  The outcome of the arbitration shall be final and binding and enforceable upon the Parties.

仲裁。双方应尽量通过友好协商解决与本协议解释或履行相关的任何争议。此类协商应当在一方向另一方递交请求协商的书面要求后立即进行。如果在通知发出后90天内争议 0173;无法通过协商解决，相关争议应当根据任一协议方向另一方发出的通知而提交中国国际经贸仲裁委员会（CIETAC）仲裁。各方应当联合任命一名合格的仲裁翻译并且对于由此产生的花费承担相同的比例。仲裁地为上海。仲裁裁决是终局性的，对 双方均有约束力，并可根据其条款予以强制执行。

10.2.1           Number and Selection of Arbitrators. There shall be three (3) arbitrators.  Party B shall select one (1) arbitrator and Party A shall select one (1) arbitrator, and both arbitrators shall be selected within thirty (30) days after giving or receiving the demand for arbitration.  Such arbitrators shall be freely selected, and the Parties shall not be limited in their selection to any prescribed list.  The chairman of the CIETAC shall select the third arbitrator.  If a Party does not appoint an arbitrator who consents to participate within thirty (30) days after giving or receiving the demand for arbitration, the relevant appointment shall be made by the chairman of the CIETAC.

仲裁员的选择和数量。仲裁应当有三名仲裁员组成。乙方和甲方应当各选择一名仲裁员，并且这两名仲裁员应当在发出或者接受仲裁请求的三十天内选择。此类仲裁员应当自由选择，同时各方不应当受到任何仲裁员名单的限制。CIETAC的主席应当选择第三名仲裁员。如果任意协议方没有在发出或接受仲裁请求30天内选出仲裁员，该仲裁员由CIETAC的主席指定。

10.2.2           Arbitration Language and Rules.  Unless otherwise provided by the arbitration rules of CIETAC, the arbitration proceeding shall be conducted in Chinese.  The arbitration tribunal shall apply the arbitration rules of the CIETAC in effect on the date of execution of this Agreement.  However, if such rules are in conflict with the provisions of this clause, or with Section 10 of this Agreement, then the terms of Section 10 of this Agreement shall prevail.

语言与适用法律。除非CIETAC的仲裁规则另有规定，仲裁使用中文。仲裁庭应当使用本协议签字时CIETAC有效的仲裁规则。但是，如果此类规则和本条款或本协议第十节相冲突，应采用本协议第十节相关条款的Š 68;定。

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10.2.3            Cooperation; Disclosure. Each Party shall cooperate with the other Party in making full disclosure of and providing complete access to all information and documents requested by the other Party in connection with such proceedings, subject only to any confidentiality obligations binding on such Parties.

合作；披露。除非受到保密义务的限制，根据另一方的要求，每一方应当和另一方合作以期提供完全地披露与相关法律程序有关的信息和文件。

10.2.4           Jurisdiction. Judgment rendered by the arbitration may be entered into by any court having jurisdiction, or application may be made to such court for a judicial recognition of the judgment or any order of enforcement thereof.

管辖权。仲裁委员会的裁决可以交予任何具有管辖权的法院，或者可以向其申请承认裁决或者强制执行裁决。

10.3           Continuing Obligations. The Parties shall continue their implementation of this Agreement during the period when the relevant dispute is being resolved.

持续之义务。在相关纠纷解决期间，各方应在其他各个方面继续履行本协议。

11.           ASSIGNMENT (转让)

No part of this Agreement shall be assigned or transferred by either Party without the prior written consent of the other Party.  Any such assignment or transfer shall be void, provided that Party A may assign its rights and obligations under this Agreement to an Affiliate without Party B’s consent.

在没有得到另一方事先书面同意的情况下，本协议的任何一部份都不能转让。任何此类的转让都无效。但是甲方可以不需乙方同意将其在本协议下的权利和义务转让给其关联人。

12.           NOTICES (通知)

Notices or other communications required to be given by any Party pursuant to this Agreement shall be written in English and Chinese and delivered personally or sent by registered mail or prepaid mail or by a recognized courier service or by facsimile transmission to the address of the other Party set forth below or to such other address of the Party as specified by such Party from time to time. The date when the notice is deemed to be duly served shall be determined as the follows: (a) a notice delivered personally is deemed duly served upon the delivery; (b) a notice sent by mail is deemed duly served the tenth (10th) day after the date, or the fourth (4th) day after the delivery date of an internationally recognized courier service; and (c) a notice sent by facsimile transmission is deemed duly served upon the time shown on the transmission confirmation of relevant documents.

任何一方根据本协议要求发出的通知或其他函件应以英文和中文制作，在以专人递送、或挂号信或邮资预付邮件、或知名邮件服务机构或传真方式等送达到下列相关各方的地址或者各方不时通知的地址。通知有效送达的日期应当由以下条件 决定：(a) 由专人递送的通知，在递交时视作有效送达；(b) 通过邮递送达的，在邮资预付的航空挂号邮件投递后（见邮戳）的第十天视为有效送达；如果通过国际知名快递公司邮寄的，在投递后的第四天视为有效送达；(c)如果一份邮件是通过传真递送的，在相关文件传输确认单上显示的接受时间应当视作有效送达日期。

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Party A 甲方:	Korea Jinduren (Int’l) Dress Limited 韩国劲都人(国际)服饰有限公司
	Address: 地址：
	Attn: WU, Qingqing 联系人：吴青青
	Fax: 传真
	Tel: 电话：
Party B: 乙方	Jinjiang Yinglin Jinduren Dress Co., Ltd. 晋江市英林劲都人服饰有限公司
	Address: 地址：
	Attn: WU, Qingqing 联系人: 吴青青
	Fax: 传真
	Tel: 电话

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13.           GENERAL (一般条款)

13.1           The failure or delay in exercising a right or remedy under this Agreement shall not be constituted as a waiver of the right or remedy, and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy.

未主张、延迟主张权利或者救济不能被视作放弃本协议下其他权利和救济，并且对于部分权利和救济的主张不能阻止进一步权利和救济的主张。

13.2           Should any clause or any part of any clause contained in this Agreement be declared invalid or unenforceable for any reason whatsoever, all other clauses or parts of clauses contained in this Agreement shall remain in full force and effect.

如果本协议任何条款或者条款的某部分因为任何原因被宣布为无效或者无强制执行力，所有其他的条款或者条款的其他部分仍保持完全的效力。

13.3           This Agreement constitutes the entire agreement between the Parties relating to the subject matter of this Agreement and supersedes all previous agreements.

本协议构成各方针对本协议主题事项的完整协议并且取代所有之前的协议。

13.4           No amendment or variation of this Agreement shall be valid unless it is in writing and executed by the Parties or their authorized representatives.

除非通过书面的方式并由各方或者各方代表签署，任何修正或者更改都无效。

13.5           This Agreement shall be executed in two (2) duplicate originals in English. Each Party shall receive one (1) duplicate original, and all originals shall be equally valid.

本协议用英文制作二份。每方各持有一份具有同等效力。

[SIGNATURE PAGE FOLLOWS]

[以下是签字页]

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SIGNATURE PAGES］

签字页

IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.

兹证明，本协议由各方或者各方的法定代表人签订。

PARTY A:  Korea Jinduren (Int’l) Dress Limited.

甲方：韩国劲都人(国际)服饰有限公司

Authorized Representative: ______________________

授权代表(签字)

Name: WU, Qingqing

姓名: 吴青青

Title: Director

职务:董事

PARTY B:   Jinjiang Yinglin Jinduren Dress Co., Ltd.

乙方：晋江市英林劲都人服饰有限公司

Legal/Authorized Representative: ______________________

法定代表人/或被授权人（签字）

Name: WU, Zhifan

姓名:吴志藩

Title: General Manager

职务: 总经理

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EX-10.2

OPERATING AGREEMENT

经营协议

This Operating Agreement (this “Agreement”) is dated December 28, 2005, and is entered into in Jinjiang, People’s Republic of China (“PRC” or “China”) by and among Korea Jinduren (Int’l) Dress Limited (“Party A”); Jinjiang Yinglin Jinduren Dress Co., Ltd. (“Party B”), and the shareholders holding 100% of the issued and outstanding equity interests of Party B (the “Shareholders of Party B” or “Party C”). Party A, Party B, and Party C are each referred to in this Agreement as a “Party” and collectively as the “Parties.”

本《经营协议》（“本协议”）由韩国劲都人(国际)服饰有限公司（“甲方”）；晋江市英林劲都人服饰有限公司（“乙方”）；以及拥有乙方100%已发行的股权的股东（“乙方股东”或“丙方”）协商一致，于200 5年12月28日在中国晋江市签订。甲方，乙方和丙方总称为“各方”。

RECITALS

陈述

1.           Party A, a company incorporated in Hong Kong, specializes in dress industry and investment;

甲方为在香港设立的公司，专业开展服饰业务和投资；

2.  Party B, a limited company incorporated in PRC, is engaged in the manufacture and sale of the dress (collectively the “Business”);

乙方在中国设立的有限公司，从事服装制造和销售(“业务”);

3.           The Shareholders of Party B collectively own 100% of the equity interests of Party B;

乙方的股东拥有乙方100％的股权；

4.           Party A has established a business relationship with Party B pursuant to that certain Consulting Services Agreement dated December 28, 2005 (hereinafter “Consulting Services Agreement”);

甲方已经通过2005年12月28日签订的《咨询服务协议》（“服务协议”）和乙方建立了业务联系；

5.           Pursuant to that the Consulting Services Agreement, Party B is obligated to make regular payments of consulting services fee to Party A during the term of the Consulting Services Agreement. However, no payment has yet been made, and Party B’s daily operation has a material effect on its ability to make such payments to Party A; and

根据服务协议，在服务协议有效期间，乙方有义务定期向甲方支付咨询服务费。但是，该费用还未被支付，并且乙方的日常经营对于其向甲方进行支付的能力具有重大的影响；与

6.           The Parties are entering into this Agreement to clarify certain matters in connection with Party B’s operations in order to ensure Party B’s ability to meet its obligations under the Consulting Services Agreement, including payment of consulting services fee.

为确认乙方有能力实现服务协议里的义务，包括支付咨询服务费，各方准备签订本协议以便理清和乙方经营有关的议题。

NOW THEREFORE, all Parties of this Agreement hereby agree as follows through negotiations:

鉴于此，通过双方协商，各方同意签订协议如下：

1.           Party A agrees, subject to Party B’s agreement to relevant provisions of this Agreement, to be Party B’s guarantor in connection with the contracts, agreements and transactions executed between Party B and any third party, and to provide full guarantee for the performance of such contracts, agreements or transactions by Party B. Party B agrees, as a counter-guarantee, to pledge all of its relevant assets, including accounts receivable, to Party A. Pursuant to such guarantee arrangement, Party A may, pursuant to Section 5, enter into written guarantee agreements with Party B’s counter-parties to assume guarantor liability, upon which Party B and Party C shall take all necessary actions (including, but not limited to, executing relevant documents and commencing relevant registrations) to carry out the counter-guarantee arrangements to be provided to Party A.

甲方同意，根据乙方所接受的本协议相关约定，作为乙方在和其经营有关的第三人的合同、协议和交易中的担保人，为乙方履行相关合同、协议或者交易提供完全的担保。乙方同意，作为反担保，向甲方提供其包括应收帐款在&# 20869;的所有相关资产的质押。根据前述的担保安排，甲方可以根据第五条和乙方的相对方签订书面的担保合同以承担相关担保人应承担的责任。因此，乙方和丙方应当采取所有必要的行动（包括但不限于签订相关文件并且进行相关登记）以便实现向甲方提供的反担保。

2.           In consideration of Section 1 herein and to ensure the performance of the various arrangements between Party A and Party B, including related payment obligations of Party B to Party A, Party B and the Party C hereby jointly agree that Party B shall not, without the prior written consent of Party A, conduct any transactions which may materially affect the assets, obligations, rights or the operations of Party B (excluding proceeding with Party B’s normal business operation and the lien obtained by relevant counter parties due to such proceedings).  Such transactions shall include, without limitation the following:

考虑到本协议第一条的要求，为求保证甲乙双方之间达成的各类交易的履行,包括乙方向甲方应当支付的相关价款的支付，乙方及丙方在此一致同意除非事先获得来自甲方的书面同意，乙方不应当进行任何能够& #23454;质性影响乙方财产、义务、权利或者经营的那些交易（排除乙方进行日常的业务活动以及相对方由此获得的担保权）。那些交易应包括但不局限于以下情形：

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2.1           To borrow money from any third party or assume any debt;

向任何第三方借款或者承担任何债务;

2.2           To sell or acquire from any third party any asset or right, including, but not limited to, any intellectual property rights;

向任何第三方出售（或者购得）任何财产或者权利，包括但不限于任何知识产权;

2.3           To provide any guarantees to any third parties using its assets or intellectual property rights; or

以其拥有的财产和知识产权向任何第三方提供担保; 或

2.4           To assign to any third party its business agreements.

向任何第三方转让业务合同。

3.           In order to further ensure Party B’s performance of the various arrangements between Party A and Party B, including related payment obligations of Party B to Party A, Party B and Party C hereby jointly agree to accept the corporate policies provided by Party A in connection with Party B’s daily operations, financial management and the employment and dismissal of Party B’s employees.

为了更加保证乙方履行各类在甲方和乙方之间达成的各类交易，包括乙方对甲方相关帐款的支付义务，乙方及其股东丙方在此一致同意接受甲方提供的有关公司的政策的建议。相关政策有关乙方的日常经营，财政安排和乙方员&# 24037;的解雇和雇佣。

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4.           Party B and Party C hereby jointly agree that Party C shall appoint such individuals as recommended by Party A to be Directors of Party B, and shall appoint members of Party A’s senior management as Party B’s General Manager, Chief Financial Officer, and other senior officers.  If any member of such senior management leaves or is dismissed by Party A, he or she will lose the qualification to take any other position with Party B, and Party B shall appoint another member of Party A’s senior management as recommended by Party A to take such position.  The person recommended by Party A in accordance with this section shall have the qualifications necessary to be a Director, General Manager, Chief Financial Officer, and/or other relevant senior officers pursuant to applicable laws.

乙方与丙方在此一致同意丙方应当任命甲方推荐的人员担任乙方的董事，且应当任命甲方的高级经理人员担任乙方的总经理、首席财务官和其他公司的高级主管。如果以上任何公司的高级 027;管被甲方解雇或者自动离职，她/他自动丧失其在乙方的职务而乙方应当任命其他由甲方推荐的甲方高级管理人员以担任相关职务。甲方依照本协议规定推荐的人员应当符合相关适用法律中涉及董事，总经理，首席财务官和或/其他高级主管的资质规定。

5.           Party B, together with Party C, hereby jointly agree and confirm that Party B shall first seek guarantee from Party A if Party B requires any guarantee for its performance of any contract or loan in the course of its business operation.  Under such circumstances, Party A shall have the right, but not the obligation, to provide the appropriate guarantee to Party B at its sole discretion.  If Party A decides not to provide such guarantee, Party A shall issue a written notice to Party B immediately and Party B shall seek a guarantee from other third party.

乙方及丙方在此一致同意并且确认乙方在经营中因为合同履行或者贷款而需要担保时，应当首先向甲方寻求此类担保。在这种情况下，甲方拥有权利（非义务）依据自身判断向乙方提供合适的担保。如果甲方决定不提供此类担&# 20445;，那么甲方应当立即向乙方发出书面通知并且乙方应当寻求其他第三方获得此类担保。

6.           In the event that any of the agreements between Party A and Party B terminates or expires, Party A shall have the right, but not the obligation, to terminate all agreements between Party A and Party B, including, but not limited to, the Consulting Services Agreement.

在甲方和乙方之间的协议终止或者到期的情况下，甲方拥有（非义务）终止甲乙双方之间的所有协议（包括但不限于服务协议）的权利。

7.           Any amendment to this Agreement shall be made in writing.  The amendments duly executed by all Parties shall be deemed as a part of this Agreement and shall have the same legal effect as this Agreement.

任何本协议的修正和补充应当以书面提供。各方签署的相关修正和补充应当视作本协议的一部份并且应当和本协议拥有相同的法律效力。

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8.           If any provision or provisions of this Agreement shall be held to be invalid, illegal, unenforceable or in conflict with the laws and regulations of the jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

如果根据相关法律，任何条款被视作无效、非法或者不可执行或与法域内的法律法规相冲突，那么该类条款应当仅在该类法域的范围内无效并且不会影响本协议中的其他条款。

9.           Party B and Party C shall not assign its rights and obligations under this Agreement to any third party without the prior written consent of Party A.  Party B and Party C hereby agree that Party A may assign its rights and obligations under this Agreement if necessary and such transfer shall only be subject to a written notice sent to Party B and Party C by Party A, and no any further consent from Party B or Party C will be required.

乙方和丙方不应当在未获得甲方事先书面同意的情况下将本协议中相关权利和义务转让给任何第三方。乙方和丙方在此同意甲方在需要时可以将其在本协议中的权利和义务进行转让，并且相关转让仅取决于甲方向乙方和丙方发&# 20986;的书面通知，并且无需自乙方或丙方获得任何进一步的同意。

10.           The Parties hereby acknowledge and agree the confidentiality of all oral and written materials exchanged relating to this Agreement.  No Party shall disclose the confidential information to any other third party without the other Party’s prior written approval, unless: (a) it was in the public domain at the time it was communicated (unless it entered the public domain without the authorization of the disclosing Party); (b) the disclosure was in response to the relevant laws, regulations, or stock exchange rules; or (c) the disclosure was required by any of the Party’s legal counsel or financial consultant for the purpose of the transaction of this Agreement.  However, such legal counsel and/or financial consultant shall also comply with the confidentiality as stated hereof.  The disclosure of confidential information by employees or agents of any Party is deemed to be an act of such Party, and such Party shall bear all liabilities of the breach of confidentiality.  If any provision of this Agreement is found by a proper authority to be unenforceable or invalid, such unenforceability or invalidity shall not render this Agreement unenforceable or invalid as a whole.

各方认识到并且确认任何通过口头或者书面传递的与本协议有关的材料均为机密。各方应当对此类文件采取保密措施并且在没有获得其他方书面同意的情况下不向任何第三方泄露，除非：（a）提供时已被公ߨ 7;知晓。（排除接受方在未获授权的情况下将此类文件向公众公开）；（b）任何依照适用的法律法规及证券交易规则所做的披露；（c）应一方法律顾问或者财务顾问为本协议项下的交易而要求进行的披露，但是该法律顾问和财务顾问也应当遵守本协议的Ì 45;密规定。各方的雇员或者代理人所做的披露应当视作该方所做的披露，并且该方应当承担所有违反本协议保密条款的责任。本协议任何规定被恰当的监管当局判定为不可执行或者无效，并不就此得出本协议作为一个整体不可执行或无效的结论。

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Operating Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD

11.           This Agreement shall be governed and construed in accordance with PRC law.

本协议应当适用中华人民共和国法律并进行解释。

12.           The Parties shall strive to settle any disputes arising from the interpretation or performance of this Agreement through amicable negotiations.  If such dispute cannot be settled, any Party may submit such dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration.  The arbitration shall abide by the current rules of CIETAC, and the arbitration proceedings shall be conducted in Shanghai, China in Chinese.  The judgment of the arbitration shall be final and binding upon the Parties.

各方应当尽力通过友好协商解决任何对于本协议的解释和履行而产生的纠纷。如果无法通过协商解决纠纷，每一方都可以诉诸中国贸促会仲裁委员会并接受其现有规则进行仲裁。仲裁地为上海。仲裁程序以中文进行。任何仲裁&# 35009;决应当为终局的并且对协议各方具有约束力。

13.           This Agreement shall be executed by a duly authorized representative of each Party as of the date first written above and becomes effective on January 1, 2006.

本协议应由各方授权的代表在首页确定的日期签署，在2006年1月1日生效。

14.           The Parties confirm that this Agreement shall constitute the entire agreement of the Parties with respect to the subject matters therein and supersedes and replaces all prior or contemporaneous verbal and written agreements and understandings.

各方确认本协议应当就其中规定的事项构成一份完整的协议，并且应当替代所有以前达成的所有口头和书面的协议和谅解。

15.           The term of this Agreement is maximum period of time permitted by law unless early terminated in accordance with the relevant provisions herein or by any other agreements reached by all Parties.  The term may only be extended upon Party A’s written confirmation prior to the expiration of this Agreement and the extended term shall be determined by the Parties hereto through mutual negotiations.

本协议期限是法律许可的最长期限，除非根据相应规定提前终止或者各方另行达成协议。本协议只能由甲方在到期时通过书面协议进行继展，并且继展期只能通过双方协商确定。

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JINJIANG YINGLIN JINDUREN DRESS CO., LTD

16.           This Agreement shall be terminated on the expiration date unless it is renewed in accordance with the relevant provisions herein.  During the effective term of this Agreement, neither Party B nor Party C may terminate this Agreement.  Party A shall have the right to terminate this Agreement at any time by giving a thirty (30) day prior written notice to Party B and Party C.

除非根据本协议相应规定终止，本协议应当在到期时终止。在有效期间，乙方和丙方都不得终止本协议。甲方有权通过提前三十天发出书面通知的方式，在任何时间终止本协议。

17.           This Agreement has been executed in four (4) duplicate originals in English.  Each Party has received one (1) original, and all originals shall be equally valid.

本协议一式四份，以英语签署，每一方保留一份并且每一份拥有相同的效力。

[SIGNATURE PAGE FOLLOWS]

 [以下是签字页]

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Operating Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD

[SIGNATURE PAGE]

[签字页]

IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.

兹证明，本协议由各方或者各方的法定代表人签订。

PARTY A:   Korea Jinduren (Int’l) Dress Limited

甲方：韩国劲都人(国际)服饰有限公司

Authorized Representative: ____________________

授权代表(签字)

Name: WU, Qingqing

姓名: 吴青青

Title: Director

职务:董事

PARTY B:   Jinjiang Yinglin Jinduren Dress Co., Ltd.

乙方：晋江市英林劲都人服饰有限公司

Legal/Authorized Representative: ______________________

法定代表人/或被授权人（签字）

Name: WU, Zhifan

姓名:吴志藩

Title: General Manager

职务: 总经理

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Operating Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD

SIGNATURE PAGE FOR SHAREHOLDERS OF PARTY B

乙方股东签字页

SHAREHOLDERS OF JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

晋江市英林劲都人服饰有限公司的股东:

_____________________

WU, Qingqing

吴青青

ID Card No.: ____________________

身份证号

Owns 65.91% of Jinjiang Yinglin Jinduren Dress Co., Ltd.

持有晋江市英林劲都人服饰有限公司股权65.91%

____________________

WU, Zhifan

吴志藩

ID Card No.: ____________________

身份证号

Owns 34.09% of Jinjiang Yinglin Jinduren Dress Co., Ltd.

持有晋江市英林劲都人服饰有限公司股权34.09%

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Operating Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD

EX-10.3

EQUITY PLEDGE AGREEMENT

股权质押协议

This Equity Pledge Agreement (hereinafter this “Agreement”) is dated December 28, 2005, and is entered into in Jinjiang City, People’s Republic of China (“PRC” or “China”) by and between Korea Jinduren (Int’l) Dress Limited (“Pledgee”), and each of the shareholders listed on the signature pages hereto (“Pledgor”) of Jinjiang Yinglin Jinduren Dress Co., Ltd.（“Jinduren Company”). The Jinduren Company is made a party to this Agreement for the purpose of acknowledging the Agreement.

此《股权质押协议》（以下作“协议”）于2005年12月28日在中华人民共和国（“PRC”或“中国”）晋江市由韩国劲都人(国际)服饰有限公司（“质权人”）与签字页所示的晋江市英林劲都人服饰有限公司（“劲都人公司”）的股东（“出质人”）共同 订立。劲都人公司以下签字是为认可本协议。

RECITALS

说       明

1.           The Pledgee incorporated in Hong Kong, specializes in dress industry and investment.

质权人设立于香港，专门开展服饰业务和投资。

2.           Jinduren Company, a limited company incorporated in PRC, is engaged in the manufacture and sale of the dress (collectively the “Business”).

劲都人公司为在中国设立的有限公司，其从事服装制造和销售(合称“业务”).

3.           The Pledgors are shareholders of Jinduren Company, each legally holding such amount of equity interest of Jinduren Company as set forth on the signature page of this Agreement and collectively holding 100% of the issued and outstanding equity interests of Jinduren Company (collectively the “Equity Interest”).

出质人为按照本协议签字页载明的数额合法持有劲都人公司的股权的股东，前述股东持有股权合计构成劲都人公司的已发行股权的100%（以下统称“股权”）。

4.           The Pledgee and Jinduren Company have executed a Consulting Services Agreement dated December 28, 2005 (the “Consulting Services Agreement”) concurrently herewith, pursuant to which Jinduren Company shall pay consulting and service fees (the “Consulting Services Fee”) to the Pledgee for consulting and related services in connection with the Business.

质权人和劲都人公司在2005年12月28日签订了签署了《咨询服务协议》（以下简称《咨询服务协议》）。基于该协议，劲都人公司需向质权人就其提供的咨询和其他与公司业务相关的服务支付咨询和服务费（以下简称“咨询服ࡃ 3;费”）。

5.           In order to ensure that Jinduren Company will perform its obligations under the Consulting Services Agreement, and in order to provide an additional mechanism for the Pledgee to enforce its rights to collect the Consulting Services Fee from Jinduren Company, the Pledgors agree to pledge all their equity interests in Jinduren Company as security for the performance of the obligations of Jinduren Company under the Consulting Services Agreement, including payment of the Consulting Services Fee.

为确保劲都人公司履行其在《咨询服务协议》项下的义务，并为质权人能够照常从劲都人公司收取咨询服务费提供进一步的措施，出质人同意出质在劲都人公司中的所有股权作为对劲都公司履行《咨询服务协议》项下义务（含咨询服务费用 支付义务）的担保。

NOW THEREFORE, the Pledgee and the Pledgors through mutual negotiations hereby enter into this Agreement based upon the following terms:

因此，质权人和出质人经相互协商签订以下协议，以资遵守：

1.           Definitions and Interpretation.  Unless otherwise provided in this Agreement, the following terms shall have the following meanings:

定义和解释。如果该协议不另作说明，下述条款将有下述含义：

1.1           “Pledge” refers to the full content of Section 2 hereunder.

 “质押”指的是下文第2节的全部内容。

1.2           “Equity Interest” refers to all the equity interests in Jinduren Company legally held by the Pledgors.

“股权”指的是由出质人合法拥有的在劲都人公司中的全部股权。

1.3           “Term of Pledge” refers to the period provided for under Section 3.2 hereunder.

“质押期限”指的是下文3.2节所提到的期限。

1.4           “Event of Default” refers to any event in accordance with Section 7.1 hereunder.

“违约事项”指的是下文7.1节所列任何事项。

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Equity Pledge Agreement

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1.5           “Notice of Default” refers to the notice of default issued by the Pledgee in accordance with this Agreement.

“违约通知” 指的是由质权人根据本协议发出的违约通知。

2.           The Pledge.  The Pledgors hereby pledge the Equity Interest to the Pledgee as a security for the obligations of the Jinduren Company under the Consulting Services Agreement (the “Pledge”).  Pursuant thereto, the Pledgee shall have priority in receiving payments from the evaluation or the proceeds from the auction or sale of the Equity Interest. The Equity Interest shall hereinafter be referred to as the “Pledged Collateral”.

质押。出质人谨此向质权人质押他们股权以作为在该《咨询服务协议》中所涉及的劲都人公司义务的担保（“质押”）。依照该协议，质权人将从股权权益的拍卖或销售的价款获得优先受偿权。股权以下称为“质押物”。

3.           Term of Pledge.

质押期限。

3.1           The Pledge shall take effect as of the date when the Pledge is recorded in the Jinduren Company’s Register of Shareholders, and shall expire two (2) years from the Jinduren Company’s satisfaction of all its obligations under the Consulting Services Agreement (the “Term”).

质押将从质押事项载入公司股东登记薄之日开始生效。有效期限（“期限”）将在劲都人公司充分履行《咨询服务协议》项下义务的两（2）年后到期。

3.2           During the Term, the Pledgee shall be entitled to vote, control, sell, or dispose of the Pledged Collateral in accordance with this Agreement in the event that the Jinduren Company does not perform its obligations under the Consulting Services Agreement, including without limitations thee failures to pay the Consulting Service Fee.

在期限之内，如果劲都人公司没有履行《咨询服务协议》下的义务，包括但不限于三次不支付咨询服务费，质权人有权根据本协议投票、控制、出售或处分质押物。

3.3           During the Term, the Pledgee shall be entitled to collect any and all dividends declared or paid in connection with the Pledged Collateral.

在期限之内，质权人有权收取所有已宣告或已支付的与质押物有关的红利。

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4.           Pledge Procedure and Registration.

质押程序和登记。

4.1           The Pledge shall be recorded in the Jinduren Company’s Register of Shareholders.  The Pledgors shall, within ten (10) days after the date of this Agreement, process the registration procedures with the Administration for Industry and Commerce concerning the Pledge.

质押应在劲都人公司的股东登记薄上载明。出质人应在本协议签订后10日内，向工商行政管理局办理质押登记手续。

5.           Representation and Warranties of Pledgors.

出质人的陈述和保证。

5.1           The Pledgors are the legal owners of the Pledged Collateral.

出质人是质押物的合法所有人。

5.2           Other than to the Pledgee, the Pledgors have not pledged the Pledged Collateral to any other party, and the Pledged Collateral is not encumbered to any other party.

除质权人以外，出质人没有将质押物质押给其它任何人或在质押物上为其他人设定权利负担。

6.           Covenants of Pledgors.

出质人的承诺。

6.1           During the Term, the Pledgors represent and warrant to the Pledgee for the Pledgee’s benefit that the Pledgors shall:

在期限内，出质人向质权人陈述并保证：基于质权人的利益，出质人必须做到：

6.1.1     Not transfer or assign the Pledged Collateral, nor create or permit to create any pledge or encumbrance to the Pledged Collateral which may adversely affect the rights and/or benefits of the Pledgee without the Pledgee’s prior written consent.

未经质权人事先书面同意，不得转让质押物，不得设立或允许设立任何可能对质权人权利或利益产生负面影响的质押或权利负担。

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6.1.2     Comply with the laws and regulations with respect to the Pledge; present to Pledgee any notices, orders or advisements with respect to the Pledge that may be issued or made by a competent PRC authority within five (5) days upon receiving such notices, orders or advisements; comply with such notices, orders or advisements; or object to the foregoing matters upon the reasonable request of the Pledgee or with consent from the Pledgee.

遵守与质押相关的法律、法规；在接到中国主管单位发布或制作的关于抵押的公告、命令或者广告5天内转交给质权人；遵守这些公告、命令或者广告；或者根据质权人合理要求或经质权人允许而对上述公告、命令或广告 5552;出异议；

6.1.3     Timely notify the Pledgee of any events which may affect the Pledged Collateral or the Pledgors’ rights thereto, or which may change any of the Pledgors’ warranties or affect the Pledgor’s performance of their obligations under this Agreement.

及时通知质权人那些可能影响质押物或出质人对质押物权利的事件，或可能改变出质人在本协议下的保证或影响出质人履行本协议项下义务的事件。

6.2           The Pledgors agree that the Pledgee’s right to the Pledge pursuant to this Agreement shall not be suspended or inhibited by any legal proceedings initiated by the Pledgors, jointly or separately, or by any successor of or any person authorized by the Pledgors.

出质人同意，质权人对依本协议对质押的权利不应被由出质人、出质人继承者、出质人授权的人（单独或共同）提起的法律程序所中止或禁止。

6.3           The Pledgors represent and warrant to the Pledgee that in order to protect and perfect the security for the payment of the Consulting Services Fee, the Pledgors shall execute in good faith and cause other parties who have interests in the Pledged Collateral to execute all the title certificates, contracts, and perform actions and cause other parties who have interests to take action, as required by the Pledgee.

出质人向质权人陈述并保证：为了保障和实现对服务费用支付的担保并使担保处于良好状态，出质人应依质权人要求，善意地并且促使其他在质押物中有利益的他方，签署所有的产权证明、合同及采取行动。

6.4          The Pledgors represent and warrant to the Pledgee or its appointed representative (whether a natural person or a legal entity) that they will execute all applicable and required amendments in connection with the registration of the Pledge, and within a reasonable amount of time upon request, provide the relevant notice, order and decision regarding such registration to the Pledgee.

出质人向质权人或其指定代表（自然人或法人机构）陈述并保证：其会签署与质押登记有关的所有适用且必要的修正文件，并且根据要求在合理的时间内向质权人提供与登记相关的通知、命令或决定。

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6.5           The Pledgors represent and warrant to the Pledgee that they will abide by and perform all relevant guarantees, covenants, warranties, representations and conditions necessary to insure the rights of the Pledgee under this Agreement.  The Pledgors shall compensate all the losses suffered by the Pledgee as a result of the Pledgors’ failure to perform any such guarantees, covenants, warranties, representations or conditions.

出质人向质权人陈述并保证：其会遵守和履行所有相关的担保、承诺、保证、陈述和条件来保证本协议项下质权人的权利。出质人应对由于其没有履行此等担保承诺、契约、担保、陈述或条件而给质权人造成的损失作出赔偿。

7.           Events of Default.

违约事项。

7.1          The occurrence of any one of the following events shall be regarded as an “Event of Default”:

如下事项将被视为违约事项:

7.1.1     This Agreement is deemed illegal by a governing authority of the PRC, or the Pledgor is incapable of continuing to perform the obligations herein due to any reason except force majeure;

该协议被中华人民共和国监管部门视作非法，或出质人由于除不可抗力以外的任何原因不能继续履行本协议规定的义务；

7.1.2     The Jinduren Company fails to timely pay the Consulting Services Fee in full as required under the Consulting Service Agreement;

劲都人公司不能如期全额支付《咨询服务协议》中的服务费用；

7.1.3     A Pledgor makes any materially false or misleading representations or warranties under Section 5 herein, or breaches any warranties under Section 5 herein;

出质人在第5节作出任何重大错误说明或误导性的陈述保证，或者出质人违反第5节中的保证；

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7.1.4     A Pledgor breaches the covenants under Section 6 herein;

出质人违反第6款规定的契约；

7.1.5     A Pledgor breaches any terms and conditions of this Agreement;

出质人违反协议规定的任何条款或条件；

7.1.6     A Pledgor transfers or assigns, cause to be transferred or assigned, or otherwise abandons the Pledged Collateral without the prior written consent of the Pledgee;

事先未经质权人的书面允许，出质人转让质押物，或导致质押物被转让，或放弃质押物；

7.1.7     Jinduren Company is incapable of repaying debt;

劲都人公司无力偿付债务；

7.1.8     The assets of a Pledgor are adversely affected so as to cause the Pledgee to believe that such Pledgor’s ability to perform the obligations herein is adversely affected;

出质人财产遭受不利影响导致质权人确信出质人履行本协议义务的能力也受到不利影响；

7.1.9     The successors or agents of Jinduren Company refuse, or are only partly able, to perform the payment obligations under the Consulting Services Agreement;

劲都人公司的承继人或代理人拒绝履行，或仅能部分履行《咨询服务协议》中的支付义务；

7.2           A Pledgor shall immediately give a written notice to the Pledgee if such Pledgor is aware of or discovers that any event under Section 7.1 herein, or any event that may result in any one of the foregoing events, has occurred or is likely to occur.

出质人一旦意识到或发现7.1款中的事件或其他可能导致上述任一事件发生的因素，必须马上给予质权人书面通知。

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7.3           Unless an Event of Default has been resolved to the Pledgee’s satisfaction within 15 days of its occurrence (the “Cure Period”), the Pledgee may, at any time thereafter, give a written default notice (the “Default Notice”) to the Pledgor and require the Pledgors to immediately make full payment of the then outstanding Consulting Service Fee and any other outstanding payables in accordance with Section 8 herein.

除非违约事项在发生后15天内（“补救期”）得到解决，并且质权人对此满意，质权人可以在此后给予出质人一个书面的违约通知（“违约通知”）并且要求出质人根据第8节的规定立即全额支付尚欠的咨෽ 0;服务费用以及其他应付费用。

8.           Exercise of Remedies.

补救措施。

8.1           Authorized Action by Secured Party. The Pledgors hereby irrevocably appoint Pledgee as the attorney-in-fact of the Pledgors for the purpose of carrying out the security provisions of this Agreement and to take any action and execute any instrument that the Pledgee may deem necessary or advisable to accomplish the purpose of this Agreement.  Such power of attorney shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral) by any person, upon the occurrence an Event of Default.  Pledgee shall not have any duty to exercise any such right or to preserve the same and shall not be liable for any failure to do so or for any delay in doing so.

If an Event of Default occurs, or is already proceeding, Pledgee shall have the right to exercise the following rights:

被担保方的受权措施。出质人不可撤销地指定质权人为自己的事实代理人，以实现本协议担保条款之目的、并采取任何质权人认为对达到本协议目的必要的或有益的行动和签署此等文书。在违约事项发生时，该代理权将自动生效，无须任何 0154;的任何行为（包括抵押物的转移）。质权人没有义务行使或保留上述权利，也不对未行使或延迟行使上述权利负责。

如果一个违约事件发生，或者正在发展，质权人有权利行使如下权利：

(a)           Collect by legal proceedings or otherwise, and endorse and/or receive all payments, proceeds and other sums and property now or hereafter payable on or on account of the Pledged Collateral;

代表或为了质押物，以法定程序及其它方式收取、背书、接收所有付款、价款以及现今及今后所有应收的款项和财产；

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(b)           Enter into any extension, reorganization, deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange for the Pledged Collateral;

参与关于、处置、放弃、接受、或拥有其它财产交换质押物的任何延期、重组、处置、兼并、合并等安排；

(c)           Transfer the Pledged Collateral under the Pledgee’s name or under an appointed nominee;

将质押物转到质权人或其指定人名下；

(d)           Make any compromise or settlement, and take any action the Pledgee deems advisable, with respect to the Pledged Collateral;

就质押物作出质权人认为有益的妥协或和解。

(e)           Notify any obligor with respect to the Pledged Collateral to make payment directly to the Pledgee;

通知任何与质押物有关的债务人直接付款给质权人；

(f)           All rights of the Pledgors that they would otherwise be entitled to enjoy or exercise with respect to the Pledged Collateral, including without limitations the rights to vote and to receive distributions, shall cease without any further action by or notice, and all such rights shall thereupon become vested in the Pledgee; and

无需任何其他措施或通知，出质人应丧失原先所有对质押物享有或行使的其他权利，包括但不限于投票权及获得分配的权利。这些权利应归属于质权人；并且

(g)           The Pledgors shall execute and deliver to the Pledgee such other instruments as the Pledgee may request in order to permit the Pledgee to exercise the rights set forth herein.

出质人应按质权人要求签署和交付其他文据，以允许质权人行使本协议项下的权利。

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8.2           Other Remedies.  Upon the expiration of the Cure Period, the Pledgee, in addition to the remedies set forth in Section 8.1 or such other rights in law, equity or otherwise, may, without notice or demand on the Pledgors, elect any of the following:

其他补救措施。补救期限结束之后，质权人除了享有法律、股权和8.1条规定等的权利以外，还有权无须通知或经向出质人提出要求，而采取以下措施：

(a)           Require the Pledgors to immediately pay all outstanding unpaid amounts due under the Consulting Services Agreement;

要求出质人立即支付《咨询服务协议》中的到期未支付费用的总额；

(b)           Foreclose or otherwise enforce the Pledgee’s security interest to the Pledged Collateral in any manner permitted by law or provided under this Agreement;

用法律许可的及本协议中规定的任何方式来终止回赎权或以其他方法执行出质人在质押物上的股权；

(c)           Terminate this Agreement pursuant to Section 11;

依照11节终止该协议；

(d)           Exercise any and all rights as the beneficial and legal owner of the Pledged Collateral, including, without limitation, the transfer and exercise of voting and any other rights to the Pledged Collateral; and

行使作为质押物合法所有人和受益人的所有权利，包括但不限于转让、行使涉及质押物的投票权和任何其他权利；并且

(e)           Exercise any and all rights and remedies of a secured party under applicable laws.

行使可适用法律下被担保方的任何权利及补救措施。

8.3           The Pledgee has priority in the receipt of payments from the proceeds of auction or sale of the Pledged Collateral, in part or in whole, in accordance with legal procedures, until all payment obligations under the Consulting Services Agreement are satisfied.

质权人依法定程序对整体地或部分地拍卖或销售质押物的价款具有优先受偿权，直至所有《咨询服务协议》下的付款义务偿清为止。

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8.4           The Pledgors shall not hinder the Pledgee from exercising its rights in accordance with this Agreement and shall give necessary assistance so that the Pledgee may exercise its rights in full.

出质人不可阻碍质权人根据本协议行使权利，并应给予必要的帮助以确保质权人充分行使权利。

9.           Assignment.

转让。

9.1            The Pledgors shall not assign or otherwise transfer the rights and obligations herein without the Pledgee’s prior written consent.

未经质权人的事先书面允许，出质人不得转让或以其他方式转移其权利和义务。

9.2           This Agreement shall be binding upon each of the Pledgors and their respective successors, and shall be binding on the Pledgee and each of its successor and assignee.

本协议对每个出质人及其继承者有约束力，对质权人及其继承者及受让人有约束力。

9.3           Upon the transfer or assignment by the Pledgee of any or all of its rights and obligations under the Consulting Service Agreement, the Pledgee’s transferee or assignee shall enjoy and undertake the same rights and obligations as the Pledgee under this Agreement.  The Pledgors shall be notified of any such transfer or assignment by written notice and at the request of the Pledgee, the Pledgors shall execute such relevant agreements and/or documents with respect to such transfer or assignment.

如果质权人转让《咨询服务协议》中的权利和义务，其受让人应当享有和承担与质权人相同的权利和义务。质权人应将该转让书面通知出质人。出质人应按质权人要求签署涉及转让的相关协议及文件。

9.4           In the event of the Pledgee’s change in control resulting in the transfer or assignment of this Agreement, the successor to the Pledgee and the Pledgors shall execute a new equity pledge agreement.

如果质权人由于控制权改变而导致本协议转让，质权人的承继人应与出质人签署新的股权质押协议。

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10.           Formalities, Fees and Other Charges.

手续，费用及其他支出。

10.1           The Pledgors shall be responsible for all the fees and expenses in relation to this Agreement, including, but not limited, to legal fees, cost of production, stamp tax and any other taxes and charges.  If the Pledgee pays the relevant taxes in accordance with applicable law, the Pledgors shall fully reimburse the Pledgee of such taxes.

出质人将负责与该协议相关的所有费用，包括但不限于：法律费用、制作成本、印花税及其它税金和花费。如果质权人根据法律支付相关的税金，出质人将全额赔偿质权人该笔税金。

10.2           The Pledgors shall be responsible for all expenses (including, but not limited to, any taxes, application fees, management fees, litigation costs, attorney’s fees, and various insurance premiums in connection with the disposition of the Pledge) incurred by the Pledgee in its recourse to collect from the Pledgors arising from the Pledgors’ failure to pay any relevant taxes and fees.

由于出质人因某种原因没有支付应付的税金、费用而导致质权人寻求追索权而引起的费用由出质人承担（包括但不限于与处理质押有关的税金、申请费、管理费用、诉讼费、律师费及各种保险费）。

11.           Force Majeure.

不可抗力。

11.1           “Force Majeure” shall include, but not be limited, to acts of governments, acts of nature, fire, explosion, typhoon, flood, earthquake, tide, lightning, war, and any unforeseen events beyond a Party’s reasonable control or which cannot be prevented with reasonable care.  However, any shortage of credit, capital or finance shall not be regarded as an event beyond a Party’s reasonable control.  A Party affected by Force Majeure shall promptly notify the other Parties of such event in order to be exempted from such Party’s obligations under this Agreement.

不可抗力，包括但不限于：政府行为、自然力、火灾、爆炸、台风、洪水、地震、涨潮、闪电、战争、各方无法预料并超出合理控制范围或不能因维护得宜而预防的其他事项。但是，任何贷款、资金或融资的短缺不应被视作超出某方合理控 1046;范围。受不可抗力影响的一方应立即通知其他方，以获得本协议下相关义务的豁免。

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11.2           In the event that the affected Party is delayed or prevented from performing its obligations under this Agreement due to Force Majeure, the affected Party shall not be responsible for any damage caused by the delay or prevention of such performance, as long as such damage is within the scope of such delay or prevention.  The affected Party shall take appropriate means to minimize or remove the effects of Force Majeure and attempt to resume performance of the obligations delayed or prevented by Force Majeure.  When such Force Majeure ceases to exist, both Parties covenant and agree to resume the performance of this Agreement with their best efforts.

如果受影响一方由于不可抗力推迟或被阻碍履行其在协议中的义务，在推迟或阻碍的范围内，受影响方无须对该损失负责。受影响方需采取合适措施来最小化或去除不可抗力的影响，并恢复履行被不可抗力推迟或阻碍的义务。在不可抗力消 8500;后，双方应尽最大努力恢复履行本协议。

12.           Confidentiality. The Parties hereby acknowledge and agree to ensure the confidentiality of all oral and written materials exchanged relating to this Agreement.  No Party shall disclose any confidential information to any other third party without the other Parties’ prior written approval, unless: (a) such information was in the public domain at the time it was communicated (unless it entered the public domain without the authorization of the disclosing Party); (b) the disclosure was in response to the relevant laws, regulations, or stock exchange rules; or (c) the disclosure was required by any of the Party’s legal counsel or financial consultant for the purpose of the transaction underlying this Agreement.  However, such legal counsel and/or financial consultant shall also comply with the confidentiality as stated hereof.  The disclosure of confidential information by employees or agents of the disclosing Party is deemed to be an act of the disclosing Party, and such disclosing Party shall bear all liabilities for any breach of confidentiality.

保密条款。各方承认并同意保证与此文件相关的所有口头或书面往来资料的保密性。未经其他方的预先书面允许，任何一方不得向第三方提供保密信息 。但下述除外：a. 提供时已为公众获悉（除非该信息未经披露方授权即向公众披露）；b.或依法律、法规股票、证券交易市场规则披露的信息；c.基于本协议载明交易之目的，依各方的法律顾问或财务顾问要求向其披露的信息。但是，该法律顾问或财& #21153;顾问也应当遵守此节提出的保密要求。任何一方的员工或者代理人披露保密信息行为应被视为该方的行为，并且该方应承担违反保密义务的责任。

13.           Dispute Resolution.

争议的解决。

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13.1           This Agreement shall be governed by and construed in accordance with the laws of the PRC.

本协议的应适用中华人民共和国的法律和依此解释。

13.2           The Parties shall strive to resolve any disputes arising from the interpretation or performance of this Agreement through amicable negotiations.  If a dispute cannot be settled, any Party may submit such dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration.  The arbitration shall abide by the then current rules of CIETAC, and the arbitration proceedings shall be conducted in Beijing, China in Chinese.  The decision of CIETA shall be final and binding upon the parties.

各方应当友好磋商解决对本协议的解释和履行所引发的争议。如果通过协商，争议仍不能解决，各方可以将此争议提交中国国际经济贸易仲裁委员会根据那时有效的该会规则进行仲裁。仲裁应在北京进行，所有& #31243;序以中文进行。仲裁结果是终局的，并对于各方有约束力。

14.           Notices.  Any notice given by the parties hereto for the purpose of performing the rights and obligations hereunder shall be in writing.  If such notice is delivered by messenger, the time of receipt is the time when such notice is received by the addressee; if such notice is transmitted by facsimile, the time of receipt is the time when such notice is transmitted.  If the notice does not reach the addressee by the end of the business day, the following business day shall be the date of receipt.  The place of delivery is the Party’s address as set forth in the signature pages hereto or the address advised in writing including via facsimile.

通知。任何一方发出的、为本协议项下行使权利和履行义务之目的的通知应当为书面形式。当上述通知以专人送交时，通知送达时间为通知实际到达被通知人的时间；当通知以传真形式传送，通知送达时间为接受传送时间。假如通知没在工 0316;日送达被通知人，该日的下一个工作日应视为送达日，递送地址为各方签字页上的地址，或是以传真等方式书面告知的地址。

15.           Entire Contract.  The Parties agree that this Agreement constitutes the entire agreement of the Parties upon its effectiveness and supersedes all prior oral and/or written agreements and understandings relating to this Agreement.

协议的完整性。各方承认本协议一经生效即构成各方之间的完整协议，并取代任何先前和同时期所有的口头和/或书面协议及谅解。

16.           Severability.  If any provision or provisions of this Agreement shall be held by a proper authority to be invalid, illegal, unenforceable or in conflict with the laws and regulations of the PRC, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

协议的可分性。如果本协议中某些规定经恰当的权威机关认定无效、非法、不可执行或与中国法律法规冲突，该无效条款不应影响或削弱其他条款的有效性、合法性和可执行性。

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17.           Appendices.  The appendices to this Agreement are incorporated into and are a part of this Agreement.

附录。该协议的附录构成协议的完整和必要部分。

18.           Amendment or Supplement.

改正和补充。

18.1           The Parties may amend this Agreement in writing, provided that such amendment shall be duly executed and signed by the Pledgee, Jinduren Company, and such Pledgors collectively holding a majority of the Equity Interests, and such amendment shall thereupon become a part of this Agreement and shall have the same legal effect as this Agreement.

各方可用书面方式修改和补充本协议，修正应经质权人、劲都人公司以及合计持有多数股权的出质人适当签署。此等修正将成为本协议的一部分，并与本协议具有相同的法律效力。

18.2           This Agreement and any amendments, modification, supplements, additions or changes hereto shall be in writing and come into effect upon being executed and stamped by the parties hereto.

协议和任何改正、修改、补充、附加及改变均应以书面方式，自各方签署并盖章之日起生效。

19.           Language and Copies of the Agreement.  This Agreement shall be executed in English in four (4) original copies.  Each Party shall receive one (1) original copy, all of which shall be equally valid and enforceable.

语言和协议的份数。本协议由英语制作四份。各方持有一份，每份具有相同的法律效力。

[SIGNATURE PAGE FOLLOWS]

[以下是签字页]

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[SIGNATURE PAGE]

签字页

IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives as of the date first set forth above.

兹证明，本协议由各方或者各方的法定代表人在首页所述日期签订。

PLEDGEE:  Korea Jinduren (Int’l) Dress Limited

质权人：韩国劲都人（国际）服饰有限公司

Authorized Representative: ______________________

授权代表(签字)

Name: WU, Qingqing

姓名: 吴青青

Title: Director

职务: 董事

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PLEDGOR SIGNATURE PAGE

出质人签字

PLEDGORS:

出质人

____________________

WU, Qingqing

吴青青

ID Card No.: ____________________

身份证号

Owns 65.91% of Jinjiang Yinglin Jinduren Dress Co., Ltd.

持有晋江市英林劲都人服饰有限公司股权65.91%

____________________

WU, Zhifan

吴志藩

ID Card No.: ____________________

身份证号

Owns 34.09% of Jinjiang Yinglin Jinduren Dress Co., Ltd.

持有晋江市英林劲都人服饰有限公司股权34.09%

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ACKNOWLEDGED BY:

认可:                      

JINDUREN COMPANY:  Jinjiang Yinglin Jinduren Dress Co., Ltd

劲都人公司:  晋江市英林劲都人服饰有限公司

Legal/Authorized Representative: ______________________

法定代表人/或被授权人（签字）

Name: WU, Zhifan

姓名:吴志藩

Title: General Manager

职务: 总经理

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EX-10.4

OPTION AGREEMENT

选择权协议

This Option Agreement (this “Agreement”) is dated December 28, 2005, and is entered into in Jinjiang City, People’s Republic of China (“PRC” or “China”) by and among Korea Jinduren (Int’l) Dress Limited (“Party A”); Jinjiang Yinglin Jinduren Dress Co., Ltd.(“Party B”); and the undersigned shareholders of Party B (each a “Shareholder” and collectively the “Shareholders” or “Party C”). Party A, Party B and the Shareholders are each referred to in this Agreement as a “Party” and collectively as the “Parties”.

本《选择权协议》（“本协议”）由韩国劲都人(国际)服饰有限公司（“甲方”），晋江市英林劲都人服饰有限公司（“乙方”），以及以下签署该协议的乙方股东（分别称为或统称为“股东”或“丙方”）协商一致，于2008年12月28日在中国晋江市签订。甲方，乙方和股东总称为“各方”。

RECITALS

说明

1.           Party A, a company incorporated in Hong Kong, specializes in dress industry and investment. Party B, a limited company incorporated in PRC, is engaged in the manufacture and sale of the dress (collectively the “Business”). Party A and Party B have entered into a Consulting Agreement dated December 28, 2005 (the “Consulting Services Agreement”) in connection with the Business.

甲方为在香港设立的公司，专业开展服饰业务和投资。乙方为在中国设立的有限公司，从事服装制造和销售(统称“业务”)。甲方与乙方在2005年12月28& #26085;签订了有关于业务的《咨询服务协议》（“服务协议”）。

2.           The Shareholders are shareholders of Party B, each legally holding such amount of equity interest of the Party B as set forth on the signature page of this Agreement and collectively holding 100% of the issued and outstanding equity interests of Party B (collectively the “Equity Interest”).

股东按照本协议签字页载明的数额合法持乙方的股权，前述股权合计构成乙方的已发行股权的100%（以下统称“股权”）。

3.           The Parties are entering into this Agreement in connection with the Consulting Services Agreement.

与《咨询服务协议》有关，各方签订本协议。

NOW, THEREFORE, the Parties to this Agreement hereby agree as follows:

据此，协议各方必须遵守如下条款：

1.           PURCHASE AND SALE OF EQUITY INTEREST (购买和出售股权)

1.1           Grant of Rights. The Shareholders (hereinafter the “Transferors”) hereby collectively and irrevocably grant to Party A or a designee of Party A (the “Designee”) an option to purchase at any time, to the extent permitted under PRC Law, all or a portion of the Equity Interest in accordance with such procedures as determined by Party A, at the price specified in Section 1.3 of this Agreement (the “Option”).  No Option shall be granted to any party other than to Party A and/or a Designee.  Party B hereby agrees to Party C’s grant of the Option to Party A and/or the Designee.  As used herein, Designee may be an individual person, a corporation, a joint venture, a partnership, an enterprise, a trust or an unincorporated organization.

授权。各股东（以下称“转让方”）在此共同并不可撤销地授予甲方或者甲方指定人员（“被指定人”）购买选择权。该选择权行使人可随时在中国法律允许的范围内根据甲方制订的步骤和本协议1.3条中规定的价格购买部࠳ 8;或全部的股权（“选择权”）。除甲方和甲方指定的人员之外，该选择权不准授予第三方。乙方同意将丙方的选择权授予甲方或甲方指定的人员。在该条款中的被指定人可以是自然人、公司、合资企业、合伙企业、企业、信托基金或者其他非公司组织。

1.2           Exercise of Rights.  According with the requirements of applicable PRC laws and regulations, Party A and/or the Designee may exercise the Option at any time by issuing a written notice (the “Notice”) to one or more of the Transferors and specifying the amount of the Equity Interest to be purchased from such Transferor(s) and the manner of purchase.

权利的行使。根据可适用的中华人民共和国法律法规规定，甲方或被指定人可以随时通过向一个或一个以上转让方发布一个书面的通知（“通知”）并且指明从转让方所购入的股权数量和购买方式来行使该选择权。

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

1.3           Purchase Price.

购买价格

1.3.1                      The purchase price of the Equity Interest pursuant to an exercise of the Option shall be equal to the original paid-in price of the Transferors, adjusted pro rata for purchase of less than all of the Equity Interest, unless applicable PRC laws and regulations require an appraisal of the Equity Interest or stipulate other restrictions regarding the purchase price of the Equity Interest.

在甲方行使选择权时，已购股权的购买价格必须等于原先转让方购买股权的价格，购入部分股权时价格按比例调整，除非适用的中华人民共和国法律法规要求评估股权价格或者规定对股权购买价格的限制。

1.3.2                      If the applicable PRC laws and regulations require an appraisal of the Equity Interest or stipulate other restrictions regarding the purchase price of the Equity Interest at the time Party A exercises the Option, the Parties agree that the purchase price shall be set at the lowest price permissible under the applicable laws and regulations.

如果适用的中华人民共和国法律法规在甲方履行选择权时要求评估股权价格或者规定对股权购买价格的其他限制，各方同意购买价格设定为所适用法律法规可允许的最低价格。

1.4           Transfer of Equity Interest.  Upon each exercise of the Option under this Agreement:

股权的转让。在本协议范围内每次行使该选择权时：

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

1.4.1                      The Transferors shall hold or cause to be held a meeting of shareholders of Party B in order to adopt such resolutions as necessary in order to approve the transfer of the relevant Equity Interest (such Equity Interest hereinafter the “Purchased Equity Interest”) to Party A and/or the Designee;

转让方应召开或促使召开乙方股东会议，批准转让相应股权给甲方或被指定人的决议（该股权以下称“已购股权”）。

1.4.2                      The relevant Parties shall enter into an Equity Interest Purchase Agreement in a form reasonably acceptable to Party A, setting forth the terms and conditions for the sale and transfer of the Purchased Equity Interest;

相关各方应在甲方可接受的合理形式下签订《股权购买协议》，约定买卖已购股权的各个条款和条件;

1.4.3                      The relevant Parties shall execute, without any security interest, all other requisite contracts, agreements or documents, obtain all requisite approval and consent of the government, conduct all necessary actions, transfer the valid ownership of the Purchased Equity Interest to Party A and/or the Designee, and cause Party A and/or the Designee to be the registered owner of the Purchased Equity Interest.  As used herein, “security interest” means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, such term shall not include any security interest created under that certain Equity Pledge Agreement dated as of December 28, 2005 by and among the Parties (the “Pledge Agreement”).

相关各方必须在没有任何担保权益的情况下履行其余全部必备的合同、协议或者文件，获得所有政府批文，采取所有必要行动，向甲方或甲方指定的人员出让有效已购股权，促成甲方或被指定人成为已购股权的登记拥有者。在该条款中，“ 担保权益”指的是抵押、质押、第三方的权利或利益，任何购买股权的权利，收购权，优先取舍权，抵销权，所有权保留或者其他担保安排，但是，不包括任何在2008年12月28日签订的《股权质押协议》（“质押协议”）下所产生的担保权益& #12290;

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

1.5           Payment.  Payment of the purchase price shall be determined through negotiation between the Transferors and Party A in accordance with the applicable laws at the time of the exercise of the Option.

支付方式。股权购买支付方式必须由转让方和甲方根据所适用的法律在行使选择权时协商决定。

2.           REPRESENTATIONS RELATING TO EQUITY INTEREST (与股权相关的陈述)

2.1           Party B’s Representations.  Party B hereby represents and warrants:

乙方的陈述。乙方在此做出以下陈述和保证：

2.1.1                      Without Party A’s prior written consent, Party B’s Articles of Association shall not be supplemented, amended, changed or renewed in any way, Party B’s registered capital of shall not be increased or decreased, and the structure of Party B’s registered capital shall not be changed in any form;

未经甲方事先书面同意，不能以任何形式补充、更改或更新乙方公司章程，增加或减少乙方的注册资本或者以任何形式更改乙方注册资本的结构;

2.1.2                      To maintain the corporate existence of Party B and to prudently and effectively operate the Business according with customary fiduciary standards applicable to managers with respect to corporations and their shareholders;

根据适用于公司经理对公司与股东的客户受托信义标准维持公司的生存，谨慎有效地开展业务；

2.1.3                      Upon the execution of this Agreement, to not sell, transfer, mortgage or dispose, in any other form, any asset, legitimate or beneficial interest of business or income, or encumber or approve any encumbrance or imposition of any security interest on Party B’s assets without Party A’s prior written consent;

未经甲方事先书面同意，在签署本协议后不能以任何形式出售、转让、抵押或处理任何资产、合法的或受益的商业利益或收入，在乙方资产上设置权利负担、批准设置权利负担或设立任何担保权益；

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

2.1.4                      To not issue or provide any guarantee or permit the existence of any debt without Party A’s prior written consent, other than (i) such debt that may arise from Party B’s ordinary course of business (excepting a loan); and (ii) such debt which has been disclosed to Party A;

未经甲方事先的书面同意，不引起任何债务或提供任何担保，除了(I)乙方日常业务中非借贷引起的债务；和(II) 已向甲方批露的债务;

2.1.5                      To operate and conduct all business operations in the ordinary course of business, without damaging the Business or the value of Party B’s assets;

正常地运作所有业务，不损害乙方业务或资产价值;

2.1.6                      To not enter into any material agreements without Party A’s prior written consent, other than agreements entered into in the ordinary course of business (for purpose of this paragraph, if any agreement for an amount in excess of One Hundred Thousand Renminbi (RMB 100,000) shall be deemed a material agreement);

未经甲方事先书面同意，不签订任何重大协议，但日常业务除外（本条款中，如果协议金额超过100,000人民币，该协议被视为重大协议）;

2.1.7                      To not provide loan or credit to any other party or organization without Party A’s prior written consent;

未经甲方事先书面同意，不向他人或组织提供任何贷款或信用安排;

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

2.1.8                      To provide to Party A all relevant documents relating to the Business and its operations and finance at the request of Party A;

根据甲方要求，向甲方提供所有业务和财务相关材料;

2.1.9                      To purchase and maintain general business insurance of the type and amount comparable to those held by companies in the same industry, with similar business operations and assets as Party B, from an insurance company approved by Party A;

购买并维持甲方认可的保险公司所提供的保险，保险金额和种类必须与同行业经营相同业务以及资产与乙方相当的公司所持有的保险相同;

2.1.10                      To not enter into any merger, cooperation, acquisition or investment without Party A’s prior written consent;

未经甲方事先书面同意，不进行任何合并、合作、收购或投资;

2.1.11                      To notify Party A of the occurrence or the potential occurrence of litigation, arbitration or administrative procedure relating to Party B’s assets, business operations and/or income;

向甲方通告已发生或可能发生的与乙方资产、业务和收入相关的诉讼、仲裁或行政程序;

2.1.12                       In order to guarantee the ownership of Party B’s assets, to execute all requisite or relevant documents, take all requisite or relevant actions, and make and pursue all relevant claims;

签署所有适当必要的文件，采取所有必要的或相关的措施，提出所有适当的索赔，来保障乙方所持资产的所有权;

2.1.13                      To not assign the Equity Interest in any form without Party A’s prior written notice; however, Party B shall distribute dividends to the Shareholders upon the request of Party A; and

未经甲方事先书面允许，不以任何形式派发股权；但是，乙方必须在甲方的要求下将股息分配给股东；与

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

2.1.14                      In accordance with Party A’s request, to appoint any person designated by Party A to a management position for Party B.

根据甲方的要求，指派甲方指定的人员担任乙方管理职位。

2.2           Transferors’ Representations.  The Transferors hereby represent and warrant:

转让方的陈述。转让方在此做出如下陈述和保证：

2.2.1                      Without Party A’s prior written consent, upon the execution of this Agreement, to not sell, transfer, mortgage or dispose of in any other form any legitimate or beneficial interest of the Equity Interest, or to approve any security interest, except as created pursuant to the Pledge Agreement;

未经甲方事先书面同意，在签订本该协议后，不得出售、转让、抵押或或以任何其他形式处置任何合法的或受益的股权利益，也不得允许担保权益。《股权质押协议》设定的除外；

2.2.2                      Without Party A’s prior written notice, to not adopt or support or execute any shareholders resolution at any meeting of the shareholders of Party B that seeks to approve any sale, transfer, mortgage or disposal of any legitimate or beneficial interest of the Equity Interest, or to allow any attachment of security interests, except as created pursuant to the Pledge Agreement;

未经甲方事先书面通知，不得通过、支持或签署任何乙方股东会议所做出的企图批准出售、转让、抵押或处置任何合法的或受益的股权利益，或是允许附加担保权益的股东决议，但根据《股权质押协议》设定的除外；

2.2.3                      Without Party A’s prior written notice, to not agree or support or execute any shareholders resolution at any meeting of the shareholders of Party B that seeks to approve Party B’s merger, cooperation, acquisition or investment;

未经甲方事先书面同意，不得同意、支持或签署在乙方股东会议做出的，企图批准乙方合并、合作、收购或投资的决议；

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

2.2.4                      To notify Party A the occurrence or the potential occurrence of any litigation, arbitration or administrative procedure relevant to the Equity Interest;

向甲方通告与股权有关的已发生或可能发生的诉讼、仲裁或行政程序；

2.2.5                      To cause Party B’s Board of Directors to approve the transfer of the Purchased Equity Interest pursuant to this Agreement;

促使乙方董事会根据本协议允许已购股权的转让；

2.2.6                      In order to maintain the ownership of Equity Interest, to execute all requisite or relevant documents, conduct all requisite or relevant actions, and make all requisite or relevant claims, or make requisite or relevant defense against all claims of compensation;

签署所有必要的或相关的文件，采取所有必要的或相关的措施，提出所有必要的或相关的索赔或对他方索赔提出必要的或相关的抗辩，以保障所拥有的股权；

2.2.7                      Upon the request of Party A, to appoint any person designated by Party A to be a director of Party B; and

根据甲方的要求，指派甲方指定的人员担任乙方董事；与

2.2.8                      To prudently comply with the provisions of this Agreement and any other agreements entered into with Party A and Party B in connection therewith, and to perform all obligations under all such agreements, without taking any action or nonfeasance that may affect the validity and enforceability of such agreements.

切实遵守本协议以及其他与甲乙方达成的相关协议，履行这些协议规定的义务，不得懈怠执行或采取任何可能影响这些协议有效性和可执行性的行为。

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

3.           Representations and Warranties.  As of the execution date of this Agreement and on each transfer of Purchased Equity Interest pursuant to an exercise of the Option, Party B and the Transferors hereby represent and warrant as follows:

陈述和保证。在本协议签署之日并对每次依选择权行权而转让已购股权，乙方和转让方作如下陈述和保证：

3.1           Such Parties shall have the power and ability to enter into and deliver this Agreement and to perform their respective obligations thereunder, and at each transfer of Purchased Equity Interest, the relevant Equity Interest Purchase Agreement and to perform their obligations thereunder. Upon execution, this Agreement and each Equity Interest Purchase Agreement will constitute legal, valid and binding obligations and be fully enforceable in accordance with their terms;

本方有权利和能力签订和交付本协议，履行本协议和每次转让已购股权时《股权购买协议》所规定的的义务。一经签署，本协议和每个《股权购买协议》将依其相关条款构成合法、有效、有约束力和可执行的义务;

3.2           The execution and performance of this Agreement and any Equity Interest Purchase Agreement shall not: (i) violate any relevant laws and regulations of the PRC; (ii) conflict with the Articles of Association or other organizational documents of Party B; (iii) cause to breach any agreements or instruments or having binding obligation on it, or constitute a breach under any agreements or instruments or having binding obligation on it; (iv) breach relevant authorization of any consent or approval and/or any effective conditions; or (v) cause any authorized consent or approval to be suspended, removed, or cause other added conditions;

签署和履行本协议和《股权购买协议》不会：(1) 违反任何中华人民共和国的法律、法规；(2) 与乙方公司章程或其他组织文件相冲突；(3) 致使或造成其违反相关协议或文件或产生约束义务；(4) 违反任何同意或批准的授权和/或危害其持续有效的条件；(5) 导致任何同意或批准被中止、取消，或者产生附加条件;

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

3.3           The Equity Interest is transferable in whole and in part, and neither Party B nor the Transferors has permitted or caused any security interest to be imposed upon the Equity Interest other than pursuant to the Pledge Agreement;

股权可部分或全部转让，但乙方或转让方不得将担保权益加于股权上，《质押协议》项下规定的情形除外;

3.4           Party B does not have any unpaid debt, other than (i) such debt that may arise during the ordinary course of business; and (ii) debt either disclosed to Party A or incurred pursuant to Party A’s written consent;

乙方没有任何未了债务，除了（1）由正常业务产生的债务；和（2）已告知甲方的债务或经甲方书面允诺而导致的债务;

3.5           Party B has complied with all applicable PRC laws and regulations in connection with this Agreement;

乙方已遵守所有与本协议相关的可适用的中国法律法规;

3.6           There are no pending or ongoing litigation, arbitration or administrative procedures with respect Party B, its assets or the Equity Interests, and Party B and the Transferors have no knowledge of any pending or threatened claims to the best of their knowledge; and

不存在任何与乙方、乙方资产或股权相关的未决或正在进行的诉讼、仲裁或行政程序。就乙方和转让方尽力了解，没有未决或有威胁的索赔情况存在; 以及

3.7           The Transferors own the Equity Interest free and clear of encumbrances of any kind, other than the security interest pursuant to the Pledge Agreement.

转让人所持有的股权上没有任何权利负担，《质押协议》项下的担保权益除外。

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

4.           ASSIGNMENT OF AGREEMENT (协议的转让)

4.1           Party B and the Transferors shall not transfer their rights and obligations under this Agreement to any third party without Party A’s prior written consent.

未经甲方事先书面允许，乙方和转让方不得向第三方转让他们在本协议项下的权利和义务。

4.2           Party B and the Transferors hereby agree that Party A shall be able to transfer all of its rights and obligations under this Agreement to any third party, and such transfer shall only be subject to a written notice of Party A to Party B and the Transferors without any further consent from Party B or the Transferors.

乙方和转让方同意甲方可以向任何第三方转让其在本协议项下的所有权利和义务。但只有当甲方向乙方和转让方做出书面通知后才可转让，不需要乙方或转让方的进一步许可。

5.           EFFECTIVE DATE AND TERM (有效日期和期限)

5.1           This Agreement shall be effective as of January 1, 2006.

此协议自2006年1月1日起生效。

5.2           The term of this Agreement is ten (10) years unless it is early terminated in accordance with this Agreement.  This Agreement may be extended by Party A’s written consent prior to the expiration of this Agreement.  The terms of any such extension shall be determined through mutual agreement of the Parties.

除非各方按本协议规定提前终止协议，此协议的期限为十年。在协议到期前，由甲方书面同意可以延长协议期限。延长的条款由各方协商决定。

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

5.3           At the end of the term of this Agreement (including any extension thereto), or if earlier terminated pursuant to Section 5.2, the Parties agree that any transfer of rights and obligations pursuant to Section 4.2 shall continue to be in effect.

在本协议有效期（包括延长期）到期或者是根据5.2提前终止时；协议双方同意：根据协议的4.2进行的权利义务转让应当依然有效。

6.           APPLICABLE LAWS AND DISPUTE RESOLUTION (适用法律和争议的解决)

6.1           Applicable Laws.  The execution, validity, interpretation and performance of this Agreement and the dispute resolution under this Agreement shall be governed by the laws of PRC.

适用法律。本协议的签署、效力、解释和履行以及争议的解决均适用中华人民共和国的法律。

6.2           Dispute Resolution.  The Parties shall strive to resolve any disputes arising from the interpretation or performance of this Agreement through amicable negotiations.  If such dispute cannot be settled within thirty (30) days, any Party may submit such dispute to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration.  The arbitration shall abide by the current rules of CIETAC, and the arbitration proceedings shall be conducted in Shanghai, China in Chinese.  The determination of CIETAC shall be final and binding upon the Parties.

争议的解决。各方应当友好磋商解决因本协议的解释和履行所引发的争议。如果争议不能在30天内解决，任何一方可以将此争议提交中国国际经济贸易仲裁委员会（“委员会”）根据其制定的规定进行仲裁。仲裁将在上海Ű 27;行，所有程序以中文进行。委员会的仲裁决定是终局的，并对协议各方产生约束效力。

7.           Taxes and Expenses.  Each Party shall, according with PRC laws, bear any and all registration taxes, costs and expenses for the transfer of equity arising from the preparation, execution and completion of this Agreement and all Equity Interest Purchase Agreements.

税收和花费。各方应根据中国法律承担因本协议和所有《股权购买协议》的准备、签订和完成而产生的所有注册税，成本以及花费。

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

8.           Notices.  Notices or other communications required to be given by any Party pursuant to this Agreement shall be written in English and Chinese and delivered personally or sent by registered mail or prepaid mail or by a recognized courier service or by facsimile transmission to the relevant address of each Party as set forth below or other addresses of the Party as specified by such Party from time to time.  The date when the notice is deemed to be duly served shall be determined as follows: (a) a notice delivered personally is deemed duly served upon the delivery; (b) a notice sent by mail is deemed duly served the tenth (10th) day after the date of the air registered mail with the postage prepaid has been sent out (as is shown on the postmark), or the fourth (4th) day after the delivery by an internationally recognized courier service; and (c) a notice sent by facsimile transmission is deemed duly served upon the receipt time as shown on the transmission confirmation.

通知。任何一方发出的、与此协议相关的通知或信息都应当用中文和英文书写，并以以下方式：专人、使用挂号信件、已付邮资的信件，急件送信服务，传真发送到相关各方的地址、本页下方的地址、各方的其他地址或各方特定的其他地址 。通知适时送达的日期应当遵循如下原则：（1）个人递送的通知的日期即应在送达之时；（2）用邮件递送的通知的日期在用已付邮资的空运挂号信件送出当天（以邮戳为准）后的第十天，或者用国际公认的急件送信服务机构递送日期后的第四天；（3）用传真发送的通知的，按传输确认书显示的接收时间。

Party A 甲方:	Korea Jinduren (Int’l) Dress Limited 韩国劲都人(国际)服饰有限公司
	Address: 地址：
	Attn: WU, Qingqing 联系人：吴青青
	Fax: 传真
	Tel: 电话：

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JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

Party B: 乙方	Jinjiang Yinglin Jinduren Dress Co., Ltd. 晋江市英林劲都人服饰有限公司
	Address: 地址:
	Attn: WU, Qingqing 联系人: 吴青青
	Fax: 传真
	Tel: 电话

Party C : 丙方
	WU, Qingqing 吴青青
	Address: 地址：
	Tel: 电话
	Fax: 传真
	WU, Zhifan 吴志藩
	Address: 地址：
	Tel: 电话：
	Fax: 传真

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

9.           Confidentiality.  The Parties acknowledge and confirm that any oral or written information exchanged by the Parties in connection with this Agreement is confidential.  The Parties shall maintain the confidentiality of all such information. Without the written approval by the other Parties, any Party shall not disclose to any third party any confidential information except as follows:

保密条款。各方承认并确认任何与本协议相关的口头或书面信息都是保密的，应当确保所有此类信息的机密性。未经其他方的书面允许，任何一方不得向任何第三方提供机密信息。但下述信息除外：

(a)           Such information was in the public domain at the time it was communicated;

提供时已被公众获悉的信息；

(b)           Such information is required to be disclosed pursuant to the applicable laws, regulations, policies relating to the stock exchange; or

应股票交易市场相关的法律、制度、规则之要求而披露的信息；

(c)           Such information is required to be disclosed to a Party’s legal counsel or financial consultant, provided however, such legal counsel and/or financial consultant shall also comply with the confidentiality as stated hereof.  The disclosure of confidential information by employees or agents of the disclosing Party is deemed to be an act of the disclosing Party, and such Party shall be responsible for all breach of confidentiality arising from such disclosure.  This provision shall survive even if certain clauses of this Agreement are subsequently amended, revoked, terminated or determined to be invalid or unable to implement for any reason.

应该透露给各方法律顾问或财务顾问的信息，但该法律顾问或财务顾问应当同样遵守此节提出的保密要求。任何一方的员工或者代理人披露保密信息的行为应被视为该方的行为，并且该方将承担相应的违反保密义务的责任。本协议中的任何 条款基于任何原因修改、废除、终止，或被认为无效或不能执行时，本条款始终有效。

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

10.           Further Warranties.  The Parties agree to promptly execute such documents as required to perform the provisions of this Agreement, and to take such actions as may be reasonably required to perform the provisions of this Agreement.

进一步保证。各方同意为本协议条款之履行而签署必要的文件并采取合理的行动。

11.           MISCELLANEOUS (其他条款)

11.1           Amendment, Modification and Supplement.  Any amendments and supplements to this Agreement shall only take effect if executed by both Parties in writing.

协议的改善、修正和补充。任何对协议的改善和补充必须由各方书面签订才能生效。

11.2           Entire Agreement.  Notwithstanding Article 5 of this Agreement, the Parties acknowledge that this Agreement constitutes the entire agreement of the Parties with respect to the subject matters therein and supercede and replace all prior or contemporaneous agreements and understandings, whether oral or in writing.

协议的完整性。尽管有本协议第5款的规定，各方承认本协议构成了各方关于协议所述问题的完整协议。本协议取代任何先前和同时期所有的口头或书面的协议或谅解。

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

11.3           Severability.  If any provision of this Agreement is deemed invalid or non-enforceable according with relevant laws, such provision shall be deemed invalid only within the applicable laws and regulations of the PRC, and the validity, legality and enforceability of the other provisions hereof shall not be affected or impaired in any way.  The Parties shall, through reasonable negotiation, replace such invalid, illegal or non-enforceable provisions with valid provisions in order to bring similar economic effects of those invalid, illegal or non-enforceable provisions.

协议的可分性。如果根据相关法律本协议的任何规定无效或者不可执行，则该规定只有在适用的中华人民共和国法律和法规范围内无效，但是其他条款的有效性、合法性和可执行性不会受到任何影响和削弱。各方需通过合理的协商，通过使 用产生相同经济效益的其他有效规定来取代这些无效、不合法或不可实施的规定。

11.4           Headings.  The headings contained in this Agreement are for reference only and shall not affect the interpretation and explanation of the provisions in this Agreement.

标题。此协议所含的标题仅供参考的方便，不会影响协议中条款的阐述、解释。

11.5           Language and Copies.  This Agreement shall be executed in English in four (4) duplicate originals. Each Party shall hold one (1) original, each of which shall have the same legal effect.

语言和份数。此协议以英文签署，一式四份，各方各执一份，具同等法律效力。

11.6           Successor.  This Agreement shall be binding on the successors of each Party and the transferee allowed by each Party.

承继。此协议将约束各方的承继人和各方认可的受让方。

11.7           Survival.  Each Party shall continue to perform its obligations notwithstanding the expiration or termination of this Agreement.  Article 6, Article 8, Article 9 and Section 11.7 hereof shall continue to be in full force and effect after the termination of this Agreement.

仍然有效。不论本协议的到期或终止事项，各方应当继续履行义务。在本协议终止后，第6、8、9节和11.7条款仍然有效。

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

11.8           Waiver.  Any Party may waive the terms and conditions of this Agreement in writing with the written approval of all the Parties.  Under certain circumstances, any waiver by a Party to the breach of other Parties shall not be construed as a waiver of any other breach by any other Parties under similar circumstances.

弃权。各方书面同意后，一方可以放弃协议规定的条款。某种情况下当事人一方对其他方违约的弃权，不能视作对其他方在相似情况下违约的弃权。

[SIGNATURE PAGE FOLLOWS]

[以下是签字页]

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

[SIGNATURE PAGE]

[签字页]

IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.

兹证明，本协议由各方或者各方的法定代表人签订。

PARTY A:   Korea Jinduren (Int’l) Dress Limited

甲方：韩国劲都人(国际)服饰有限公司

Authorized Representative: ____________________

授权代表(签字)

Name: WU, Qingqing

姓名: 吴青青

Title: Director

职务:董事

PARTY B:   Jinjiang Yinglin Jinduren Dress Co., Ltd.

乙方：晋江市英林劲都人服饰有限公司

Legal/Authorized Representative: ______________________

法定代表人/或被授权人（签字）

Name: WU, Zhifan

姓名:吴志藩

Title: General Manager

职务: 总经理

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

SIGNATURE PAGE FOR SHAREHOLDERS OF PARTY B

乙方股东签字页

SHAREHOLDERS OF JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

晋江市英林劲都人服饰有限公司的股东:

_____________________

WU, Qingqing

吴青青

ID Card No.: ____________________

身份证号

Owns 65.91% of Jinjiang Yinglin Jinduren Dress Co., Ltd.

持有晋江市英林劲都人服饰有限公司股权65.91%

____________________

WU, Zhifan

吴志藩

ID Card No.: ____________________

身份证号

Owns 34.09% of Jinjiang Yinglin Jinduren Dress Co., Ltd.

持有晋江市英林劲都人服饰有限公司股权34.09%

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Option Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

EX-10.5

VOTING RIGHTS PROXY AGREEMENT

投票权代理协议

This Voting Rights Proxy Agreement (the “Agreement”) is entered into in Jinjiang City, People’s Republic of China (“PRC” or “China”) as of December 28, 2005 by and between Korea Jinduren (Int’l) Dress Limited (“Party A”) and the undersigned shareholders (the “Shareholders”) of Jinjiang Yinglin Jinduren Dress Co., Ltd. (“Jinduren Company”). Party A and the Shareholders are each referred to in this Agreement as a “Party” and collectively as the “Parties”. Jinduren Company is made a party to this Agreement for the purpose of acknowledging the Agreement.

本《投票权代理协议》（“本协议”）于2005年12月28日在中华人民共和国（“PRC”或“中国”）晋江市，由韩国劲都人(国际)服饰有限公司（“甲方”）与以下签字的晋江市英林劲都人服饰有限公司（“劲都人公司”）的股东（“股东”）签署。甲方 和股东总称为“各方”。劲都人公司以下签字是为认可本协议。

RECITALS

陈述

1.           Party A, a company incorporated in Hong Kong, specializes in dress industry and investment. Jinduren Company, a limited company incorporated in PRC, is engaged in the manufacture and sale of dress (collectively the “Business”). Party A and Jinduren Company have entered into a certain Consulting Services Agreement dated December 28, 2005 (the “Consulting Services Agreement”) in connection with the Business.

甲方为在香港设立的公司，专业开展服装业务和投资(合称业务)。在中国设立的有限公司劲都人公司从事服装制造和销售（统称“业务”）。甲方与劲都人公司在2005年12月28日签订了有关劲都人公司业务的《咨询服务协议》（“服务& #21327;议”）。

2．           The Shareholders are shareholders of Jinduren Company, each legally holding such amount of equity interest of the Jinduren Company as set forth on the signature page of this Agreement and collectively holding 100% of the issued and outstanding equity interests of Jinduren Company (collectively the “Equity Interest”).

股东作为劲都人公司股东，按照本协议签字页载明的数额合法持有劲都人公司的股权，前述股权合计构成劲都人公司的已发行股权的100%（以下统称“股权”）。

3.           In connection with the Consulting Services Agreement, the Parties have entered into a certain Operating Agreement dated December 28, 2005, pursuant to which the Shareholders now desire to grant to Party A a proxy to vote the Equity Interest for the maximum period of time permitted by law in consideration of Party A’s obligations thereunder.

在签署服务协议时，各方于2005年12月28日签署一份《经营协议》。根据经营协议的需求，股东现在依甲方之义务为对价，在法律允许的最长期限内授予甲方全部股权投票权利。甲方认可并接受该权利。

NOW THEREFORE, the Parties agree as follows:

鉴于此，各方达成如下协议：

1.           The Shareholders hereby agree to irrevocably grant and entrust Party A, for the maximum period of time permitted by law, with all of their voting rights as shareholders of Jinduren Company.  Party A shall exercise such rights in accordance with and within the parameters of the laws of the PRC and the Articles of Association of Jinduren Company.

股东在此同意不可撤销地许可和授权甲方，在法律允许的最长期限内，行使劲都人公司股东的投票权。并且甲方应当根据中国法和劲都人公司的公司章程行使该投票权。

2.           Party A may establish and amend rules to govern how Party A shall exercise the powers granted by the Shareholders herein, including, but not limited to, the number or percentage of directors of Party A which shall be required to authorize the exercise of the voting rights granted by the Shareholders, and Party A shall only proceed in accordance with such rules.

甲方可以设立或修改适用于有关于如何行使股东所赋予的权力的规则。包括但不限于行使投票权授权所需的甲方董事人数或比例。甲方必须仅根据上述规则进行行为。

3.           The Shareholders shall not transfer or cause to be transferred the Equity Interest to any party (other than Party A or such designee of Party A).  Each Shareholder acknowledges that it will continue to perform its obligations under this Agreement even if one or more of other Shareholders no longer hold any part of the Equity Interest.

股东不得转让股权或导致股权转让给除甲方或甲方指定人以外的其他人。每位股东了解：即使任何其他股东不再持有公司的股权的任何部分，其也将继续履行本协议。

4.           This Proxy Agreement has been duly executed by the Parties as of the date first set forth above, and in the event that a Party is not a natural person, then such Party’s action has been duly authorized by all necessary corporate or other action and executed and delivered by such Party’s duly authorized representatives.  This Agreement shall take effect on January 1, 2006.

本协议由各方于首页载明之日期依法签署，在一方不是自然人的情况下，该协议方的作为已通过必要措施有效授权，并由该协议方的授权代表签署、交付。本协议应于2006年1月1日生效。< /font>

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Proxy Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

5.           Each Shareholder represents and warrants to Party A that such Shareholder owns such amount of the Equity Interest as set forth next to its name on the signature page below, free and clear of all liens and encumbrances, and such Shareholder has not granted to any party, other than Party A, a power of attorney or proxy over any of such amount of the Equity Interest or any of such Shareholder’s rights as a shareholder of Jinduren Company.  Each Shareholder further represents and warrants that the execution and delivery of this Agreement by such Shareholder shall not violate any law, regulations, judicial or administrative order, arbitration award, agreement, contract or covenant applicable to such Shareholder.

每位股东向甲方陈述和保证：该股东拥有所有在签字页姓名以下显示的股权数额，并且没有任何担保和权利负担。该股东未向除甲方以外的任何人授予任何股权和作为劲都人公司股东的权利的授权书或委托书。每位股东进一步陈述和保证它 签署或交付本协议不违反适用于股东的法律、法规、司法决定、行政命令、仲裁裁决、合同或契约。

6.           This Agreement may not be terminated without the unanimous consent of all Parties, except that Party A may, by giving a thirty (30) day prior written notice to the Shareholders, terminate this Agreement, with or without cause.

除非甲方因任何原因提前30天书面通知可以终止本协议外，本协议非经各方一致同意不得终止。

7.           Any amendment to and/or rescission of this Agreement shall be in writing by the Parties.

本协议的任何修改和/或解除都必须由协议各方通过书面形式进行。

8.           The execution, validity, creation and performance of this Agreement shall be governed by the laws of PRC.

本协议的签署、效力、成立和履行应当适用中华人民共和国法律。

9.           This Agreement shall be executed in four (4) duplicate originals in English, and each Party shall receive one (1) duplicate original, each of which shall be equally valid.

本协议用英语签署四份，每一方持有一份，每一份都具有同等效力。

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Proxy Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

10.           The Parties agree that in the event a dispute shall arise from this Agreement, the Parties shall settle their dispute through amicable negotiations.  If the Parties cannot reach a settlement within 45 days following the negotiations, the dispute shall be submitted to be determined by arbitration through China International Economic and Trade Arbitration Commission (“CIETAC”) Shanghai Branch in accordance with CIETAC arbitration rules.  The determination of CIETAC shall be conclusively binding upon the Parties and shall be enforceable in any court of competent jurisdiction.

如果因本协议产生争议，双方同意通过协商解决。如果双方不能在协商45日后达成一致，应提交中国国际经济贸易仲裁委员会上海分会依据其仲裁规则进行仲裁。仲裁裁决对各方具有最终约束效力，能够在具有管辖权的任 0309;法院执行。

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Proxy Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

[SIGNATURE PAGE FOLLOWS]

[以下是签字页]

IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.

兹证明，本协议由各方或者各方的法定代表人签订。

PARTY A:   Korea Jinduren (Int’l) Dress Limited

甲方：韩国劲都人(国际)服饰有限公司

Authorized Representative: ____________________

授权代表(签字)

Name: WU, Qingqing

姓名: 吴青青

Title: Director

职务: 董事

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Proxy Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

SIGNATURE PAGE FOR SHAREHOLDERS

股东签字页

SHAREHOLDERS OF JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

晋江市英林劲都人服饰有限公司的股东:

____________________

WU, Qingqing

吴青青

ID Card No.: ____________________

身份证号

Owns 65.91% of Jinjiang Yinglin Jinduren Dress Co., Ltd.

持有晋江市英林劲都人服饰有限公司股权65.91%

____________________

WU, Zhifan

吴志藩

ID Card No.: ____________________

身份证号

Owns 34.09% of Jinjiang Yinglin Jinduren Dress Co., Ltd.

持有晋江市英林劲都人服饰有限公司股权34.09%

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Proxy Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

ACKNOWLEDGED BY:

认知:

JINDUREN COMPANY: Jinjiang Yinglin Jinduren Dress Co., Ltd

劲都人公司:    晋江市英林劲都人服饰有限公司

Legal/Authorized Representative: ______________________

法定代表人/或被授权人（签字）

Name: WU, Zhifan

姓名:吴志藩

Title: General Manager

职务: 总经理

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Proxy Agreement

JINJIANG YINGLIN JINDUREN DRESS CO., LTD.

EX-99.1

Report of Independent Registered Accounting Firm

To the Board of Directors and Shareholders

Peng Xiang Peng Fei Investments Limited

We have audited the accompanying consolidated balance sheets of Peng Xiang Peng Fei Investments Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) as of December 31, 2007 and 2006 and the related consolidated statements of income, consolidated stockholders' equity and consolidated comprehensive income, and consolidated cash flows for each of the years in the two year period ended December 31, 2007.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  The Company was not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting.  Our audits included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Peng Xiang Peng Fei Investments Limited as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

Crowe Horwath LLP

Sherman Oaks, California

February 9, 2009

1

PENG XIANG PENG FEI INVESTMENTS LIMITED

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

	September 30,				December 31,
	2008		2007		2007		2006
	(Unaudited)		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	4,721	$	10,897	$	2,758	$	1,982
Pledged bank deposits		88		80		82		-
Accounts receivable		6,890		4,333		4,514		1,936
Amount due from a director		-		152		156		146
Inventories		657		3,439		4,708		3,677
Tax recoverable		-		-		-		269
Prepayment		25		-		137		-
Total current assets		12,381		18,901		12,355		8,010
Property, plant and equipment, net		1,089		1,033		1,041		1,120
Land use rights		274		259		264		256
TOTAL ASSETS	$	13,744	$	20,193	$	13,660	$	9,386
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	1,623	$	4,450	$	3,406	$	1,823
Accrued expenses and other payables		1,112		644		714		478
Amount due to a director		2		1		1		1
Bills payable		293		267		274		-
Short-term bank loans		585		534		548		257
Dividend payable		-		-		3,016		-
Taxes payable		366		1,042		3,015		185
Total current liabilities		3,981		6,938		10,974		2,744
Non-current Liabilities:
Other payable		65		616		243		362
Total liabilities		4,046		7,554		11,217		3,106
Commitments and contingencies		-		-		-		-
Equity:
Share capital		-		-		-		-
Capital reserve		1,237		1,237		1,237		1,237
Statutory reserve		913		525		913		525
Retained earnings		7,033		10,284		84		4,304
Accumulated other comprehensive income		515		593		209		214
Total equity		9,698		12,639		2,443		6,280
TOTAL LIABILITIES AND EQUITY	$	13,744	$	20,193	$	13,660	$	9,386

See accompanying notes to consolidated financial statements.

2

PENG XIANG PENG FEI INVESTMENTS LIMITED

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands)

	Nine months ended September 30,						Years ended December 31,
	2008			2007			2007			2006
	(Unaudited)			(Unaudited)
Net sales	$	40,013		$	30,216		$	39,727		$	18,989
Cost of sales		25,620			18,996			24,939			12,385
Gross profit		14,393			11,220			14,788			6,604
Operating expenses:
Selling expenses		2,965			1,306			1,847			1,697
General and administrative expenses		2,076			988			1,380			645
Other operating expenses		2			2			3			9
		5,043			2,296			3,230			2,351
Income from operations		9,350			8,924			11,558			4,253
Other income (expenses):
Interest income		13			35			54			18
Interest expense		(50	)		(33	)		(46	)		(17	)
		(37	)		2			8			1
Income before provision for income taxes		9,313			8,926			11,566			4,254
Provision for income taxes		2,364			2,946			3,817			1,404
Net income	$	6,949		$	5,980		$	7,749		$	2,850

See accompanying notes to consolidated financial statements.

3

PENG XIANG PENG FEI INVESTMENTS LIMITED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(Amounts in thousands)

					Accumulated
					other
	Capital		Statutory		comprehensive			Retained			Total			Comprehensive
	reserve		reserve		income			earnings			equity			income
Balance at January 1, 2006	$	106	$	198	$	40		$	1,781		$	2,125
Net income		-		-		-			2,850			2,850			2,850
Foreign currency translation adjustment		-		-		174			-			174			174
Statutory reserve (Note 10)		-		327		-			(327	)		-			-
Proceeds from investment capital		1,131		-		-			-			1,131			-
Total comprehensive income														$	3,024
Balance at December 31, 2006		1,237		525		214			4,304			6,280
Comprehensive income:
Net income		-		-		-			7,749			7,749			7,749
Foreign currency translation adjustment		-		-		(5	)		-			(5	)		(5	)
Statutory reserve (Note 10)		-		388		-			(388	)		-			-
Dividend declared		-		-		-			(11,581	)		(11,581	)		-
Total comprehensive income														$	7,744
Balance at December 31, 2007		1,237		913		209			84			2,443
Comprehensive income:
Issuance of ordinary share		-		-		-			-			-			-
Net income		-		-		-			6,949			6,949			6,949
Foreign currency translation adjustment		-		-		306			-			306			306
Total comprehensive income														$	7,255
Balance at September 30, 2008 (Unaudited)	$	1,237	$	913	$	515		$	7,033		$	9,698
Balance at December 31, 2006		1,237		525		214			4,304			6,280
Comprehensive income:
Net income		-		-		-			5,980			5,980			5,980
Foreign currency translation adjustment		-		-		379			-			379			379
Total comprehensive income														$	6,359
Balance at September 30, 2007 (Unaudited)	$	1,237	$	525	$	593		$	10,284		$	12,639

See accompanying notes to consolidated financial statements.

4

PENG XIANG PENG FEI INVESTMENTS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousand)

	Nine months ended
	September 30,						Years ended December 31,
	2008			2007			2007			2006
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	6,949		$	5,980		$	7,749		$	2,850
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, plant and equipment		78			68			92			90
Loss on disposal of property, plant and equipment		-			2			2			9
Write off of property, plant and equipment		1			-			-			-
(Increase) decrease in assets:
Receivables		(2,032	)		(2,271	)		(2,347	)		159
Inventories		4,280			378			(747	)		(2,014	)
Prepaid expenses and other current assets		119			-			(132	)		-
Increase (decrease) in liabilities:
Accounts payable		(1,971	)		2,501			1,399			72
Accrued expenses and other payables		154			639			319			190
Income and other tax payables		(2,793	)		1,107			612			(83	)
Net cash provided by operating activities		4,785			8,404			6,947			1,273
Cash flows from investing activities:
Purchases of property, plant and equipment		(52	)		-			-			(25	)
Disposals of property, plant and equipment		-			67			69			51
Net cash provided by (used in) investing activities		(52	)		67			69			26
Cash flows from financing activities:
Pledged bank deposits		-			(80	)		(82	)		-
Cash provided by investors		-			-			-			372
Amount due to/from a director		168			-			-			(146	)
Proceeds from debt financing		-			267			548			513
Payments of short-term debt		-			-			(274	)		(257	)
Payments of dividend		(3,219	)		-			(6,855	)		-
Net cash provided by (used in) financing activities		(3,051	)		187			(6,663	)		482
Effect of exchange rate changes		281			257			423			47
Net increase in cash and cash equivalents		1,963			8,915			776			1,828
Cash and cash equivalents, beginning of year/period		2,758			1,982			1,982			154
Cash and cash equivalents, end of year/period	$	4,721		$	10,897		$	2,758		$	1,982
Supplemental disclosure of cash flow information:
Interest paid	$	50		$	33		$	46		$	17
Income taxes paid	$	2,813		$	2,901		$	3,413		$	1,220
Non-cash transactions:
Plant and machinery provided by investors	$	-		$	-		$	-		$	201
Raw materials provided by investors	$	-		$	-		$	-		$	196
Finished goods provided by investors	$	-		$	-		$	-		$	371

See accompanying notes to consolidated financial statements.

5

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of business and organization

Peng Xiang Peng Fei Investments Limited (“PXPF” or the “Company”) is a limited liability company incorporated on April 30, 2008 in the British Virgin Islands. The Company designs, manufactures and sells fashion apparel under the brand name “V．LOV”. All current operations of the Company are in the People’s Republic of China (“China” or the “PRC”).

The Company does not conduct any substantive operations of its own and conducts its primary business operations through the variable interest entity (“VIE”), Korea Jinduren International Fashion Co., Ltd. (“Jinduren Fashion”) of its subsidiary, Korean Jinduren (Int’l) Dress Limited (“Jinduren Dress”). Jinduren Dress is a limited liability company incorporated in Hong Kong on January 5, 2005 and was acquired by PXPF from the majority shareholders of PXPF on September 22, 2008.

Jinduren Fashion is a limited company incorporated without shares in the PRC on January 19, 2002, of which paid-in capital was funded by the majority shareholders of PXPF. PRC law currently has limits on foreign ownership of companies. To comply with these foreign ownership restrictions, on December 28, 2005, Jinduren Dress entered into certain exclusive agreements with Jinduren Fashion and its shareholders. Pursuant to these agreements, Jinduren Dress provides exclusive consulting services to Jinduren Fashion in return of a consulting services fee which is equal to Jinduren Fashion’s net profits. In addition, Jinduren Fashion’s shareholders have pledged their equity interests in Jinduren Fashion to Jinduren Dress, irrevocably granted Jinduren Dress an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Jinduren Fashion and agreed to entrust all the rights to exercise their voting power to the person(s) appointed by Jinduren Dress. Through these contractual arrangements, Jinduren Dress has the ability to substantially influence Jinduren Fashion’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring shareholder approval.

As a result of these contractual arrangements, which obligates Jinduren Dress to absorb a majority of the risk of loss from Jinduren Fashion’s activities and enable Jinduren Dress to receive a majority of its expected residual returns, the Company believes Jinduren Fashion a VIE under FASB Interpretation No. 46R (“FIN 46R”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51”, because the equity investors in Jinduren Fashion do not have the characteristics of a controlling financial interest and the Company should be considered the primary beneficiary of Jinduren Fashion. Accordingly, the Company consolidates Jinduren Fashion’s results, assets and liabilities in the accompanying financial statements.

The Company’s consolidated assets do not include any collateral for Jinduren Fashion’s obligations. The creditors of Jinduren Fashion do not have recourse to the general credit of the Company.

(b) Basis of presentation and consolidation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.

Pursuant to FIN 46 (R), a VIE is required to be consolidated if a party with an ownership, contractual or other financial interest in the VIE, is obligated to absorb a majority of the risk of loss from the VIE’s activities, is entitled to receive a majority of the VIE’s residual returns (if no party absorbs a majority of the VIE’s losses), or both. A variable interest holder that consolidates the VIEs is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and non-controlling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. FIN 46(R) provides a new framework for identifying VIEs and determining when a company should include the assets, liabilities, non-controlling interests and results of activities of a VIE in its consolidated financial statements.

A VIE is a corporation, partnership, limited liability corporation, trust or any other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations.

6

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Basis of presentation and consolidation (continued)

The Company, through its wholly owned subsidiary Jinduren Dress, consolidated Jinduren Fashion as Jinduren Fashion was deemed the VIE and it determined that it was the primary beneficiary of the Jinduren Fashion as a result of the execution of a series of enterprise agreements. The determination of whether Jinduren Fashion is a VIE requires an evaluation of all the facts and circumstances, including interpretation of various laws, rules and regulations.  Though the Company cannot determine how the PRC regulatory authorities would conclude on the enterprise arrangements, management believes Jinduren Fashion qualifies as a VIE based on its evaluation.

Because the Company and Jinduren Fashion are under common control, the initial measurement of the assets and liabilities of Jinduren Fashion for the purpose of consolidation by the Company is at book value. The Company has had no other business activities except for the entering into of the exclusive agreements with Jinduren Fashion and its shareholders. For the purpose of presenting the financial statements on a consistent basis, the consolidated financial statements are prepared as if the Company had been in existence since January 1, 2006 and throughout the whole of the two-year period ended December 31, 2007 and nine-month period ended September 30, 2008.

The consolidated financial statements include the financial statements of the Company, its subsidiary and the variable interest entity, Jinduren Fashion. All significant inter-company transactions and balances between the Company, its subsidiary and the variable interest entity are eliminated upon consolidation.

(c) Use of Estimates

Management has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States. Significant areas requiring the use of management estimates relate primarily to valuation of long-lived assets. Actual results could differ from those estimates.

(d) Revenue Recognition

Revenue from the sales of goods is recognized on the transfer of significant risks and rewards of ownership, which generally coincides with the time when the goods are delivered and the title has passed to the customers. Revenue excludes value-added tax and is arrived at after deduction of trade discounts and allowances.

(e) Cash and Cash Equivalents

For purposes of the statements of cash flows, the Group considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents comprise cash at bank and on hand and demand deposits with banks.

(f) Accounts receivable

Accounts receivable, which are unsecured, are stated at the amount the Group expects to collect. The Group maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Group evaluates the collectability of its accounts receivable based on a combination of factors, including customer credit-worthiness and historical collection experience. Management reviews the receivable aging and adjusts the allowance based on historical experience, financial condition of the customer and other relevant current economic factors. As of September 30, 2008 and 2007 and December 31, 2007 and 2006, all of the trade receivable balances were aged less than 90 days. The management determined no allowance for uncollectible amounts is required.

7

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) Depreciation and Amortization

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation of property, plant and equipment is computed using the straight-line method based on the following estimated useful lives:

Buildings	30 years
Furniture, fixtures and equipment	5 years
Motor vehicles	5 years
Office equipment	5 years
Plant and machinery	5 to 15 years

(h) Inventories

Inventories are stated at the lower of cost or market value, determined by the weighted average method. Work-in-progress and finished goods inventories consist of raw materials, direct labor and overhead associated with the manufacturing process.

(i) Foreign Currency Translation

The Group has its local currency, Renminbi (“RMB”), as its functional currency. The consolidated financial statements of the Group are translated from RMB into US$ in accordance with SFAS No. 52, "Foreign Currency Translation".  Accordingly, all assets and liabilities are translated at the exchange rates prevailing at the balance sheet dates, all income and expenditure items are translated at the average rates for each of the years and equity accounts, except for retained earnings, are translated at the rate at transaction date. Retained earnings reflect the cumulative net income (loss) translated at the average rates for the respective periods since inception and dividends translated at the rate at transaction date.

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People's Bank of China (the "PBOC") or other institutions authorized to buy and sell foreign exchange.  The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand.  Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective years:

	Nine months ended September 30,				Years ended December 31,
	2008		2007		2007		2006
	(Unaudited)		(Unaudited)
Assets and liabilities	USD	0.1463	USD	0.1334	USD	0.1371	USD	0.1283
Statement of income	USD	0.1434	USD	0.1306	USD	0.1317	USD	0.1256

Commencing from July 21, 2005, China has adopted a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. The exchange rate of the US$ against the RMB was adjusted from approximately RMB 8.28 per US$ to approximately RMB 8.11 per US$ on July 21, 2005. Since then, the PBOC administers and regulates the exchange rate of US$ against RMB taking into account the demand and supply of RMB, as well as domestic and foreign economic and financial conditions.

8

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(j) Land use right

All land in the People’s Republic of China is owned by the government and cannot be sold to any individual or company. However, the government grants the user a “land use right” to use the land.

The Group acquired land use right on March 25, 2004 for a total amount of US$259,000. These land use right are for 50 years and expire in 2056.

Land use rights are stated at cost less accumulated amortization and impairment losses. Amortization is calculated on the straight-line method over the estimated useful life of 50 years.

Intangible assets of the Group are reviewed annually to determine whether their carrying value has become impaired. The Group considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations. The Group also re-evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. As of September 30, 2008, the Group expects these assets to be fully recoverable.

(k) Long-Lived Assets

The Group estimates the future undiscounted cash flows to be derived from an asset to assess whether or not a potential impairment exists when events or circumstances indicate the carrying value of a long-lived asset may be impaired. If the carrying value exceeds the Group’s estimate of future undiscounted cash flows, the Group then calculates the impairment as the excess of the carrying value of the asset over the Group’s estimate of its fair market value.

(l) Comprehensive Income

The Group has adopted the provisions of SFAS No. 130, “Reporting Comprehensive Income” (“SFAS No. 130”). SFAS No. 130 establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements. SFAS No. 130 defines comprehensive income or loss to include all changes in equity except those resulting from investments by owners and distributions to owners, including adjustments to minimum pension liabilities, accumulated foreign currency translation, and unrealized gains or losses on marketable securities.

The Group’s only component of other comprehensive income is foreign currency translation gain (loss). The foreign currency translation gain (loss) for the years ended December 31, 2007 and 2006, were loss of US$5,000 and gain of US$174,000 respectively, and gain of US$306,000 and US$379,000 for the nine months ended September 30, 2008 and 2007 respectively. Accumulated other comprehensive income is recorded as a separate component of shareholders’ equity.

(m) Income Taxes

The Group is mainly subject to income taxes in the PRC. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The Group accounts for income taxes under Statement of Financial Accounting Standard (SFAS) No. 109, “Accounting for Income Taxes.” Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

9

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(n) Advertising Costs

Advertising costs are expensed in the period in which the advertisements are first run or over the life of the endorsement contract. Advertising expense for the years ended December 31, 2007 and 2006, and nine months ended September 30, 2008 and 2007 were approximately US$1.39 million, US$1.38 million, US$2.33 million and US$600,000 respectively. Advertising costs include advertising subsidy expense which is accrued based on the terms in effect with distributors and paid when all attaching conditions will be completed.

(o) Shipping and Handling Costs

Shipping and handling costs are expensed as incurred and included in cost of sales.

(p) Research and Development Costs

The Group charges all product design and development costs to expense when incurred. Product design and development costs aggregated approximately US$1.03 million, and US$350,000 for the years ended December 31, 2007 and 2006 respectively, and US$1.76 million and US$730,000 for the nine months ended September 30, 2008 and 2007 respectively.

(q) Fair Value of Financial Instruments

The carrying amount of the Group’s consolidated financial instruments, which principally include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, approximates fair value due to the relatively short maturity of such instruments.

The carrying amount of the Group’s short-term borrowings approximates the fair value based upon current rates and terms available to the Group for similar debt.

(r) Recently Adopted Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes. FIN 48 prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. Tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. FIN 48 is effective for fiscal years beginning after December 15, 2006 and the provisions of FIN 48 are applied to all tax positions under Statement No. 109 upon initial adoption. The cumulative effect of applying the provisions of this interpretation are reported as an adjustment to the opening balance of retained earnings for that fiscal year. The Group adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not require an adjustment to the opening balance of retained earnings as of January 1, 2007.

(s) New Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 for financial assets and liabilities are effective for the Group’s fiscal years beginning January 1, 2008 and the provisions of FAS 157 for non financial assets and liabilities except for items recognized at fair value on a recurring basis are effective for the fiscal year beginning January 1, 2009. The Group is currently evaluating the impact of the provisions for non financial assets and liabilities. The Group has evaluated the provisions of FAS 157 for financial assets and liabilities and does not expect that the adoption will have a material impact on the Group’s financial position or results of operations.

10

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(s) New Accounting Standards (continued)

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities including an Amendment of FASB Statement No. 115” (“FAS 159”). FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of FAS 159 are effective for the Group’s fiscal year beginning January 1, 2008. The Group has evaluated the impact of the provisions of FAS 159 and does not expect that the adoption will have a material impact on the Group’s financial position or results of operations.

In December 2007, the FASB issued SFAS 160 “Accounting for Noncontrolling Interests”, which clarifies the classification of noncontrolling interests in statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests. SFAS 160 will be effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact of this standard on our Financial Statements; however, we do not expect that the adoption of SFAS 160 will have a material impact on our financial condition or results of operations.

In December 2007, the FASB issued SFAS 141(R) “Applying the Acquisition Method”, which clarifies the accounting for a business combination and requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. SFAS 141(R) will be effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact of this standard on our Financial Statements; however, we do not expect that the adoption of SFAS 141(R) will have a material impact on our financial condition or results of operations.

(2) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is summarized as follows (in thousands):

	September30,				December31,
	2008		2007		2007		2006
	(Unaudited)		(Unaudited)
Buildings	$	912	$	831	$	854	$	800
Furniture, fixtures and equipment		24		22		23		21
Motor vehicles		195		131		134		125
Office equipment		84		69		72		67
Plant and machinery		234		222		228		284
Total property, plant and equipment		1,449		1,275		1,311		1,297
Less accumulated depreciation		360		242		270		177
	$	1,089	$	1,033	$	1,041	$	1,120

There was no capitalized interest for the years ended December 31, 2007 and 2006, and the nine months ended September 30, 2008 and 2007.

11

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(3) LAND USE RIGHT

Land use right is summarized as follows (in thousands):

	September 30,				December 31,
	2008		2007		2007		2006
	(Unaudited)		(Unaudited)
Land use right	$	314	$	286	$	294	$	275
Less accumulated amortization		40		27		30		19
		274		259		264		256

There was no capitalized interest for the years ended December 31, 2007 and 2006, and the nine months ended September 30, 2008 and 2007.

(4) ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables are summarized as follows (in thousands):

	September 30,				December 31,
	2008		2007		2007		2006
	(Unaudited)		(Unaudited)
Current portion:
Accrued salaries and wages	$	100	$	111	$	96	$	73
Accrued electricity		2		3		4		5
Receipts in advance		-		44		45		-
Advertising subsidies payables		1,010		486		569		272
Other payables		-		-		-		128
		1,112		644		714		478
Non-current portion:
Advertising subsidies payables		65		616		243		362
	$	1,177	$	1,260	$	957	$	840

(5) INVENTORIES

Inventories consist of the following (in thousands):

	September 30,				December 31,
	2008		2007		2007		2006
	(Unaudited)		(Unaudited)
Raw materials	$	415	$	1,078	$	2,289	$	2,434
Work in process		-		159		168		170
Finished goods		242		2,202		2,251		1,073
	$	657	$	3,439	$	4,708	$	3,677

(6) RELATED PARTY TRANSACTIONS

The amount due to/from a director was unsecured, interest-free and repayable on demand.

The Company was granted the rights to use several newly applied trademarks which are owned by the Company’s CEO. However, the Company has not yet utilized these trademarks. The Company’s CEO is in the process of transferring these trademarks to the Company. Costs of applying these trademarks are not significant.

12

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(7) SHORT-TERM BORROWINGS

The carrying amounts of the Group’s borrowings are as follows (in thousands):

	September 30,										December 31,
	2008					2007					2007					2006
			Interest					Interest					Interest					Interest
	Amounts		Rate			Amounts		Rate			Amounts		Rate			Amounts		Rate
	(Unaudited)					(Unaudited)
Bank loan	$	585		11.071	%	$	534		9.198	%	$	548		10.058	%	$	257		9.216	%

As of September 30, 2008, the short-term borrowings were secured by personal guarantee granted by Wu Qingqing, a director of the Company. The short-term borrowings of US$293,000 and US$292,000 were fully repaid on December 2, 2008 and January 15, 2009 respectively.

(8) SHARE CAPITAL

As mentioned in note 1(b), the consolidated financial statements are prepared as if the Company had been in existence since January 1, 2006 and throughout the whole of the two-year period ended December 31, 2007 and nine-month period ended September 30, 2008. The share capital was assumed to have been issued on January 1, 2006, prior to its date of incorporation, April 30, 2008.

As of September 30, 2008, the Company’s authorized ordinary share capital was 50,000 shares of a single class each with a par value of US$1.00 and its issued and fully paid share capital was 100 shares of a single class issued at par.

On December 5, 2008, an additional 900 shares of a single class each were allotted at par value of US$1.00 and fully paid up in cash. On January 6, 2009, an additional 9,000 shares of a single class each were allotted at par value of US$1.00 and fully paid up in cash. As such, as of the date of this report, the Company’s issued and fully paid share capital was 10,000 shares of a single class issued at par.

(9) INCOME TAXES

The provisions for income tax expense were as follows (in thousands):

	Nine months ended September 30,				Years ended December 31,
	2008		2007		2007		2006
	(Unaudited)		(Unaudited)
PRC enterprise income tax - current	$	2,364	$	2,946	$	3,817	$	1,404

The Group is mainly subject to income taxes in the PRC and provision for the PRC corporate income tax was calculated based on the statutory tax rate of 33% on the assessable income arose in or before year 2007. Pursuant to the PRC Enterprise Income Tax Law (the “New Law”) passed by the Tenth National People’s Congress on 16 March 2007, the new PRC income tax rates for domestic and foreign enterprises are unified at 25% effective from January 1, 2008. The enactment of the New Law is not expected to have any significant financial effect on the amounts accrued in the consolidated balance sheet in respect of taxation payable and deferred taxation.

On January 1, 2007, the Group adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48).  FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized.  FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, disclosure, and other topics.  The adoption of FIN 48 had no impact on the financial statements, as the Group had no material uncertain income tax positions which would result in a liability to the Group.  The Group recognized no interest or penalties on income taxes in its statement of operations for the years ended December 31, 2006 and 2007, and the nine months ended September 30, 2008. There is no statue of limitation in terms of audit by the PRC tax authorities under the current PRC tax law.

The applicable rate of Hong Kong profits tax for the years ended December 31, 2006 and 2007, and the nine months ended September 30, 2008 was 17.5%.  However, no provision for Hong Kong profits tax has been made for the years ended December 31, 2006 and 2007, and the nine months ended September 30, 2008 as the Group did not carry on any business which generate profits chargeable to Hong Kong profits tax.

13

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(9) INCOME TAXES (CONTINUED)

PXPF is a company incorporated as an international company in the BVI and is fully exempt from Domestic Corporate Tax of the BVI.

As of the balance sheet dates presented, there were no deferred tax assets or liabilities.

(10) STATUTORY RESERVES

Under PRC regulations, Jinduren Fashion should pay dividends only out of its accumulated profits, if any, determined in accordance with PRC GAAP.  In addition, it is required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of their registered capital.  The statutory reserves are not distributable in the form of cash dividends to the Company but can be used to make up prior year cumulative losses.

(11) LEASE COMMITMENTS

The Group leases certain facilities under long-term, non-cancelable leases and year-to-year leases. These leases are accounted for as operating leases.  Rent expense amounted to US$32,300, US$19,596, US$26,334 and US$25,114 for the nine months ended September 30, 2008 and 2007 and the years ended December 31, 2007 and 2006 respectively.

Future minimum payments under long-term, non-cancelable leases as of the period ended September 30, 2008 are as follows:

	Future minimum payments
Three months ended December 31, 2008	$	10,733
Year ended December 31, 2009		7,130
Total	$	17,863

(12) BUSINESS AND CREDIT CONCENTRATIONS

The Group operates in the fashion apparel industry and generates all of its sales in the PRC. The fashion apparel industry is impacted by the general economy. Changes in the marketplace would significantly affect management’s estimates and the Group’s performance.

The Group has the following concentrations of business with each customer constituting greater than 10% of the Group’s sales:

	September30,						December31,
	2008			2007			2007			2006
Customers	(Unaudited)			(Unaudited)
Hangzhou Mingzhu Xiaobaifengchang No. C-002
(杭州明珠小百分场C-002 号)		26.35	%		23.67	%		24.01	%		25.37	%
Jiangxi Wanma Apparel Plaza Buzhi Liangpin Apparel Shop
(江西万马服饰广场布制良品服饰行)		15.29	%		13.50	%		14.92	%		15.04	%
Wuhan Jinyang Business Co., Ltd.
(武汉金扬商贸有限责任公司)		12.71	%		13.91	%		12.26	%		12.57	%
Kunming Yunfang Jinduren
(昆明云纺劲都人)		*			*			*			10.39	%
Jinan City Tianqiao District Jinduren Apparel Shop
(济南市天桥区劲都人服饰行)		10.47	%		10.92	%		10.25	%		10.25	%

14

PENG XIANG PENG FEI INVESTMENTS LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(12) BUSINESS AND CREDIT CONCENTRATIONS (CONTINUED)

The Group has the following concentrations of business with each vendor constituting greater than 10% of the Group’s purchases:

	September30,						December31,
	2008			2007			2007			2006
Vendors	(Unaudited)			(Unaudited)
Shishi City Jiexing Apparel Industry Development Co., Ltd.
(石狮市捷兴服饰工贸发展有限公司)		45.85	%		*			*			11.88	%
Shishi Meilian Textile Co., Ltd.
(石狮市美联纺织品有限公司)		*			*			*			13.81	%
Fujian Longzhizu Textile Development Co., Ltd.
(福建龙之族纺织发展有限公司)		*			10.78	%		14.50	%		*
Zhongshan City Luzhicheng Apparel Co., Ltd.
(中山市绿之城服装有限公司)		16.30	%		*			*			*

The concentration makes the Group vulnerable to a near-term severe impact should the relationships be terminated.

* representing concentrations of business with those customers constituting less than 10% of the Group’s sales or purchases with those vendors constituting less than 10% of the Group’s purchases for the respective periods

(13) BENEFIT PLAN

Pursuant to the relevant regulations of the PRC government, Jinduren Fashion participates in a local municipal government retirement benefits scheme (the “Scheme”), whereby Jinduren Fashion is required to contribute a certain percentage of the basic salaries of its employees to the Scheme to fund their retirement benefits. Contributions under the Scheme are charged to the income statement as incurred. Its contributions to the plan amounted to US$161,000, US$142,000, US$132,000 and US$120,000 for the year ended December 31, 2007 and 2006, and the nine months ended September 30, 2008 and 2007 respectively.

15

SINO CHARTER INC.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

The unaudited pro forma consolidated financial statements of SINO CHARTER INC. (“Sino” or the “Shell”) in the opinion of management include all material adjustments directly attributable to the share exchange contemplated by a share exchange agreement, dated February 13, 2009, among Peng Xiang Peng Fei Investments Limited (“PXPF”), the Shell and all of the shareholders of PXPF (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, on February 13, 2009, the Shell issued to the shareholders of PXPF 14,560,000 shares of common stocks at par value $0.00001 each in exchange for all of the issued and outstanding common stock of PXPF. PXPF thereby became a wholly owned subsidiary of the Shell. The pro forma consolidated statement of operations includes the accounts of the Shell and PXPF.

The statement of operations was prepared as if the above mentioned acquisition of PXPF by the Shell were consummated on January 1, 2006 and the balance sheet was prepared as if they were consummated on September 30, 2008. These pro forma consolidated financial statements have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the transaction occurred on the dates indicated and are not necessarily indicative of the results that may be expected in the future.

SINO CHARTER INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 2008

	August 31,			September 30,					Unaudited
	2008			2008		Pro-forma			Pro-forma
	Sino			PXPF		Adjustment			Consolidated		Note
ASSETS
Current Assets:
Cash and cash equivalents	$	-		$	4,721				$	4,721
Pledged bank deposits		-			88					88
Accounts receivable		-			6,890					6,890
Inventories		-			657					657
Prepayment and other receivables		18			25					43
Total current assets		18			12,381					12,399
Property, plant and equipment, net		-			1,089					1,089
Land use rights		-			274					274.00
Investment in subsidiaries		-			-					-
TOTAL ASSETS	$	18		$	13,744				$	13,762
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	-		$	1,623				$	1,623
Accrued expenses and other payables		2			1,112					1,114
Amount due to a shareholder		18			2					20
Bills payable		-			293					293
Short-term bank loans		-			585					585
Taxes payable		-			366					366
Total current liabilities		20			3,981					4,001
Non-current Liabilities:
Other payable		-			65					65
Total liabilities		20			4,046					4,066
Commitments and contingencies
Equity:
Common stock		-			-		-			-	2
Additional paid-in capital		116			1,237		(118	)		1,235
Statutory reserve					913					913
Retained earnings		(118	)		7,033		118			7,033	3
Accumulated other comprehensive income		-			515					515
Total equity		(2	)		9,698					9,696
TOTAL LIABILITIES AND EQUITY	$	18		$	13,744				$	13,762

SINO CHARTER INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

	For the year ended
	November 30,			December 31,				Unaudited
	2007			2007			Pro-forma	Pro-forma
	Sino			PXPF			Adjustment	Consolidated			Note
Net sales	$	-		$	39,727			$	39,727
Cost of sales		-			24,939				24,939
Gross profit		-			14,788				14,788
Operating expenses:
Selling expenses		-			1,847				1,847
General and administrative expenses		65			1,380				1,445
Other operating expenses		1			3				4
		66			3,230				3,296
Income from operations		(66	)		11,558				11,492
Other income (expenses):
Interest income		-			54				54
Interest expense		-			(46	)			(46	)
		-			8				8
Income before provision for income taxes		(66	)		11,566				11,500
Provision for income taxes		-			3,817				3,817
Net income/ (loss)	$	(66	)	$	7,749			$	7,683

SINO CHARTER INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

	For the nine months ended
	August 31,			September 30,				Unaudited
	2008			2008			Pro-forma	Pro-forma
	Sino			PXPF			Adjustment	Consolidated			Note
Net sales	$	-		$	40,013			$	40,013
Cost of sales		-			25,620				25,620
Gross profit		-			14,393				14,393
Operating expenses:
Selling expenses		-			2,965				2,965
General and administrative expenses		5			2,076				2,081
Other operating expenses		-			2				2
		5			5,043				5,048
Income from operations		(5	)		9,350				9,345
Other income (expenses):
Interest income		-			13				13
Interest expense		-			(50	)			(50	)
		-			(37	)			(37.00	)
Income before provision for income taxes		(5	)		9,313				9,308
Provision for income taxes					2,364				2,364
Net income/ (loss)	$	(5	)	$	6,949			$	6,944

Notes to pro-forma consolidated financial statements:

1. The acquisition by Sino of PXPF is deemed to be a reverse acquisition. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, Sino (the legal acquirer) is considered the accounting acquiree and PXPF (the legal acquiree) is considered the accounting acquirer. The consolidated financial statements of the consolidated entities will in substance be those of PXPF, with the assets and liabilities, and revenues and expenses, of Sino being included effective from the date of consummation of Share Exchange Transactions. Sino is deemed to be a continuation of business of PXPF. The outstanding common stock of Sino prior to the Share Exchange Transactions will be accounting for at their net book value and no goodwill will be recognized.

2. To reflect the issuance of Sino’s 14,560,000 shares of common stocks at par value $0.00001 each in connection with the Share Exchange Transactions.

3. To eliminate the pre-acquisition retained earnings of Sino under reverse acquisition.

4. There were no inter-company transactions and balances between Sino and PXPF during the periods covered by the pro forma consolidated financial statements.

EX-99.2

SINO CHARTER INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Basis of Presentation

The unaudited pro forma combined financial statements of SINO CHARTER INC. (“Sino” or the “Shell”) in the opinion of management include all material adjustments directly attributable to the share exchange contemplated by a share exchange agreement, dated February 13, 2009, among Peng Xiang Peng Fei Investments Limited (“PXPF”), the Shell and all of the shareholders of PXPF (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, on February 13, 2009, the Shell issued to the shareholders of PXPF 14,560,000 shares of common stock at par value $0.00001 each in exchange for all of the issued and outstanding common stock of PXPF (“Share Exchange Transaction”). PXPF thereby became a wholly owned subsidiary of the Shell. The pro forma combined statements of operations include the accounts of the Shell and PXPF.

The statements of operations were prepared as if the above mentioned acquisition of PXPF by the Shell were consummated on January 1, 2007 and 2008 and the balance sheet was prepared as if they were consummated on September 30, 2008. These pro forma combined financial statements have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the transaction occurred on the dates indicated and are not necessarily indicative of the results that may be expected in the future.

SINO CHARTER INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS AT SEPTEMBER 30, 2008

(Amount in thousands)

	August 31,			September 30,					Unaudited
	2008			2008		Pro-forma			Pro-forma
	Sino			PXPF		Adjustment			Combined		Note
ASSETS
Current Assets:
Cash and cash equivalents	$	-		$	4,721				$	4,721
Pledged bank deposits		-			88					88
Accounts receivable		-			6,890					6,890
Inventories		-			657					657
Prepayment and other receivables		18			25					43
Total current assets		18			12,381					12,399
Property, plant and equipment, net		-			1,089					1,089
Land use rights		-			274					274.00
TOTAL ASSETS	$	18		$	13,744				$	13,762
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	-		$	1,623				$	1,623
Accrued expenses and other payables		2			1,112					1,114
Amount due to a shareholder		18			2					20
Bills payable		-			293					293
Short-term bank loans		-			585					585
Taxes payable		-			366					366
Total current liabilities		20			3,981					4,001
Non-current Liabilities:
Other payable		-			65					65
Total liabilities		20			4,046					4,066
Commitments and contingencies
Equity:
Common stock		-			-		-			-		2
Additional paid-in capital		116			1,237		(118	)		1,235		3
Statutory reserve					913					913
Retained earnings		(118	)		7,033		118			7,033		3
Accumulated other comprehensive income		-			515					515
Total equity		(2	)		9,698					9,696
TOTAL LIABILITIES AND EQUITY	$	18		$	13,744				$	13,762

The accompanying notes are an integral part of this statement.

SINO CHARTER INC.

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

(Amount in thousands)

	For the year ended
	November 30, 2007 Sino			December 31, 2007 PXPF			Pro-forma Adjustment	Unaudited Pro-forma Combined
Net sales	$	-		$	39,727			$	39,727
Cost of sales		-			24,939				24,939
Gross profit		-			14,788				14,788
Operating expenses:
Selling expenses		-			1,847				1,847
General and administrative expenses		65			1,380				1,445
Other operating expenses		1			3				4
		66			3,230				3,296
Income from operations		(66	)		11,558				11,492
Other income (expenses):
Interest income		-			54				54
Interest expense		-			(46	)			(46	)
		-			8				8
Income before provision for income taxes		(66	)		11,566				11,500
Provision for income taxes		-			3,817				3,817
Net income/ (loss)	$	(66	)	$	7,749			$	7,683
Weighted average number of shares outstanding -basic and diluted		125,921			100				16,000,000
Net (loss) income per common share -basic and diluted (amounts in dollars)	$	(0.05	)	$	7,749.00			$	0.05

The accompanying notes are an integral part of this statement.

SINO CHARTER INC.

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

(Amount in thousands)

	For the nine months ended
	August 31, 2008 Sino			September 30, 2008 PXPF			Pro-forma Adjustment	Unaudited Pro-forma Combined			Note
Net sales	$	-		$	40,013			$	40,013
Cost of sales		-			25,620				25,620
Gross profit		-			14,393				14,393
Operating expenses:
Selling expenses		-			2,965				2,965
General and administrative expenses		5			2,076				2,081
Other operating expenses		-			2				2
		5			5,043				5,048
Income from operations		(5	)		9,350				9,345
Other income (expenses):
Interest income		-			13				13
Interest expense		-			(50	)			(50	)
		-			(37	)			(37.00	)
Income before provision for income taxes		(5	)		9,313				9,308
Provision for income taxes					2,364				2,364
Net income/ (loss)	$	(5	)	$	6,949			$	6,944
Weighted average number of shares outstanding -basic and diluted		125,921			100				16,000,000
Net (loss) income per common share - basic and diluted (amounts in dollars)	$	(0.00	)	$	6,949.00			$	0.04

The accompanying notes are an integral part of this statement.

Notes to pro-forma combined financial statements:

1. As shareholders of PXPF obtain the majority voting rights and operating control of the combined entity and PXPF's senior management has been appointed to represent the majority of the senior management of the combined entity following the Share Exchange Transactions, the Share Exchange Transactions is deemed to be a reverse acquisition. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, Sino (the legal acquirer) is considered the accounting acquiree and PXPF (the legal acquiree) is considered the accounting acquirer. The combined financial statements of the combined entities will in substance be those of PXPF, with the assets and liabilities, and revenues and expenses, of Sino being included effective from the date of consummation of Share Exchange Transactions. PXPF will be the successor to Sino for accounting and reporting purposes. The outstanding common stock of Sino prior to the Share Exchange Transactions will be accounted for at net book value and no goodwill will be recognized.

2. To reflect the issuance of Sino’s 14,560,000 shares of common stocks at par value $0.00001 each in connection with the Share Exchange Transactions. Subsequent to the Share Exchange Transactions, the total amount of issued and outstanding common stock was 16,000,000.

3. To eliminate the pre-acquisition retained earnings of Sino under reverse acquisition.

4. There were no inter-company transactions and balances between Sino and PXPF during the periods covered by the pro forma combined financial statements.