UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




(Mark
One)


FORM
10-K





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




For the fiscal year endedJune
30, 2010




or




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





For the
transition period from ________________to ________________





Commission file number:000-52832




CHINA
UNITECH GROUP, INC.


(Exact
name of registrant as specified in its charter)





Nevada
              
              98-0500738State
      of other jurisdiction of
                incorporation
      or organization
              
              (I.R.S.
      Employer Identification No.)




1-D-1010  Yuanjing Park, Long Xiang
      Road, Long Gang
                District, Shenzhen, Guangdong
      Province  P.R.C.
              
              518117(Address
      of principal executive offices)
              
              (Zip
      Code)




Registrant’s telephone number,
including area code:86-755-2894-3820





Securities
registered pursuant to Section 12(b) of the Act:





Title of each class
                        
                        Name of each exchange on which
      registered




Securities
registered pursuant to section 12(g) of the Act:




Common Stock, $0.00001 par
      valueTitle
      of Class




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  ̈Yes 
xNo





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





Note –
Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under
those Sections.





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





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





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





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





Large accelerated filer o
              Accelerated filer o





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





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


 ̈Yes                      xNo





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.





Note.—If a determination as to
whether a particular person or entity is an affiliate cannot be made without
involving unreasonable effort and expense, the aggregate market value of the
common stock held by non-affiliates may be calculated on the basis of
assumptions reasonable under the circumstances, provided that the assumptions
are set forth in this Form.





The
aggregate market value of the voting and non-voting common stock of the issuer
held by non-affiliates as of December 31, 2009 was approximately $18,612
(1,692,000  shares of common stock held by non-affiliates) based upon
the closing price of $0.011 per share of common stock as quoted by OTC Bulletin
Board on December 17, 2009, being the last trade date of the issuer’s shares
prior to December 31, 2009.





APPLICABLE
ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:




Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. xYes  ̈No





(APPLICABLE
ONLY TO CORPORATE REGISTRANTS)




Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.




As of
September 10, 2010 there are 20,200,000 shares of common stock, par value
$0.00001 issued and outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE




List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).





TABLE
OF CONTENTS





PagePART
      IItem
      1.
                      
                      Business.
                      
                      3Item
      1A.
                      
                      Risk
      Factors.
                      
                      14Item
      1B.
                      
                      Unresolved
      Staff Comments.
                      
                      25Item
      2.
                      
                      Properties.
                      
                      25Item
      3.
                      
                      Legal
      Proceedings.
                      
                      25Item
      4.
                      
                      (Removed
      and Reserved).
                      
                      25PART
      IIItem
      5.
                      
                      Market
      for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.
                      
                      26Item
      6.
                      
                      Selected
      Financial Data.
                      
                      27Item
      7.
                      
                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation.
                      
                      27Item
      7A.
                      
                      Quantitative
      and Qualitative Disclosures About Market Risk.
                      
                      28Item
      8.
                      
                      Financial
      Statements and Supplementary Data.
                      
                      28Item
      9.
                      
                      Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure.
                      
                      29Item
      9A.
                      
                      Controls
      and Procedures.
                      
                      29Item
      9B.
                      
                      Other
      Information.
                      
                      30PART
      IIIItem
      10.
                      
                      Directors,
      Executive Officers and Corporate Governance.
                      
                      31Item
      11.
                      
                      Executive
      Compensation.
                      
                      34Item
      12.
                      
                      Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholders Matters.
                      
                      36Item
      13.
                      
                      Certain
      Relationships and Related Transactions, and Director
      Independence.
                      
                      37Item
      14.
                      
                      Principal
      Accountant Fees and Services.
                      
                      38PART
      IVItem
      15.
                      
                      Exhibits
      and Financial Statement Schedules.
                      
                      39


2


PART
I





Item
1. Business.





Our
Corporate Structure





We are a
Nevada holding company for our direct and indirect subsidiaries in the British
Virgin Islands (“BVI”) the People’s Republic of China (“PRC”). We own all of the
issued and outstanding capital stock of Classic Bond, a BVI corporation. Classic
Bond is a holding company that owns 100% of the outstanding capital stock of
Shenzhen Zhonghefangda Internet Technology Co., Limited(“Zhonghefangda”), a PRC
company.





Current
PRC laws and regulations impose substantial restrictions on foreign ownership of
the internet café business in the PRC. Therefore, our principal operations and
sales and marketing activities in the PRC are conducted through Shenzhen Junlong
Culture Communications Co., Ltd (“Junlong”), our variable interest entity
(“VIE”), which holds the licenses and approvals for conducting the internet café
business in the PRC.





Junlong
was incorporated in the PRC in December 2003. It obtained its license to operate
internet cafés in 2005. We control the VIE through a series of contractual
arrangements. These contracts include a Management and Consulting Services
Agreement, an Option Agreement, an Equity Pledge Agreement, and a Voting Rights
Proxy Agreement. The Management and Consulting Services Agreement, dated June
11, 2010, is between our indirect, wholly-owned subsidiary, Zhonghefangda, and
our VIE. The rest of the agreements, also dated June 11, 2010, are among
Zhonghefangda, our VIE and its shareholders. These contracts are summarized
below. Please also refer to the full text of the contracts, which are filed as
exhibits to this report.





·
            Management
      and Consulting Services Agreement.Under the Management
      and Consulting Services Agreement between Junlong and Zhonghefangda,
      Zhonghefangda provides management and consulting services to the VIE in
      exchange for service fees up to 100% of the VIE’s Aggregate Net Profits
      (as defined in the agreement). In consideration for its right to receive
      the VIE’s aggregate net profits, Zhonghefangda will reimburse to the VIE
      the full amount of Net Losses (as defined in the Agreement) incurred by
      the VIE. During the term of the agreement, the VIE may not contract with
      any other party to provide services that are the same or similar to the
      services to be provided by Zhonghefangda pursuant to the agreement. The
      term of this agreement is 20 years, renewable for succeeding periods of
      the same duration until terminated pursuant to terms of the
      agreement.


·
            Option
      Agreement.Under the Option Agreement, the shareholders of the VIE,
      Mr. Dishan Guo, Mr. Jinzhou Zeng and Ms. Xiaofen Wang, or the VIE
      Shareholders, who collectively own 100% of the equity interest in the VIE,
      granted Zhonghefangda an exclusive, irrevocable option to purchase all or
      part of their equity interests in the VIE, exercisable at any time and
      from time to time, to the extent permitted under PRC law. The purchase
      price of the equity interest will be equal to the original paid-in
      registered capital of the transferor, adjusted proportionally if less than
      all of the equity interest owned by the transferor is
      purchased.


·
            Equity
      Pledge Agreement.The VIE Shareholders have pledged their entire equity interest in
      the VIE to Zhonghefangda pursuant to the Equity Pledge Agreement. The
      equity interests are pledged as collateral to secure the obligations of
      the VIE under the Management and Consulting Services Agreement and the VIE
      Shareholders’ obligations under the Option Agreement and the Proxy
      Agreement.


·
            Voting
      Rights Proxy Agreement.Pursuant to the Voting
      Rights Proxy Agreement, each of the VIE Shareholders has irrevocably
      granted and entrusted Zhonghefangda with all of the voting rights as a
      shareholder of the VIE for the maximum period of time permitted by law.
      Each VIE Shareholder has also covenanted not to transfer his or her equity
      interest in the VIE to any party other than Zhonghefangda or a designee of
      Zhonghefangda.





We
believe that the terms of these agreements are no less favorable than the terms
that we could obtain from disinterested third parties. According to our PRC
counsel, China Commercial Law Firm, our conduct of business through these
agreements complies with existing PRC laws, rules and
regulations.


3


As a
result of these contractual arrangements, Junlong became our controlled VIE. A
variable interest represents a contractual or ownership interest in another
entity that causes the holder to absorb the changes in fair value of the other
entity’s net assets. Potential variable interests include: holding economic
interests, voting rights, or obligations to an entity; issuing guarantees on
behalf of an entity; transferring assets to an entity; managing the assets of an
entity; leasing assets from an entity; and providing financing to an entity. In
such cases consolidation of the VIE is required by the enterprise that controls
the economic risks and rewards of the entity, regardless of ownership. We have
consolidated Junlong’s historical financial results in our financial statements
as a variable interest entity pursuant to U.S. generally accepted accounting
principles (“GAAP”).





The
following chart reflects our organizational structure as of the date of this
report.











*Contractual
agreements consisting of a management and consulting service agreement, equity
pledge agreement, option agreement and proxy agreement.





Our
Corporate History





We were
incorporated in the State of Nevada on March 14, 2006. From our office in China,
we planned to operate in the online travel business using the website www.chinabizhotel.com.
The website was planned to offer viewers the ability to book hotel rooms in
China and earn us booking fees from the respective hotels. However, we did not
engage in any operations and were dormant from our inception until our reverse
acquisition of Classic Bond on July 2, 2010. As a result of the reverse
acquisition, we ceased to be a shell company on July 2, 2010.


4


Acquisition
of Classic Bond





On July
2, 2010, we completed a reverse acquisition transaction through a share exchange
with Classic Bond and its shareholders, whereby we acquired 100% of the issued
and outstanding capital stock of Classic Bond, in exchange for 19,000,000 shares
of our common stock, which shares constituted 94% of our issued and outstanding
shares on a fully-diluted basis, as of and immediately after the consummation of
the reverse acquisition. As a result of the reverse acquisition, Classic Bond
became our wholly-owned subsidiary and the former shareholders of Classic Bond,
became our controlling shareholders. The share exchange transaction with Classic
Bond was treated as a reverse acquisition, with Classic Bond as the acquirer and
China Unitech Group, Inc. as the acquired party. Unless the context suggests
otherwise, when we refer in this report to business and financial information
for periods prior to the consummation of the reverse acquisition, we are
referring to the business and financial information of Classic Bond and its
consolidated subsidiaries.





Upon the
closing of the reverse acquisition, Xuezheng Yuan, our sole director and
officer, submitted a resignation letter pursuant to which he resigned, with
immediate effect, from all offices that he held and from his position as our
sole director that will become effective on the tenth day following the mailing
by us of an information statement, or the Information Statement, to our
stockholders that complies with the requirements of Section 14f-1 of the
Exchange Act, which will be mailed out on or about July 12, 2010. Also upon the
closing of the reverse acquisition, our board of directors increased its size
from one to five members and appointed Dishan Guo, Zhenquan Guo, Lei Li, Wenbin
An and Lizong Wang to fill the vacancies created by the resignation of Xuezheng
Yuan and such increase. Mr. Dishan Guo's appointment became effective upon
closing of the reverse acquisition, while the remaining appointments will become
effective on the tenth day following our mailing of the Information Statement to
our stockholders. In addition, our executive officers were replaced by the
Classic Bond executive officers upon the closing of the reverse acquisition as
indicated in more detail below.





As a
result of our acquisition of Classic Bond, we now own all of the issued and
outstanding capital stock of Classic Bond. Classic Bond was incorporated in the
British Virgin Islands on November 2, 2009 to serve as an investment holding
company. Junlong was incorporated in the PRC in December 2003. It obtained its
first licenses from the Ministry of Culture to operate an internet café chain in
2005 and opened its first internet café in April 2006.





We are in
the midst of amending our certificate of incorporation to change our name from
“China Unitech Group, Inc.” to “China Internet Café Holdings Group, Inc.” to
reflect the current business of our company, which changed as a result of our
acquisition of Classic Bond.





Business
Overview




We
operate a chain of 36 internet cafés in Shenzhen, Guangdong, PRC. We provide top
quality internet café facilities and we believe we are the largest internet café
chain in Shenzhen. We provide internet access at reasonable prices to students
and migrant workers. Although we sell snacks, drinks, and game access cards,
over 95% of our revenue comes from selling access time to our computers. We sell
internet café memberships to our customers. Members purchase prepaid IC cards (a
pocket-sized card with embedded integrated circuits that can be used for
identification, authentication, data storage and application processing), which
include stored value that will be deducted based on time usage of computer at
the internet café. The cards are only sold at our cafés. We deduct the amount
that reflects the access time used by a customer when the customer’s IC card is
inserted into the IC card slot on the computer.




The internet cafés are generally open 24 hours, 7 days a
week.




Our
Industry




Background
on Internet Cafés in the PRC




Internet
cafés have been booming in the PRC in the recent years. According to the "Survey
of China Internet Café Industry" by the Ministry of Culture in 2005, the PRC had
110,000 internet cafés, with more than 1,000,000 employees and contributing RMB
18,500,000,000 to China's GDP. According to an article entitled “China Surpasses U.S. in Number of
Internet Users” written by David Barboza on the New York Times July 26,
2008 issue, the number of internet users in the PRC reached about 253 million in
June 2008, thereby, putting China ahead of the United States as the world’s
biggest internet market. Within the Chinese internet market, internet cafés have
been a fast growing segment.


5




The
internet café market in the PRC, like most places worldwide, originally started
out as simply a location to access the internet. However, PRC internet cafés
have changed into full service entertainment centers where people can relax
outside work and home. These cafés provide services that are vastly different
from the internet cafés initially established in the PRC. They provide decent
facilities at a reasonable fee, with specific configuration for online games and
audio visual entertainment. They are a source of cost effective entertainment
for low-income earners who cannot afford computers, game consoles or an internet
connection, such as migrant workers and students. In internet cafés, customers
have access to popular online games and can either socialize or entertain
themselves. Players gather together in internet cafés for games such as World of
Warcraft (WOW), and Call to Arms played either with their friends in the café or
with users across the globe.




After
tightened regulations on the operations of internet cafés, there are currently
around 81,000 internet cafés in the PRC. (Source: “Internet café ban call draws
Chinese hacker wrath”. AFP 3 Mar 2010. http://www.google.com/hostednews/afp/article/ALeqM5gJus4tWVAaeWI8IoS-n238PYpFjw)
The largest chain has over 1,000 locations. There are currently 10 chains which
have licenses to operate nationally.




Computer
Gaming Industry in China




According
to Pearl Research, a business intelligence and consulting firm, the PRC online
game market rose 63% in 2008 to $2.8 billion. Given the relatively low rate of
computer ownership in the PRC as compared to Western countries, internet cafés
have become the primary distribution point for games in the PRC. A substantial
number of game players access online games through internet cafés and these
players are crucial for survival of internet cafés. The chart below shows the
robust revenue growth of online game companies from 2003 to 2009.









The
following diagram prepared by Morgan Stanley depicts the interdependent
relations between online game developers and internet cafés. (Source: Ji Richard
and Meeker, Mary. "Creating Consumer Value in Digital China" Morgan Stanley
Equity Research Global. September 12, 2005.)


6









Given the
pivotal position of internet cafés, many online game companies have been making
great efforts to support internet cafés to expand their customer
base.




Partnerships
between Internet Cafés and Other Online Information Providers




Besides
games, internet cafés are able to develop partnerships with other online
information providers. These companies provide games as well as other
information services. As can be seen by the chart below, these providers have
significant revenues and profits.




Table 1 Major Internet Company Revenues




Company
                        
                        2009 Q1
                          Revenue
                          Million US$
                        
                        
                        Mobile
                          Value-Added
                          Service
                          (MVAS)
                        
                        
                        % of Revenue
                          Gaming /
                          Internet
                          Value-Added
                          Service
                          (IVAS)
                        
                        
                        Advertising
                        
                        
                        Operating
                          MarginSohu
                        
                        $
                        84.4
                        
                        
                        
                        10
                        %
                        
                        
                        49
                        %
                        
                        
                        41
                        %
                        
                        
                        40
                        %Baidu
                        
                        $
                        81.9
                        
                        
                        
                        –
                        
                        
                        
                        –
                        
                        
                        
                        100
                        %
                        
                        
                        27
                        %Sina
                        
                        $
                        71.3
                        
                        
                        
                        33
                        %
                        
                        
                        –
                        
                        
                        
                        67
                        %
                        
                        
                        19
                        %Shanda
                        
                        $
                        111
                        
                        
                        
                        –
                        
                        
                        
                        97
                        %
                        
                        
                        3
                        %
                        
                        
                        40
                        %NetEase
                        
                        $
                        93
                        
                        
                        
                        –
                        
                        
                        
                        86
                        %
                        
                        
                        14
                        %
                        
                        
                        63
                        %Tencent
                        
                        $
                        204.1
                        
                        
                        
                        20
                        %
                        
                        
                        70
                        %
                        
                        
                        10
                        %
                        
                        
                        51
                        %Total
                        
                        $
                        646
                        
                        
                        
                        11
                        %
                        
                        
                        58
                        %
                        
                        
                        31
                        %
                        
                        
                        40
                        %




(Source:
I2I Group. “Social Media Opportunities.” October 2009. Online PowerPoint.
http://www.i2i-m.com/downloads/Handbook%20of%20Social%20Media%20in%20China%202.ppt.)




7




Our
Competitive Strengths




We
believe that the following strengths enable us to compete effectively in and to
capitalize on growth in the internet café market in the PRC:




·
            Company-owned
      Cafés.Unlike most of our competitors who franchise their internet
      cafés, all of our cafés are direct outlets. This model makes it easier to
      carry out management decisions at each of our cafés. It also allows us to
      maximize operating profit and create a consistent name
    brand.


·
            Good Scale
      of Operation.We have a registered capital of RMB 10 million(approximately
      $1.47 million) with 36 cafés. The scale of operations allows us to control
      cost and standardize store
management.


·
            Proprietary
      Software.We developed the software “SAFLASH” that provides fast
      and stable internet connections. Its automatic flow control prevents users
      from being disconnected when there is a disruption of internet traffic.
      Stability is a key requirement for online gamers. Our research and
      development team is working constantly to improve the
      software.


·
            Government
      and Industry Relations. We have developed excellent working
      relationship with the government that has assisted us to better comply
      with internet café related laws and regulations and to understand
      regulatory trends in our industry. Our CEO and CFO Dishan Guo is the
      executive president of Shenzhen Longgang District Internet Industry
      Association. This association is an associated department of the Ministry
      of Culture and sets the internet café industry standards. As a result of
      his involvement, Mr. Guo gains valuable insight into new standards and may
      also have the opportunity to influence industry
  standards.


·
            Centralized
      Oversight. All of our café managers are trained by, and under the
      supervision of, our centralized operations manager, who is based at our
      headquarters. As a result, our local managers are able to effectively
      handle operational issues at the cafés. The local managers are trained to
      provide a service level that meets Junlong’s service standards, and our
      operations manager is able to effectively enforce policies and procedures
      implemented by us.




Our
Growth Strategy




We are
committed to enhancing our sales, profitability and cash flows through the
following strategies:




·
            We will
      seek to grow by business expansion. We plan to expand in the
      southwest and mid-east regions of the PRC
      through acquisitions of local small chains, in order to meet the
      requirements of applying for a national chain license. The national chain
      license requires 30 internet cafés in three
      provinces.  We plan to accomplish acquisitions of internet cafés in
      Guizhou in the third quarter, and Sichuan in the fourth
      quarter in order to help us satisfy the requirements of obtaining a
      national chain license.We also
      want to fully develop our wholly-owned branches through effective
      integration of resources. Most of our current competitors that offer
      franchising simply provide a franchise license to entrepreneurs to get
      started in exchange for a yearly fee.  Junlong, on the other
      hand,
      is deeply involved in the operational management of its
      company-owned cafés. After we obtain a national chain license, we will
      focus on developing high-end internet cafés in the more developed cities
      to create new concepts of internet café operation.  We expect to
      spread to the less developed cities in three years in order to gain
      competitive market shares. We plan to put 20% of our resources to the less
      developed cities for market integration after we are granted a national
      license, which will effectively lay the foundation for us in those
      cities.


·
            We will
      seek to grow by improving our company structure.To optimize our
      resources and operations, we plan to improve our company structure so that
      20% of our internet cafés will be large stores each with 300 or more
      computers mainly focusing on movies, high-end games and entertainment; 50%
      of cafés will be medium stores with 150 to 300 computers and a few movie
      suites focusing on high-end games; 10% of cafés will be small stores in
      the developed cities to spread our reputation with 100 to 150 computers.
      In order to penetrate the less developed cities, we want to open 20% of
      our stores in those cities. Our mission is to set up internet cafés all
      over the PRC to become a real national chain and the industry
      leader.


8


·
            We will
      seek to grow by location selection. Internet café is a retail
      business. Internet cafés are located in highly populated areas so as to
      attract customers. Junlong’s internet cafés are located at busy and well
      attended areas such as industrial zones and business quarters. We have
      conducted market research in Sichuan, Guizhou, Yunan provinces and
      Chonqing municipalities in March. As a result of this market research, we
      have identified the university areas in Sichuan and Chongqing, the
      residential areas and business quarters in Yunan and Guizhou as prime
      areas for the establishment of internet cafés. Our future expansion in the
      south-western region will be built on the basis of these
      locations.




Use of Prepaid IC Cards




Internet
café members purchase prepaid IC cards which include stored value that will be
deducted based on time usage of computer at the internet café. The cards are
only sold at our cafés. We deduct from the stored value amount to reflect
customer usage when the customers’ IC cards are inserted into the IC card slot
on the computer. Revenues derived from the prepaid IC cards at the internet café
are recognized when services are provided. Below is our IC card
sample.









Outstanding
customer balances on the IC cards are included in deferred revenue on the
balance sheets. We do not charge any service fees that cause a decrease in
customer balances.





The basic
membership comes with the IC card and costs RMB 10 (approximately $1.47) on top
of the initial credits deposited. Members receive a discount (e.g. RMB 50
(approximately $7.35) deposit gets RMB 60 (approximately $8.82) credit in
the IC card). There is no expiration date for IC cards, but money deposited into
the IC cards is not refundable.




Software
on the Computers




We have
on average 250 computers in each location and a total of 8,324 computers for the
36 cafés. We install more than 100 online games on each of our computers. We
also provide movies, music and online chatting software. We use Microsoft Word
compatible software called “WPS” which is a freeware provided by Kingsoft, a
Chinese software company, so that we do not pay for the much higher priced
Microsoft Office license.




Third
Party Gaming Cards, Snacks and Drinks




We also
sell third party on-line gaming cards, snacks and drinks. The commission for the
sale of gaming cards is generally 20% of the value of the cards. Concessions
(snacks and drinks) are also sold to customers.


9




New products or services




We are
considering opening more “luxury” cafés in the future to meet the needs of high
income groups. This strategy is only in the planning stage. Further, although
this is potentially a very interesting marketing and branding tool, we do not
expect these locations to significantly increase our overall
revenues.




Franchising




We own
all of our cafés.  However, beginning in 2012 we expect to utilize a
modified franchise model in addition to owning our own cafés.  We expect
that our franchisees will pay the start up costs for a new internet café.
  After the initial investment, we will select the location and
provide intensive training and staff to run the café.   Once the café
becomes operational, our employees will run the café and provide management
support.  We expect the franchisee to be more akin to an investor than an
owner/operator.  We will pay the franchisee a percentage of the café’s
profit for providing the funds necessary to open the café and operate
it.




Our
Customers




Our
customers are individuals who come into the location to surf the internet and/or
play online games with their friends locally and remotely with individuals
around the world.




Internet
café users are mainly young males with low incomes, mainly migrant workers. At
our cafés migrant workers are provided a convenient channel at low cost to
communicate with their families and friends. For example, VOIP (Voice over IP)
service at the café is much cheaper than any other telecommunications method.
Low income earners can arrange a time to chat online with their friends and
families in their home cities.




We
estimate that at our internet café approximately 50% of computer time is spent
on gaming, 30% for other entertainment (e.g. online chatting, online movies, or
online music); and 20% for other purposes (e.g work).




In the
last few years there has been a decrease in the number of internet café users as
a result of increased availability of internet connections at home. However, we
believe that we will be able to maintain organic growth by providing quality
services to our core customers. Even if someone has internet access in their
home or dormitory, these locations do not provide the atmosphere and services
provided by internet cafés at a reasonable cost. For example, if a computer is
set up in the limited space of a dormitory, an additional internet connection
would need to be purchased. A computer suitable for online gaming costs RMB
5,000 (approximately $735.29) or more. The monthly rent for an ADSL connection
costs an additional RMB 100 (approximately $14.71) and even this may not be good
enough for some online games such as WOW. In these types of games, there is a
very important play mode called RAID, where, for example, 40 people are needed
on a team to kill some monster in the dungeon. This requires all players to have
very stable internet connections. A typical low-end computer and ADSL connection
would suffer significant lags and cause performance issues. Internet cafés, on
the other hand, can provide high speed computers and internet connections at
much lower cost to the players.




Our
future plans are to open internet cafés around university areas in the
south-western provinces. Students spend more time in internet cafés because
their time is very flexible. We believe that major users of internet cafés in
the future will be young game players.




Competition




There are
approximately 168,000 Internet cafés in the PRC in 2009. (Source:
http://www.ai-media.cn/chinastats.htm (accessed March 23, 2010) The market is
extremely fragmented. One of the largest national chains which has around 1,000
locations only has less than 2% of the national market. The following describes
some of the local, regional and national competitors.


10




Local
Competitors in Shenzhen




·
            Shenzhen Weiwo
      Internet Café Chain Company.Weiwo was founded in 1997. Currently,
      Weiwo has 14 cafés. The company mainly operates a franchise model, with
      only 3 company owned cafés. The cafés are mainly located in Futian
      district, Shenzhen City. The company concentrates on mid-range market.
      Each café is relatively small with 100 to150 computers (for a total of
      around 1,600 computers). Its franchised stores are charged a franchising
      fee per month of approximately RMB 5,000 (approximately $735.29). Weiwo is
      the smallest internet café chain company in
  Shenzhen.


·
            Shenzhen Bian Internet
      Co. Ltd.Although the company entered into the internet café
      industry in 2003, its current structure was founded on February 22, 2007
      and obtained its regional internet café chain license in 2007. The company
      operates mostly as a franchise model with 26 registered café, only 3 of
      which are directly owned by the company. Each café has 80-150 computers.
      It also has a few large cafés with more than 200 computers. The estimated
      total number of computers owned by the company is 4,000. There is a
      significant turnover in franchise ownership with around one third of the
      franchise cafés transferring their licenses to other internet café
      owners.


·
            Quansu Internet Café
      Chain Company. Quansu was founded in 1998 as a subsidiary
      investment project of the Shenzhen Commercial Bank Investment Co. Ltd. The
      company owns 36 cafés, 8 of which are directly owned and 28 of which are
      franchises. Each café has 80-150 computers. The total number of computers
      is approximately 6,000. The cafés are located in Baoan District, Futian
      District and Luohu District. In May 2009, Quansu switched its major
      business towards its internet cable connection business and public
      telephone business.




National
Competitors




Currently
there are ten national internet café chains:




·
            Zhongqing
      Network Home Co., Ltd.


·
            Beijing
      Cultural Development Co., Ltd.


·
            China
      Digital Library Co., Ltd.


·
            Yalian
      Telecommunication Network Co., Ltd.


·
            China
      Heritage Information Center


·
            Capital
      Networks Limited


·
            Great
      Wall Broadband Network Service Co.,
Ltd.


·
            China
      United Telecommunications Co., Ltd. (China
  Unicom)


·
            CLP
      Chinese Tong Communication Co.,
Ltd.


·
            Reid
      Investment Holding Company




The ten national chains generally have strong financial support.
However, to our knowledge these chains have not been successful in expanding
their operations.




Competitors
in Potential Markets




As we
plan to expand our operations in other major cities, we identify the following
competitors in the potential new markets where we expect to operate in the
future:




·
            Kunming –Yunnan
      Jin-Zhao Yuan Culture Communication Network Co., Ltd.The company was
      founded on May 1, 2003 by the Yunnan Provincial Department of Culture. It
      obtained its business license and registration to operate a chain of
      Internet cafés from the Industrial and Commercial Bureau of Yunnan
      Province on April 31, 2004. It has a registered capital of RMB 10 million.
      The company has opened approximately 15 cafés with an average of 200
      computers in each café and a total of nearly 3,000
    computers.


·
            Chengdu – Chengdu
      Shang Dynasty Networks Co., Ltd.The company was founded in 2002
      with a registered capital of RMB 12 million. It would be most accurately
      described as a multifunctional entertainment facility with coffee bars and
      multi-function rooms. Its facilities have full range of digital
      entertainment including hardware and software products, and professional
      e-sport training. The company has four wholly owned cafés, and has more
      than 20,000 registered members.


11




Intellectual
Property




Trademark




Junlong
owns the trademark Junlong, as specified in the Registration Certificate No.
4723040 issued by the Trademark Office under the State Administration of
Industry and Commerce of the PRC. The registration is valid from January 28,
2009 to January 27, 2019.




Domain
Name




We own
and currently utilize the domain name, www.cnculture.com.cn.
We have recently also acquired the domain name www.chinainternetcafé.com,
which we believe better reflects our business.  We will transition from our
old domain name to our new one during the third quarter of 2010.




Software




The main
piece of intellectual property for Junlong is the SAFLASH software. This
software, developed on a Microsoft Windows platform, increases internet
connection stability. Its automatic flow control prevents users from being
disconnected when there is a disruption in internet traffic. The stability is a
key requirement for online gamers.




Although
there are no patents or copyrights for this software, it is only used internally
on our computer systems and is not available for download. We also entered into
a confidentiality agreement with the IT manager Zhenfan Li whose team developed
this software. Our competitive advantage lies in continually updating SAFLASH to
assure internet connection stability.




Regulation




Because
our controlled VIE is located in the PRC, we are regulated by the national and
local laws of the PRC.




In 2001,
the PRC government imposed a minimum capital requirement of RMB 10 million
(approximately $1.47 million) for regional café chains and RMB 50 million
(approximately $7.35 million) for national café chains. On September 29, 2002,
Ministry of Information Industry, Ministry of Public Security, Ministry of
Culture and State Administration for Commerce and Industry issued “Regulations
on the Administration of Business Sites of Internet Access Services.” The
regulations require a license to operate internet cafés which may not be
assigned or leased to any third parties. The regulations also have detailed
provisions regarding internet cafés’ business operations and security
control.




We have
been in compliance of these regulations. In August 2004, we increased our
registered capital to RMB 10 million (approximately $1.46 million). In 2005,
Junlong obtained internet café licenses of operating internet café chain in
Shenzhen from the local counterpart of Ministry of Culture.




The
Ministry of Cultural of China is in charge of regulating national internet café
chains. To obtain a license to operate a national internet café chain, an
applicant must, among other things, (i) a minimum registered capital of RMB 50
million, (ii) own or control at least 30 internet cafés, which shall cover at
least three provinces or municipalities under direct administration of the State
Council, and (iii) have been in full compliance with administrative regulations
with respect to internet cafés for at least one year before submitting the
application. Other requirements include having appropriate computer and
ancillary facilities, necessary and qualified personnel and sound internal
policy. Application for a national internet café chain shall be first made to
the provincial counterpart of the Ministry of Cultural. After preliminary
approval, the provincial authority will submit the application to the Ministry
of Culture for final approval. In rendering its approval, the authorities
consider such factors as the then existing number of the internet café
chains.


12




We are
subject to PRC foreign currency regulations. The PRC government has controlled
Renminbi reserves primarily through direct regulation of the conversion of
Renminbi into other foreign currencies. Although foreign currencies, which are
required for “current account” transactions, can be bought at authorized PRC
banks, the proper procedural requirements prescribed by PRC law must be met. At
the same time, PRC companies are also required to sell their foreign exchange
earnings to authorized PRC banks, and the purchase of foreign currencies for
capital account transactions still requires prior approval of the PRC
government.




Under
current PRC laws and regulations, Foreign Invested Entities, or FIEs, may pay
dividends only out of their accumulated after-tax profits, if any, determined in
accordance with PRC accounting standards and regulations. In addition, FIEs in
China are required to set aside at least 10% of their after-tax profit based on
PRC accounting standards each year to their general reserves until the
cumulative amount of such reserves reaches 50% of their registered capital.
These reserves are not distributable as cash dividends. The board of directors
of an FIE has the discretion to allocate a portion of the FIEs’ after-tax
profits to staff welfare and bonus funds, which may not be distributed to equity
owners except in the event of liquidation.




Our Employees




As of
June 30, 2010, we had 419 employees. The following table sets forth the number
of employees by function:




Function
                  
                  Number ofEmployeesSenior
      Management
                  
                  41Accounting
                  
                  5Staff
      employees
                  
                  373Total
                  
                  419




As required by applicable PRC law, we have entered into employment
contracts with most of our officers, managers and employees. We are working
towards entering employment contracts with those employees who do not currently
have employment contracts with us. We believe that we maintain a satisfactory
working relationship with our employees, and we have not experienced any
significant disputes or any difficulty in recruiting staff for our
operations.




Litigation




From time
to time, we may become involved in various lawsuits and legal proceedings which
arise in the ordinary course of business. We are currently not a party to any
legal proceeding and are not aware of any legal claims that we believe will have
a material adverse affect on our business, financial condition or operating
results.


13


Item
1A.                Risk
Factors.




An investment in our common stock
involves a high degree of risk. You should carefully consider the risks
described below, together with all of the other information included in this
report, before making an investment decision. If any of the following risks
actually occurs, our business, financial condition or results of operations
could suffer. In that case, the trading price of our common stock could decline,
and you may lose all or part of your investment.




RISKS RELATED TO OUR
BUSINESS




Our
limited operating history makes evaluating our business and prospects
difficult.




Our VIE
Junlong was established in December 2003 and obtained the license to operate
internet cafés in Shenzhen in 2005. Our limited operating history may not
provide a meaningful basis for you to evaluate our business and prospects. Our
business strategy has not been proven over time and we cannot be certain that we
will be able to successfully expand our business.




You
should also consider additional risks and uncertainties that may be experienced
by early stage companies operating in a rapidly developing and evolving
industry.




We
are dependent on our management team and the loss of any key member of that team
could have a material adverse effect on our operations and financial
condition.




We
attribute our success to the leadership and contributions of our managing team
comprising executive directors and key executives, in particular, to our Chief
Executive Officer and Chief Financial Officer, Dishan Guo and our Chief
Technology Officer Zhenfan Li.




Our
continued success is therefore dependent to a large extent on our ability to
retain the services of these key management personnel. The loss of their
services without timely and qualified replacement, will adversely affect our
operations and hence, our revenue and profits. The loss of the services of
Dishan Guo and Zhenfan Li in particular, will have an adverse impact on our
performance.




We have not obtained social insurance benefits for all of our
employees and could incur administrative fines and penalties that could
materially affect our financial condition and reputation.




We have
obtained social benefits coverage for employees who work at the headquarters of
Junlong. For other employees, because of the high mobility of their work, they
usually work on a probationary basis and will not enter into a long employment
relationship with us. We are subject to administrative fines and penalties as a
result of our failure to obtain social insurance for these employees. The amount
of these fines and penalties, in the aggregate, may adversely affect our
financial condition and our public image.




Tightened
regulations on internet cafés may adversely affect our operations and
revenues.




The PRC
government has been tough on internet café regulations. In 2003, the PRC
government imposed a minimum capital requirement of RMB 10 million
(approximately $1.47 million) for regional café chains and RMB 50 million
(approximately $7.32 million) for national café chains. On September 29, 2002,
the State Council issued “Regulations on the Administration of Business Sites of
Internet Access Services.” The regulations require a license to operate internet
cafés which may not be assigned or leased to any third parties. The regulations
also have detailed provisions regarding internet cafés’ business operations and
security control. These regulations reduced the number of internet
cafés.


14




If the
PRC government decided to impose more stringent regulations on internet cafés
and their operations, our business may be adversely affected and our revenues
may decrease as a result.




There
may be reduced use of internet cafés with the increase in computer ownership and
internet connections at home and any such reduction would negatively affect our
financial performance.




With the
rapid economic development and growing disposable income, computer ownership and
internet connections at home will gradually increase. Although internet cafés
provide easy access to the latest games, movies and music, fast and stable
internet connections and a sense of community, there is no guarantee that
individuals will continue to use internet cafés when they can have internet
access at home.




Negative
media coverage of internet cafés may reduce the number of customers that visit
our internet cafés and result in lower revenues.




In the
last few years there have been several negative stories in the media about
internet cafés. A fatal fire in Beijing's Lanjisu Internet café in June 2002
raised nationwide concern about the country’s burgeoning internet café business.
In 2006, a report from the China National Children's Center, a government
think-tank, said that 13 percent of PRC's 18 million internet users under 18
were internet addicts. Responding to the problems associated with internet
cafés, the PRC imposed more stringent laws and regulations on internet cafés. In
2007, fearful of soaring internet addiction and juvenile crime, the PRC banned
the opening of new internet cafés for a year. Such negative media coverage may
result in stricter government regulations and reduced number of
customers.




We
may be unable to adequately safeguard our intellectual property or we may face
claims that may be costly to resolve or that limit our ability to use such
intellectual property in the future.




Our
business is reliant on our intellectual property. Our software SAFLASH is the
result of our research and development efforts, which we believe to be
proprietary and unique. However, we are unable to assure you that third parties
will not assert infringement claims against us in respect of our intellectual
property or that such claims will not be successful. It may be difficult for us
to establish or protect our intellectual property against such third parties and
we could incur substantial costs and diversion of management resources in
defending any claims relating to proprietary rights. If any party succeeds in
asserting a claim against us relating to the disputed intellectual property, we
may need to obtain licenses to continue to use the same. We cannot assure you
that we will be able to obtain these licenses on commercially reasonable terms,
if at all. The failure to obtain the necessary licenses or other rights could
cause our business results to suffer.




Further, we rely upon a combination of trade secrets,
non-disclosure and other contractual agreements with our employees as well as
limitation of access to and distribution of our intellectual property in our
efforts to protect intellectual property. However, our efforts in this regard
may be inadequate to deter misappropriation of our proprietary information or we
may be unable to detect unauthorized use and take appropriate steps to enforce
our rights. Policing unauthorized use of our intellectual property is difficult
and there can be no assurance that the steps taken by us will prevent
misappropriation of our intellectual property.




Where
litigation is necessary to safeguard our intellectual property, or to determine
the validity and scope of the proprietary rights of others, this could result in
substantial costs and diversion of our resources and could have a material
adverse effect on our business, financial condition, operating results or future
prospects.




We
may not have sufficient insurance coverage and an interruption of our business
or loss of a significant amount of property could have a material adverse effect
on our financial condition and operations.




We
currently do not maintain any insurance policies against loss of key personnel
and business interruption as well as product liability claims. If such events
were to occur, our business, financial performance and financial position may be
materially and adversely affected.


15




Inability
to maintain our competitiveness would adversely affect our financial
performance.




We
operate in a competitive environment and face competition from existing
competitors and new market entrants. Some of these existing competitors,
especially the national chains of internet cafés have more resources than us and
may provide better services to customers.




There is
no assurance that we will be able to compete successfully in the future. Any
failure by us to remain competitive would adversely affect our financial
performance.




We may be adversely affected by a significant or prolonged economic
downturn in the level of consumer spending in the industries and markets served
by our customers.




We rely
on the spending of our customers in our cafés for our revenues, which may in
turn depend on the customers’ level of disposable income, perceived future
earning capabilities and willingness to spend. Any significant or prolonged
decline of the PRC economy or economy of such markets served by our customers
will affect consumers’ disposable income and consumer spending in these markets,
and lead to a decrease in demand for consumer products.




To the
extent that such decrease in demand for consumer products translates into a
decline in the demand for internet café services, our performance will be
adversely affected.




Revocation
or failure to renew the license for operating internet café chain will adversely
affect our business.




We hold a
license for operating a regional internet café chain in Shenzhen and each of our
internet cafés obtains a license for the internet access services. These
licenses are currently valid and are renewable at the end of its term by
application to the relevant authorities.




If any
license is revoked or suspended or we are unable to renew the licenses for any
reason, our business operations and correspondingly, our financial performance,
would be adversely affected.




We
may be unable to effectively manage our expansion.




We have
identified several growth plans. These expansion plans may strain our financial
resources. They may also overstretch our management personnel and require us to
restructure our management structure.




If we are
unable to successfully manage our expansion, we may encounter operational and
financial difficulties which would in turn adversely affect our business and
financial results.




We
may require additional funding for our growth plans, and such funding may result
in a dilution of your investment.




We
attempted to estimate our funding requirements in order to implement our growth
plans.




If the
costs of implementing such plans should exceed these estimates significantly or
if we come across opportunities to grow through expansion plans which cannot be
predicted at this time, and our funds generated from our operations prove
insufficient for such purposes, we may need to raise additional funds to meet
these funding requirements.




These
additional funds may be raised by issuing equity or debt securities or by
borrowing from banks or other resources. We cannot assure you that we will be
able to obtain any additional financing on terms that are acceptable to us, or
at all. If we fail to obtain additional financing on terms that are acceptable
to us, we will not be able to implement such plans fully. Such financing even if
obtained, may be accompanied by conditions that limit our ability to pay
dividends or require us to seek lenders’ consent for payment of dividends, or
restrict our freedom to operate our business by requiring lender’s consent for
certain corporate actions.


16




Further, if we raise additional funds by way of a rights offering
or through the issuance of new shares, any shareholders who are unable or
unwilling to participate in such an additional round of fund raising may suffer
dilution in their investment.




We may be exposed
to potential risks relating to our internal controls over financial reporting
and our ability to have those controls attested to by our independent
auditors.




As
directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC
adopted rules requiring public companies to include a report of management on
the company’s internal controls over financial reporting in their annual
reports, including Form 10-K. In addition, the independent registered public
accounting firm auditing a company's financial statements must also attest to
and report on the operating effectiveness of the company’s internal controls. We
were not subject to these requirements for the fiscal year ended June 30, 2010;
accordingly, we have not evaluated our internal control systems in order to
allow our management to report on, and our independent auditors to attest to,
our internal controls as required by these requirements of SOX 404. We can
provide no assurance that we will comply with all of the requirements imposed
thereby. There can be no assurance that we will receive a positive attestation
from our independent auditors. In the event we identify significant deficiencies
or material weaknesses in our internal controls that we cannot remediate in a
timely manner or we are unable to receive a positive attestation from our
independent auditors with respect to our internal controls, investors and others
may lose confidence in the reliability of our financial statements.




Our holding
company structure may limit the payment of dividends.




We have
no direct business operations, other than our ownership of our subsidiaries and
contractual relationship with Junlong. While we have no current intention of
paying dividends, should we decide in the future to do so, as a holding company,
our ability to pay dividends and meet other obligations depends upon the receipt
of dividends or other payments from our operating subsidiaries and other
holdings and investments. In addition, our operating subsidiaries, from time to
time, may be subject to restrictions on their ability to make distributions to
us, including as a result of restrictive covenants in loan agreements,
restrictions on the conversion of local currency into U.S. dollars or other hard
currency and other regulatory restrictions as discussed below. If future
dividends are paid in RMB, fluctuations in the exchange rate for the conversion
of RMB into U.S. dollars may reduce the amount received by U.S. stockholders
upon conversion of the dividend payment into U.S. dollars. Further, dividends
paid to non-PRC stockholders may be subject to a 10% withholding, as further
discussed under “Risk Factors – Under the EIT Law, we may be classified as a
‘resident enterprise’ of the PRC. Such classification will likely result in
unfavorable tax consequences to us and our non-PRC shareholders.”




PRC
regulations currently permit the payment of dividends only out of accumulated
profits as determined in accordance with PRC accounting standards and
regulations. Our subsidiary in the PRC is also required to set aside a portion
of its after tax profits according to PRC accounting standards and regulations
to fund certain reserve funds. Currently, our subsidiary in the PRC is the only
sources of revenues or investment holdings for the payment of dividends. If it
does not accumulate sufficient profits under PRC accounting standards and
regulations to first fund certain reserve funds as required by PRC accounting
standards, we will be unable to pay any dividends.


17




RISKS RELATING TO OUR COMMERCIAL RELATIONSHIP WITH
JUNLONG




Our
contractual arrangements with Junlong and its shareholders may not be as
effective in providing control over them as direct ownership.




We rely
on contractual arrangements with our VIE and its shareholders to operate our
business. For a description of these contractual arrangements, see “Corporate
Structure”. In the opinion of our PRC legal counsel, China Commercial Law Firm,
these contractual arrangements are valid, binding and enforceable, and will not
result in any violation of PRC laws or regulations currently in effect. These
contractual arrangements may not be as effective in providing us with control
over these entities as direct ownership. If we had direct ownership of these
entities, we would be able to exercise our rights as a shareholder to effect
changes in the boards of directors of these entities, which in turn could effect
changes, subject to any applicable fiduciary obligations, at the management
level. However, if Junlong or any of its shareholders fails to perform its or
his respective obligations under these contractual arrangements, we may not be
able to enforce the relevant agreements. If the agreements are ruled in
violation of the PRC laws, even if the contracts are otherwise legal and valid,
we may not be able to enforce our rights under these contracts. We may have to
incur substantial costs and resources to enforce them, and seek legal remedies
under PRC law, including specific performance or injunctive relief, and claiming
damages, which may not be effective. Accordingly, it may be difficult for us to
change our corporate structure or to bring claims against any of these entities
if they do not perform their obligations under their contracts with
us.




All
of our revenues are generated through our VIE, and we rely on payments made by
our VIE to Zhonghefangda, our subsidiary, pursuant to contractual arrangements
to transfer any such revenues to Zhonghefangda. Any restriction on such payments
and any increase in the amount of PRC taxes applicable to such payments may
materially and adversely affect our business and our ability to pay dividends to
our shareholders.




We
conduct substantially all of our operations through Junlong, our VIE, which
generates all of our revenues. As Junlong is not owned by our subsidiary, it is
not able to make dividend payments to our subsidiary. Instead, Zhonghefangda,
our subsidiary in China, entered into a number of contracts with Junlong,
including Management and Consulting Services Agreement, Equity Pledge Agreement,
Option Agreement and Voting Rights Proxy Agreement, pursuant to which Junlong
pays Zhonghefangda for certain services that Zhonghefangda provides to Junlong.
However, depending on the nature of services provided, certain of these payments
are subject to PRC taxes at different rates, including business taxes and VATs,
which effectively reduce the amount that Zhonghefangda receives from Junlong. We
cannot assure you that the PRC government will not impose restrictions on such
payments or change the tax rates applicable to such payments. Any such
restrictions on such payment or increases in the applicable tax rates may
materially and adversely affect our ability to receive payments from Junlong or
the amount of such payments, and may in turn materially and adversely affect our
business, our net income and our ability to pay dividends to our
shareholders.




Dishan
Guo’s association with Junlong could pose a conflict of interest which may
result in Junlong decisions that are adverse to our business.




Dishan
Guo, Jinzhou Zeng and Xiaofen Wang, who hold controlling interest in Classic
Bond are also controlling shareholders of our VIE. Conflicts of interests
between their dual roles as owners of both Junlong and our company may arise. We
cannot assure you that when conflicts of interest arise, any or all of these
individuals will act in the best interests of our company or that any conflict
of interest will be resolved in our favor. In addition, these individuals may
breach or cause Junlong to breach or refuse to renew the existing contractual
arrangements, which will have a material adverse effect on our ability to
effectively control Junlong and receive economic benefits from it. If we cannot
resolve any conflicts of interest or disputes between us and the beneficial
owners of Junlong, we would have to rely on legal proceedings, the outcome of
which is uncertain and which could be disruptive to our business.




If Junlong or the VIE Shareholders violate our contractual
arrangements with it, our business could be disrupted and we may have to resort
to litigation to enforce our rights which may be time consuming and
expensive.




Our
operations are currently dependent upon our commercial relationship with
Junlong. If Junlong or their shareholders are unwilling or unable to perform
their obligations under our commercial arrangements with them, including payment
of revenues under the Management and Consulting Service Agreement, we will not
be able to conduct our operations in the manner currently
planned.


18




If
the PRC government determines that the agreements establishing the structure for
operating our China business do not comply with applicable PRC laws, rules and
regulations, we could be subject to severe penalties including being prohibited
from continuing our operations in the PRC.




On August
9, 2006, six PRC regulatory agencies, including the CSRC, promulgated the
Regulation on Mergers and Acquisitions of Domestic Companies by Foreign
Investors, which became effective on September 8, 2006 (the “2006 M&A
Rules”). This new regulation, among other things, governs the approval process
by which a PRC company may participate in an acquisition of assets or equity
interests. In the opinion of our PRC counsel, China Commercial Law Firm, this
approval process was not required in our case because we have not acquired
either the equity or assets of a company located in the PRC, and that the VIE
agreements do not constitute such an acquisition. If the PRC government were to
take a contrary view, we might be subject to fines or other enforcement action,
and might be forced to amend or terminate our contractual arrangements with
Junlong, which could have an adverse effect on our business.




The 2006
M&A Rules also contain provisions requiring offshore special purpose
vehicles, or SPVs, formed for the purpose of acquiring PRC domestic companies
and controlled by PRC individuals, to obtain the approval of the CSRC prior to
listing their securities on an overseas stock exchange. In the opinion of our
PRC counsel, China Commercial Law Firm, CSRC’s approval was not required for our
offering of securities since we are not an SPV as defined in the Rules, nor have
we acquired a PRC domestic company. However, there remains some uncertainty as
to how this regulation will be interpreted or implemented. If the CSRC or
another PRC regulatory agency subsequently determines that its approval was
required, we may face sanctions by the CSRC or another PRC regulatory agency or
other actions which could have an adverse effect on our business.




Uncertainties
in the PRC legal system may impede our ability to enforce the commercial
agreements that we have entered into with Junlong or any arbitral award
thereunder and any inability to enforce these agreements could materially and
adversely affect our business and operation.




While
disputes under the Consulting Agreement with Junlong is subject to binding
arbitration before the China International Economic and Trade Arbitration
Commission, or CIETAC, in accordance with CIETAC Arbitration Rules, the
agreements are governed by PRC law and an arbitration award may be challenged in
accordance with PRC law. For example, a claim that the enforcement of an award
in our favor will be detrimental to the public interest, or that an issue does
not fall within the scope of the arbitration would require us to engage in
administrative and judicial proceedings to defend an award. PRC legal system is
a civil law system based on written statutes and unlike common law systems, it
is a system in which decided legal cases have little value as precedent. As a
result, PRC administrative and judicial authorities have significant discretion
in interpreting and implementing statutory and contractual terms, and it may be
more difficult to evaluate the outcome of administrative and judicial
proceedings and the level of legal protection available than in more developed
legal systems. These uncertainties may impede our ability to enforce the terms
of the Consulting Agreement and the other contracts that we may enter into with
Junlong. Any inability to enforce the Consulting Agreement or an award
thereunder could materially and adversely affect our business and
operation.




Our arrangements with Junlong and the VIE Shareholders may be
subject to a transfer pricing adjustment by the PRC tax authorities which could
have an adverse effect on our income and expenses.




We could
face material and adverse tax consequences if the PRC tax authorities determine
that our contracts with Junlong and the VIE Shareholders were not entered into
based on arm’s length negotiations. Although our contractual arrangements are
similar to other companies conducting similar operations in the PRC, if the PRC
tax authorities determine that these contracts were not entered into on an arm’s
length basis, they may adjust our income and expenses for PRC tax purposes in
the form of a transfer pricing adjustment. Such an adjustment may require that
we pay additional PRC taxes plus applicable penalties and interest, if
any.


19




RISKS
RELATED TO DOING BUSINESS IN THE PRC




We
may be exposed to liabilities under the Foreign Corrupt Practices Act and
Chinese anti-corruption law, and any determination that we violated such laws
could hurt our business.




We are
subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that
prohibit improper payments or offers of payments to foreign governments and
their officials and political parties by U.S. persons and issuers as defined by
the statute for the purpose of obtaining or retaining business. We are also
subject to Chinese anti-corruption laws, which strictly prohibit bribery. We
have operations, agreements with third parties and make sales in the PRC, which
may experience corruption. Our activities in the PRC create the risk of
unauthorized payments or offers of payments by one of the employees,
consultants, sales agents or distributors of our Company, even though these
parties are not always subject to our control. It is our policy to implement
safeguards to discourage these practices by our employees. However, our existing
safeguards and any future improvements may prove to be less than effective, and
our employees, consultants, sales agents or distributors may engage in conduct
for which we might be held responsible. Violations of the FCPA or Chinese
anti-corruption law may result in severe criminal or civil sanctions, and we may
be subject to other liabilities, which could negatively affect our business,
operating results and financial condition. In addition, the United States
government may seek to hold us liable for successor liability FCPA violations
committed by companies in which we invest or that we acquire.




Changes
in PRC political or economic situation could harm us and our operating
results.




Economic
reforms adopted by the PRC government have had a positive effect on the economic
development of the country, but the government could change these economic
reforms or any of the legal systems at any time. This could either benefit or
damage our operations and profitability. Some of the things that could have this
effect are:




·
              Level
      of government involvement in the
economy;
 ·
              Control
      of foreign exchange;
 ·
              Methods
      of allocating resources;
 ·
              Balance
      of payments position;
 ·
              International
      trade restrictions; and
 ·
              International
      conflict.




The PRC
economy differs from the economies of most countries belonging to the
Organization for Economic Cooperation and Development, or OECD, in many ways.
For example, state-owned enterprises still constitute a large portion of the PRC
economy and weak corporate governance and a lack of flexible currency exchange
policy still prevail in the PRC. As a result of these differences, we may not
develop in the same way or at the same rate as might be expected if the PRC
economy was similar to those of the OECD member countries.




Our
business is largely subject to the uncertain legal environment in China and your
legal protection could be limited.




The PRC
legal system is a civil law system based on written statutes. Unlike common law
systems, it is a system in which precedents set in earlier legal cases are not
generally used. The overall effect of legislation enacted over the past 20 years
has been to enhance the legal protections afforded to foreign invested
enterprises in the PRC. However, these laws, regulations and legal requirements
are relatively recent and are evolving rapidly, and their interpretation and
enforcement involve uncertainties. These uncertainties could limit the legal
protections available to foreign investors, such as the right of foreign
invested enterprises to hold licenses and permits such as requisite business
licenses. In addition, all of our executive officers and our directors are PRC
residents of the PRC and not of the U.S., and substantially all the assets of
these persons are located outside the U.S. As a result, it could be difficult
for investors to effect service of process in the U.S., or to enforce a judgment
obtained in the U.S. against our PRC operations and our controlled
VIE.


20




The
PRC government exerts substantial influence over the manner in which we must
conduct our business activities.




The PRC
only recently has permitted provincial and local economic autonomy and private
economic activities. The PRC government has exercised and continues to exercise
substantial control over virtually every sector of the PRC economy through
regulation and state ownership. Our ability to operate in the PRC may be harmed
by changes in its laws and regulations, including those relating to taxation,
import and export tariffs, environmental regulations, land use rights, property
and other matters. We believe that our operations in the PRC are in material
compliance with all applicable legal and regulatory requirements. However, the
central or local governments of the jurisdictions in which we operate may impose
new, stricter regulations or interpretations of existing regulations that would
require additional expenditures and efforts on our part to ensure our compliance
with such regulations or interpretations.




Accordingly, government actions in the future, including any
decision not to continue to support recent economic reforms and to return to a
more centrally planned economy or regional or local variations in the
implementation of economic policies, could have a significant effect on economic
conditions in the PRC or particular regions thereof, and could require us to
divest ourselves of any interest we then hold in PRC properties or joint
ventures.




Future
inflation in the PRC may inhibit our ability to conduct business in the
PRC.




In
recent years, the PRC economy has experienced periods of rapid expansion and
highly fluctuating rates of inflation. During the past ten years, the rate of
inflation in the PRC has been as high as 20.7% and as low
as   -2.2%. These factors have led to the adoption by the PRC
government, from time to time, of various corrective measures designed to
restrict the availability of credit or regulate growth and contain inflation.
High inflation may in the future cause the PRC government to impose controls on
credit and/or prices, or to take other action, which could inhibit economic
activity in the PRC, and thereby harm the market for our products and our
company.




Restrictions
on currency exchange may limit our ability to receive and use our revenues
effectively.




The
majority of our revenues will be settled in Renminbi and U.S. dollars, and any
future restrictions on currency exchanges may limit our ability to use revenue
generated in Renminbi to fund any future business activities outside the PRC or
to make dividend or other payments in U.S. dollars. Although the PRC government
introduced regulations in 1996 to allow greater convertibility of the Renminbi
for current account transactions, significant restrictions still remain,
including primarily the restriction that foreign-invested enterprises may only
buy, sell or remit foreign currencies after providing valid commercial
documents, at those banks in the PRC authorized to conduct foreign exchange
business. In addition, conversion of Renminbi for capital account items,
including direct investment and loans, is subject to governmental approval in
the PRC, and companies are required to open and maintain separate foreign
exchange accounts for capital account items. We cannot be certain that the PRC
regulatory authorities will not impose more stringent restrictions on the
convertibility of the Renminbi.


21




Failure
to comply with PRC regulations relating to the establishment of offshore special
purpose companies by PRC residents may subject our PRC resident stockholders to
personal liability, limit our ability to acquire PRC companies or to inject
capital into our PRC controlled VIEs, limit our PRC controlled VIEs’ ability to
distribute profits to us or otherwise materially adversely affect
us.




In October 2005, the PRC State Administration of Foreign Exchange,
or SAFE, issued the Notice on Relevant Issues in the Foreign Exchange Control
over Financing and Return Investment Through Special Purpose Companies by
Residents Inside China, generally referred to as Circular 75, which required PRC
residents to register with the competent local SAFE branch before establishing
or acquiring control over an offshore special purpose company, or SPV, for the
purpose of engaging in an equity financing outside of China on the strength of
domestic PRC assets originally held by those residents. Internal implementing
guidelines issued by SAFE, which became public in June 2007 (known as Notice
106), expanded the reach of Circular 75 by (i) purporting to cover the
establishment or acquisition of control by PRC residents of offshore entities
which merely acquire “control” over domestic companies or assets, even in the
absence of legal ownership; (ii) adding requirements relating to the source of
the PRC resident’s funds used to establish or acquire the offshore entity; (iii)
covering the use of existing offshore entities for offshore financings; (iv)
purporting to cover situations in which an offshore SPV establishes a new
subsidiary in China or acquires an unrelated company or unrelated assets in
China; and (v) making the domestic affiliate of the SPV responsible for the
accuracy of certain documents which must be filed in connection with any such
registration, notably, the business plan which describes the overseas financing
and the use of proceeds. Amendments to registrations made under Circular 75 are
required in connection with any increase or decrease of capital, transfer of
shares, mergers and acquisitions, equity investment or creation of any security
interest in any assets located in China to guarantee offshore obligations, and
Notice 106 makes the offshore SPV jointly responsible for these filings. In the
case of an SPV which was established, and which acquired a related domestic
company or assets, before the implementation date of Circular 75, a retroactive
SAFE registration was required to have been completed before March 31, 2006;
this date was subsequently extended indefinitely by Notice 106, which also
required that the Registrant establish that all foreign exchange transactions
undertaken by the SPV and its affiliates were in compliance with applicable laws
and regulations. Failure to comply with the requirements of Circular 75, as
applied by SAFE in accordance with Notice 106, may result in fines and other
penalties under PRC laws for evasion of applicable foreign exchange
restrictions. Any such failure could also result in the SPV’s affiliates being
impeded or prevented from distributing their profits and the proceeds from any
reduction in capital, share transfer or liquidation to the SPV, or from engaging
in other transfers of funds into or out of China.




We have
asked our stockholders, who are PRC residents as defined in Circular 75, to
register with the relevant branch of SAFE, as currently required, in connection
with their equity interests in us and our acquisitions of equity interests in
our PRC subsidiaries. However, we cannot provide any assurances that they can
obtain the above SAFE registrations required by Circular 75 and Notice 106.
Moreover, because of uncertainty over how Circular 75 will be interpreted and
implemented, and how or whether SAFE will apply it to us, we cannot predict how
it will affect our business operations or future strategies. For example, our
present and prospective PRC subsidiaries' ability to conduct foreign exchange
activities, such as the remittance of dividends and foreign currency-denominated
borrowings, may be subject to compliance with Circular 75 and Notice 106 by our
PRC resident beneficial holders. In addition, such PRC residents may not always
be able to complete the necessary registration procedures required by Circular
75 and Notice 106. We also have little control over either our present or
prospective direct or indirect stockholders or the outcome of such registration
procedures. A failure by our PRC resident beneficial holders or future PRC
resident stockholders to comply with Circular 75 and Notice 106, if SAFE
requires it, could subject these PRC resident beneficial holders to fines or
legal sanctions, restrict our overseas or cross-border investment activities,
limit our subsidiaries' ability to make distributions or pay dividends or affect
our ownership structure, which could adversely affect our business and
prospects.




We
may be unable to complete a business combination transaction efficiently or on
favorable terms due to complicated merger and acquisition regulations which
became effective on September 8, 2006.




On August
9, 2006, six PRC regulatory agencies, including the CSRC, promulgated the
Regulation on Mergers and Acquisitions of Domestic Companies by Foreign
Investors, which became effective on September 8, 2006. This new regulation,
among other things, governs the approval process by which a PRC company may
participate in an acquisition of assets or equity interests. Depending on the
structure of the transaction, the new regulation will require the PRC parties to
make a series of applications and supplemental applications to the government
agencies. In some instances, the application process may require the
presentation of economic data concerning a transaction, including appraisals of
the target business and evaluations of the acquirer, which are designed to allow
the government to assess the transaction. Government approvals will have
expiration dates by which a transaction must be completed and reported to the
government agencies. Compliance with the new regulations is likely to be more
time consuming and expensive than in the past and the government can now exert
more control over the combination of two businesses. Accordingly, due to the new
regulation, our ability to engage in business combination transactions has
become significantly more complicated, time consuming and expensive, and we may
not be able to negotiate a transaction that is acceptable to our stockholders or
sufficiently protect their interests in a transaction.


22




The new regulation allows PRC government agencies to assess the
economic terms of a business combination transaction. Parties to a business
combination transaction may have to submit to the Ministry of Commerce and other
relevant government agencies an appraisal report, an evaluation report and the
acquisition agreement, all of which form part of the application for approval,
depending on the structure of the transaction. The regulations also prohibit a
transaction at an acquisition price obviously lower than the appraised value of
the PRC business or assets and in certain transaction structures, require that
consideration must be paid within defined periods, generally not in excess of a
year. The regulation also limits our ability to negotiate various terms of the
acquisition, including aspects of the initial consideration, contingent
consideration, holdback provisions, indemnification provisions and provisions
relating to the assumption and allocation of assets and liabilities. Transaction
structures involving trusts, nominees and similar entities are prohibited.
Therefore, such regulation may impede our ability to negotiate and complete a
business combination transaction on financial terms that satisfy our investors
and protect our stockholders’ economic interests.




Under
the EIT Law, we may be classified as a “resident enterprise” of China. Such
classification will likely result in unfavorable tax consequences to us and our
non-PRC shareholders.




Under the
new PRC Enterprise Income Tax Law, or the EIT Law, and its implementing rules,
both of which became effective on January 1, 2008, an enterprise established
outside of the PRC with “de facto management bodies” within the PRC is
considered a “resident enterprise,” meaning that it can be treated in a manner
similar to a PRC enterprise for enterprise income tax purposes. The implementing
rules of the EIT Law define de facto management as “substantial and overall
management and control over the production and operations, personnel,
accounting, and properties” of the enterprise.




On April
22, 2009, the State Administration of Taxation issued the Notice Concerning
Relevant Issues Regarding Cognizance of Chinese Investment Controlled
Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria
of de facto Management Bodies, or the Notice, further interpreting the
application of the EIT Law and its implementation non-PRC enterprise or group
controlled offshore entities. Pursuant to the Notice, an enterprise incorporated
in an offshore jurisdiction and controlled by a PRC enterprise or group will be
classified as a “non-domestically incorporated resident enterprise” if (i) its
senior management in charge of daily operation reside or perform their duties
mainly in the PRC; (ii) its financial or personnel decisions are made or
approved by bodies or persons in the PRC; (iii) its substantial properties,
accounting books, corporate chops, board and shareholder minutes are kept in the
PRC; and (iv) 1⁄2 directors with voting rights or senior management often resident
in the PRC. Such resident enterprise would be subject to an enterprise income
tax rate of 25% on its worldwide income and must pay a withholding tax at a rate
of 10% when paying dividends to its non-PRC shareholders. However, it remains
unclear as to whether the Notice is applicable to an offshore enterprise
incorporated by a PRC natural person. Nor are detailed measures on imposition of
tax from non-domestically incorporated resident enterprises are available.
Therefore, it is unclear how tax authorities will determine tax residency based
on the facts of each case.




However, as our case substantially meets the foregoing criteria,
there is a likelihood that we are deemed to be a resident enterprise by PRC tax
authorities. If the PRC tax authorities determine that we are a “resident
enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC
tax consequences could follow. First, we may be subject to the enterprise income
tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise
income tax reporting obligations. In our case, this would mean that income such
as interest on financing proceeds and non-PRC source income would be subject to
PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law
and its implementing rules dividends paid to us from our PRC subsidiaries would
qualify as “tax-exempt income,” we cannot guarantee that such dividends will not
be subject to a 10% withholding tax, as the PRC foreign exchange control
authorities, which enforce the withholding tax, have not yet issued guidance
with respect to the processing of outbound remittances to entities that are
treated as resident enterprises for PRC enterprise income tax purposes. Finally,
it is possible that future guidance issued with respect to the new “resident
enterprise” classification could result in a situation in which a 10%
withholding tax is imposed on dividends we pay to our non-PRC shareholders and
with respect to gains derived by our non-PRC shareholders from transferring our
shares. We are actively monitoring the possibility of “resident enterprise”
treatment for the 2008 tax year and are evaluating appropriate organizational
changes to avoid this treatment, to the extent possible.


23




If we
were treated as a “resident enterprise” by PRC tax authorities, we would be
subject to taxation in both the U.S. and the PRC, and our PRC tax may not be
creditable against our U.S. tax.




The
value of our securities will be affected by the currency exchange rate between
U.S. dollars and RMB.




The value
of our common stock will be affected by the foreign exchange rate between U.S.
dollars and RMB, and between those currencies and other currencies in which our
sales may be denominated. For example, if we need to convert U.S. dollars into
RMB for our operational needs and the RMB appreciates against the U.S. dollar at
that time, our financial position, our business, and the price of our common
stock may be harmed. Conversely, if we decide to convert our RMB into U.S.
dollars for the purpose of declaring dividends on our common stock or for other
business purposes and the U.S. dollar appreciates against the RMB, the U.S.
dollar equivalent of our earnings from our subsidiaries in the PRC would be
reduced.




RISKS
RELATED TO THE MARKET FOR OUR STOCK




Our
common stock is quoted on the OTC Bulletin Board which may have an unfavorable
impact on our stock price and liquidity.




Our
common stock is quoted on the OTC Bulletin Board. The OTC Bulletin Board is a
significantly more limited market than the New York Stock Exchange or NASDAQ
stock markets. The quotation of our shares on the OTC Bulletin Board means there
is a less liquid market available for existing and potential stockholders to
trade shares of our common stock. The limited liquidity could depress the
trading price of our common stock and could have a long-term adverse impact on
our ability to raise capital in the future.




We
are subject to penny stock regulations and restrictions.




The SEC
has adopted regulations which generally define so-called “penny stocks” to be an
equity security that has a market price less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exemptions. If our common
stock becomes a “penny stock,” we may become subject to Rule 15g-9 under the
Exchange Act, or the Penny Stock Rule. This rule imposes additional sales
practice requirements on broker-dealers that sell such securities to persons
other than established customers and “accredited investors” (generally,
individuals with a net worth in excess of $1,000,000 or annual incomes exceeding
$200,000, or $300,000 together with their spouses). For transactions covered by
Rule 15g-9, a broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser's written consent to the
transaction prior to sale. As a result, this rule may affect the ability of
broker-dealers to sell our securities and may affect the ability of purchasers
to sell any of our securities in the secondary market.




For any
transaction involving a penny stock, unless exempt, the rules require delivery,
prior to any transaction in a penny stock, of a disclosure schedule prepared by
the SEC relating to the penny stock market. Disclosure is also required to be
made about sales commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements are required to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
penny stock.




There can
be no assurance that our common stock will qualify for exemption from the Penny
Stock Rule. In any event, even if our common stock were exempt from the Penny
Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act,
which gives the SEC the authority to restrict any person from participating in a
distribution of penny stock, if the SEC finds that such a restriction would be
in the public interest.




Certain
provisions of our Certificate of Incorporation may make it more difficult for a
third party to effect a change-in-control.
  Our
Certificate of Incorporation authorizes the Board of Directors to issue up to 50
million shares of preferred stock. The preferred stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by the
board of directors without further action by the stockholders. These terms may
include voting rights including the right to vote as a series on particular
matters, preferences as to dividends and liquidation, conversion rights and
redemption rights provisions. The issuance of any preferred stock could diminish
the rights of holders of our common stock, and therefore could reduce the value
of such common stock. In addition, specific rights granted to future holders of
preferred stock could be used to restrict our ability to merge with, or sell
assets to, a third party. The ability of the board of directors to issue
preferred stock could make it more difficult, delay, discourage, prevent or make
it more costly to acquire or effect a change-in-control, which in turn could
prevent the stockholders from recognizing a gain in the event that a favorable
offer is extended and could materially and negatively affect the market price of
our common stock.
  24




Item
1B. 
              Unresolved
Staff Comments.





Not
applicable.





Item
2. 
                 Properties.




There is
no private land ownership in the PRC. Individuals and companies are permitted to
acquire land use rights for specific purposes. We currently do not have any land
use rights. Instead we lease most of the property that we need to operate our
business from third parties.




Junlong
currently leases from an individual Changsheng Hao the office space for its
headquarters located at Room 1010, Unit D, Block 1, Yuanjing Garden, Longxiang
Road, Zhongxin Cheng, Longgang District, Shenzhen. The lease is from December 1,
2009 to December 31, 2010. The lease has been filed with the House Leasing
Management Office of Longgang District, Shenzhen.




Junlong
also leases spaces from different entities or individuals for its 36 internet
cafés.




No.
                
                Shop
                
                Contract
      Date
                
                Lease
      Period
                
                Length
                
                Lessor
                
                Address
                
                RentalDeposit
                
                Rent1
                
                Bujiqingbo
      Shop
                
                2006.01.01
                
                2006.01
                
                2012.01
                
                6
                
                Xiaodong
      Gao
                
                1st
      Floor No.1 Xiashuijin xincun ,Buji neighbourhood , Longgang District,
      Shenzhen
                
                $3,831
                
                $1,9162
                
                Bujiyongtong
      Shop
                
                2006.09.01
                
                2005.09
                
                2010.09
                
                5
                
                Shenzhen
      JiubaishilaiLimited
                
                3rd
      floor, Buji neighbourhood, Yongfa Building Property, Lemin Road ,Longgang
      District, Shenzhen
                
                $17,093
                
                $8,5463
                
                Dapengqunpeng
      Shop
                
                2006.09.01
                
                2006.09
                
                2011.09
                
                5
                
                Zhijun
      Shao
                
                No.1
      east of  Dapeng road ,Dapeng neighbourhood, Longgang District,
      Shenzhen
                
                $2,947
                
                $1,4744
                
                Henggongsilian
      Shop
                
                2007.08.01
                
                2007.08
                
                2012.08
                
                5
                
                xuelin
      Li
                
                2nd
      floor 11-4 Silian ,Henggang neighbourhood, Henggang District,
      Shenzhen
                
                $2,947
                
                $1,4745
                
                Henggangsilian
      Shop
                
                2007.07.01
                
                2007.07
                
                2014.07
                
                7
                
                Shenzhen
      Hongfu General Merchandise Ltd.
                
                3rd
      floor,  Hongfu department store, west of  Renming
      road, Kenzi neighbourhood, Shenzhen
                
                $2,947
                
                $1,4746
                
                Lanmeng
      Shop
                
                2007.11.01
                
                2007.11
                
                2012.11
                
                5
                
                Xiaoxiong
      Li
                
                3rd
      floor, Block C, Xiangfa building , Jihua Road , Buji District,
      Shenzhen
                
                $4,421
                
                $2,2107
                
                Lanmeng
      Shop
                
                2006.02.01
                
                2006.02
                
                2012.02
                
                6
                
                Dezhong
      Huang
                
                3rd
      floor, No. 25, Longping East Road Zonghe building , Longgang
      neighbourhood, Shenzhen
                
                $8,841
                
                $4,4218
                
                Pengcheng
      Shop
                
                2007.12.05
                
                2007.12
                
                2012.12
                
                5
                
                Jianjun
      Shen
                
                3rd
      floor, Pengcheng 2nd Industrial Area, Pengfei Road ,Dapeng neighbourhood,
      Shenzhen
                
                $5,894
                
                $2,9479
                
                Pinghufumin
      Shop
                
                2007.10.01
                
                2007.10
                
                2012.10
                
                5
                
                Kaitian
      Science develops Ltd
                
                3rd
      floor, Hutian Buliding, Fumin Industrial Area, Pinghu community, Pinghu
      neighbourhood ,Longgang District,Shenzhen
                
                $5,894
                
                $2,94710
                
                Pinghupengchengyi
      Shop
                
                2009.01.03
                
                2009.01
                
                2014.01
                
                5
                
                Kailiang
      Liu
                
                2nd
      Floor, 12 Fuchengaojiahu Road , LongGang neighbourhood,
      Shenzhen
                
                $3,831
                
                $1,91611
                
                Pingshanliulian
      Shop
                
                2006.02.01
                
                2006.02
                
                2011.02
                
                5
                
                Shenzhen
      Pingshan TechnologyStands
                
                3rd
      floor, Xichechang,Jinbi Road, Pingshan Distrcit, Shenzhen
                
                $3,536
                
                $1,76812
                
                Pingshanpinghuan
      Shop
                
                2006.09.01
                
                2006.09
                
                2011.09
                
                5
                
                Zhiwei
      Zou
                
                3rd
      floor, Jianshe Road, Pinghuan community , Pingshan neighbourhood,
      Shenzhen
                
                $5,305
                
                $2,65213
                
                Yitongxun
      Shop
                
                2008.03.01
                
                2008.03
                
                2015.03
                
                7
                
                Shenzhen
      Hongjingchuntian Real Estate Developement Ltd.
                
                3rd
      floor, Block 3, Hongjing Spring Garden, Longdong community, Longgang
      neighbourhood, Shenzhen
                
                $6,483
                
                $3,24214
                
                Yinghao
      Shop
                
                2007.12.01
                
                2007.12
                
                2012.12
                
                5
                
                Longgang
      General Merchandise Ltd.
                
                2nd
      floor, No.3 Yudujie Road, Longgang neighbourhood, Shenzhen
                
                $3,242
                
                $1,62115
                
                Yuanhu
      Shop
                
                2008.02.01
                
                2008.02
                
                2013.02
                
                5
                
                Zhongshen
      Li
                
                3rd
      floor, Block B, 50 Xiangxixin Village,Yuanhu Industrial Area,Gaolefu Road,
      BaoAn District, Shenzhen
                
                $1,768
                
                $88416
                
                Bujihonghan
      Shop
                
                2006.08.28
                
                2006.08
                
                2011.08
                
                5
                
                Shenzhen
      Honghan Industry Ltd
                
                1st&2nd
      floor, No.28 Honghanhuayuan,Bantian Community, Buji
      Street,Shenzhen
                
                $2,505
                
                $1,25217
                
                Bujinanling
      Shop
                
                2006.02.01
                
                2006.02
                
                2011.02
                
                5
                
                Shenzhen
      Wanjia General merchandise Ltd.
                
                No.125-134、136,Building
      7, Nanlinghuayuan, Nanling Village, Buji Street,Longgang
      District,Shenzhen
                
                $6,778
                
                $3,38918
                
                Hengganganliang
      Shop
                
                2008.11.25
                
                2008.11
                
                2013.11
                
                5
                
                Xiaobo
      Jiang
                
                2nd
      floor ,No.72 Anliang,Anliang Community,Henggang Street,
      Shenzhen
                
                $2,063
                
                $1,03119
                
                Henggangsongbai
      Shop
                
                2006.02.01
                
                2006.02
                
                2013.02
                
                7
                
                Shenzhen
      Longguang Marketplace Development Ltd
                
                3rd
      floor, First Market, Henggang, Songbo Road, Henggang Street,
      Shenzhen
                
                $5,305
                
                $2,65220
                
                Longchengailian
      Shop
                
                2006.02.01
                
                2006.02
                
                2011.02
                
                5
                
                Longgang
      Ailian General Merchandise Ltd
                
                3rd
      floor, No.67 Shenhui Road, Ailian community,Longcheng Street,Longgang
      District, Shenzhen
                
                $7,368
                
                $3,68421
                
                Longchenglongxiang
      Shop
                
                2009.01.05
                
                2009.01
                
                2014.01
                
                5
                
                Longgang
      Potoubei Economic Development Ltd.
                
                1st
      floor, Nancunling, Ailian Society, Longcheng Neighbourhood, Longgang
      District, Shenzhe
                
                $2,947
                
                $1,47422
                
                Pinghukangtian
      Shop
                
                2007.12.01
                
                2007.12
                
                2012.12
                
                5
                
                Shenzhen
      Kangtian Economic Development Ltd.
                
                3rd
      floor, Kangtian Building, Kaitian Science Park, Futian Industrial
      Area,Pinghu Street,lomggang district,shenzhen
                
                $4,863
                
                $2,43123
                
                pinghulantian
      Shop
                
                2007.11.01
                
                2007.11
                
                2012.11
                
                5
                
                Kaitian
      Scientific Development Limited
                
                3rd
      floor, Kangtian Building, Kaitian Science Park, Futian Industrial
      Area,Pinghu Street,Longgang District,Shenzhen
                
                $4,421
                
                $2,21024
                
                Yitong
      Shop
                
                2007.12.01
                
                2007.12
                
                2012.12
                
                5
                
                Sixiang
      Yang
                
                2nd
      floor, A1 Building, Feifa Road,Biling community,Pingshan Street,Longgang
      District,Shenzhen
                
                $6,483
                
                $3,24225
                
                Fuyuyuan
      Shop
                
                2008.11.01
                
                2008.11
                
                2013.11
                
                5
                
                Shenzhen
      Dafanggong Commercial Development Ltd
                
                2nd
      floor, Building 1,Dafanggong Commerical Street,Pinghu community,Pinghu
      street,Longgang District,Shenzhen
                
                $3,242
                
                $1,62126
                
                Biling
      Shop
                
                2008.11.01
                
                2008.11
                
                2013.11
                
                5
                
                Shenzhen
      Longgang Renhe General Merchandise Ltd.
                
                3rd
      floor, Renhebaihuo Building, Biling Community, Pingshan Street,Longgang
      District,Shenzhen
                
                $2,947
                
                $1,47427
                
                Junda
      Shop
                
                2006.02.01
                
                2006.02
                
                2011.02
                
                5
                
                Zhibing
      Huang
                
                2nd
      floor, No.134 Hongmian Road,Aobei Community,Henggang Street,Longgang
      District,Shenzen
                
                $5,305
                
                $2,65228
                
                Xinwangsu
      Shop
                
                2007.10.01
                
                2007.10
                
                2012.10
                
                5
                
                Shenzhen
      Longbi  Industry Limited
                
                3rd
      floor, 1st Commercial Building,Longbi Industrial Area,Bantian
      Community,Buji Street,Longgang District,Shenzhen
                
                $5,599
                
                $2,80029
                
                Langman
      Shop
                
                2010.02.01
                
                2010.02
                
                2015.02
                
                5
                
                Shuangshuang
      Yi
                
                2nd
      floor ,12 Jiahu Road,Fuchengao,Longgang District,Shenzhen
                
                $5,157
                
                $2,57930
                
                Chaosu
      Shop
                
                2010.02.01
                
                2010.02
                
                2015.02
                
                5
                
                Rong
      Peng
                
                2nd
      floor, 1st Block, Jixianghuayuan, Jixiang Road,Central City,Longgang
      District,Shenzhen
                
                $5,894
                
                $2,94731
                
                Changyou
      Shop
                
                2010.03.01
                
                2010.03
                
                2015.03
                
                5
                
                Xing
      hua Long
                
                2nd
      floor, Jingxiao Building,Chuangye Road,Nanao Street,Longgang
      District,Shenzhen
                
                $7,126
                
                $3,56332
                
                Shuangji
      Shop
                
                2010.03.10
                
                2010.03
                
                2015.03
                
                5
                
                Haijun
      Jiang
                
                2nd
      floor, Kuichong 2nd Market,Zhenxing Road,Kuiyong Street,Longgang
      District,Shenzhen
                
                $5,231
                
                $2,61533
                
                Yisu
      Shop
                
                2010.03.15
                
                2010.03
                
                2015.03
                
                5
                
                Zhuangshou
      Chen
                
                2nd
      floor, Haixian Street Market, Nanao Street,Longgang
      District,Shenzhen
                
                $4,547
                
                $2,27434
                
                Guangsu
      Shop
                
                2010.04.01
                
                2010.04
                
                2015.04
                
                5
                
                Huian
      Luo
                
                2nd
      floor, No.36 Xinnan Road, Yantian District,Shenzhen
                
                $4,589
                
                $2,29435
                
                Aimin
      Shop
                
                2010.04.05
                
                2010.04
                
                2015.04
                
                5
                
                Yunhui
      Xiong
                
                2nd
      Floor, Aiminshizhuang Building,Biyadi Roadm Kuichong Neighbourhood,
      Longgang District,Shenzhen
                
                $5,947
                
                $2,97436
                
                Qingfeng
      Shop
                
                2010.04.10
                
                2010.04
                
                2015.04
                
                5
                
                Rongcan
      Lin
                
                1st
      floor, No.43 Qingfeng Road,Yantian District,Shenzhen
                
                $5,387
                
                $2,69437
                
                Office
                
                2010.06.17
                
                2010.08
                
                2012.08
                
                2
                
                Yibaode
      Telecommunication Technology(Shenzhen) Limited
                
                #2009-2010,4th
      Building,ZhuoYue Century Centre,FuHua Third Road,FuTian
      District,Shenzhen,Guangdong Province,PR China
                
                $20,223
                
                $10,11238
                
                Office
      2
                
                2009.10.23
                
                2009.11
                
                2010.11
                
                1
                
                Xuezheng
      Yuan
                
                No.1
      Xinxin Garden, Fangjicun, Xudong Road, Wuchang, Wuhan, Hubei Province,
      China 430062
                
                $0
                
                $10,000


Item
3. 
                 Legal
Proceedings.




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




Item
4. 
                 (Removed
and Reserved).


25


PART
II





Item
5. 
                 Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.




Market
Information




Our
common stock is quoted on the OTC Bulletin Board trades under the symbol
“CUIG.OB,” however there is not currently, and historically there has never
been, an active trading market for our common stock, and no information is
available for the prices of our common stock.




Approximate Number of Holders
of Our Common Stock




As
of  September 10, 2010, there were approximately 119 stockholders of
record of our common stock, as reported by our transfer agent. In computing the
number of holders of record, each broker-dealer and clearing corporation holding
shares on behalf of its customers is counted as a single
stockholder.




Dividends




Junlong
declared a dividend distribution to Dishan Guo, Jinzhou Zeng, Xiaojiang Yang and
Xiaofen Wang on December 31, 2008, totaling RMB 20 million (approximately US$2.9
million). Our board of directors will make any future decisions regarding
dividends. We currently intend to retain and use any future earnings for the
development and expansion of our business and do not anticipate paying any cash
dividends within one year. Our board of directors has complete discretion on
whether to pay dividends, subject to the approval of our stockholders. Even if
our board of directors decides to pay dividends, the form, frequency and amount
will depend upon our future operations and earnings, capital requirements and
surplus, general financial condition, contractual restrictions and other factors
that the board of directors may deem relevant.




Securities
Authorized for Issuance Under Equity Compensation Plans




We do not
have in effect any compensation plans under which our equity securities are
authorized for issuance and we do not have any outstanding stock
options.




Registrar
and Stock Transfer Agent





Our
independent stock transfer agent is Pacific Stock Transfer Company. Its mailing
address is 4045 South Spencer Street, Suite 403, Las Vegas, NV 89119. Its phone
number is (702) 361-3033.





Penny
Stock Regulations





Our
shares of common stock are subject to the "penny stock" rules of the Securities
Exchange Act of 1934 and various rules under this Act. In general terms, "penny
stock" is defined as any equity security that has a market price less than $5.00
per share, subject to certain exceptions. The rules provide that any equity
security is considered to be a penny stock unless that security is registered
and traded on a national securities exchange meeting specified criteria set by
the SEC, issued by a registered investment company, and excluded from the
definition on the basis of price (at least $5.00 per share), or based on the
issuer's net tangible assets or revenues. In the last case, the issuer's net
tangible assets must exceed $3,000,000 if in continuous operation for at least
three years or $5,000,000 if in operation for less than three years or the
issuer's average revenues for each of the past three years must exceed
$6,000,000.


26


Trading
in shares of penny stock is subject to additional sales practice requirements
for broker-dealers who sell penny stocks to persons other than established
customers and accredited investors. Accredited investors, in general, include
individuals with assets in excess of $1,000,000 or annual income exceeding
$200,000 (or $300,000 together with their spouse), and certain institutional
investors. For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of the security and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, the rules
require the delivery, prior to the first transaction, of a risk disclosure
document relating to the penny stock. A broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered representative,
and current quotations for the security. Finally, monthly statements must be
sent disclosing recent price information for the penny stocks. These rules may
restrict the ability of broker-dealers to trade or maintain a market in our
common stock, to the extent it is penny stock, and may affect the ability of
shareholders to sell their shares.





Repurchase
of Equity Securities





None.





Item
6. 
                 Selected
Financial Data





Not
Applicable.





Item
7. 
                 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.





This
section of our annual report includes a number of forward-looking statements
that reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar expressions,
or words which, by their nature, refer to future events. You should not place
undue certainty on these forward-looking statements, which apply only as of the
date of this report. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or our predictions.





As of
June 30, 2010, we were a start-up stage corporation and had not started
operations or generated or realized any revenues from our business
operations.  If we needed additional cash and could not raise it, we would
either had to suspend operations until we did raise the additional cash, or
cease operations entirely.





Our
auditor had issued a going concern opinion. This meant that there was
substantial doubt that we could continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This was
because we had not generated any revenues and no revenues were anticipated until
we completed the development of our website, find purveyors of services and
products to sell on our website, and find clients to buy our
services.





Plan
of Operation





Our
specific business goal was to profitably sell our services on our internet
website to the budget-conscious traveler.   As of June 30, 2010, we
were unable to maintain operations.  We were unable to successfully
negotiate strategic alliances with purveyors of services to enable us to offer
these services to our clients, and we were unable to attract enough clients, and
had use up our available funds. We believed that we may not satisfy our cash
requirements for the next 12 months. We were also not conducting any product
research or development.


27


Accordingly,
we entered into a share exchange agreement Classic Bond Development Limited, a
British Virgin Islands corporation(“Classic
Bond”) and
the shareholders of Classic Bond to own all the issued and outstanding capital
stock of Classic Bond.  Classic Bond in in turn the parent of Shenzhen
Zhonghefangda Internet Technology Co., Limited (“Zhonghefangda”), a PRC company
and Zhonghefangda, in turn, controls Shenzhen Junlong Culture Communications
Co., Ltd (“Junlong”), our variable interest entity (“VIE”), which holds the
licenses and approvals for conducting the internet café business in the
PRC.  As a result, we are now, through Junlong, in the business of
operating internet cafes in the PRC.





Results
of Operations





From
Inception on March 14, 2006 to June 30, 2010





During
this period we incorporated the company, hired an attorney, and hired an auditor
for the preparation of our registration statement. We have prepared an internal
business plan.  We have reserved the domain name
www.chinabizhotel.com.  We have also completed our public
offering.





Our net
loss from inception to June 30, 2010 is $156,801.  We spent this sum on
consulting fees, legal fees, audit and review fees, accounting fees, transfer
agent fees and general and administrative expenses.





Liquidity
and Capital Resources





As of the
date of this report, we had not yet generated any revenues from our business
operations.





In March
2006, we issued 4,075,000 shares of common stock pursuant to the exemption from
registration contained in Regulation S of the Securities Act of
1933  This was accounted for as a sale of common stock. On March 1,
2007, we issued 1,325,000 shares of common stock and raised a total of $132,500
from our public offering.





As of
June 30, 2010, our total assets were $3,715 and our total liabilities were
$47,975.  As of June 30, 2010, we had only had $382 in cash.





Item
7A. 
              Quantitative
and Qualitative Disclosures About Market Risk.





We are a smaller reporting company as
defined by Rule 12b-2 of the Exchange Act and are not required to provide the
information required under this item.




Item 8. 
                 Financial
Statements and Supplementary Data.









28




PAULA
S. MORELLI CPA P.C.
 21
Martha Street
 Freeport,
N.Y. 11520
 Phone/Fax:
(516) 378-4258
  REPORT
OF INDEPENDENT REGISTERED AUDITING FIRM
  PAULA
S. MORELLI
 Certified Public
Accountant
  To the
Board of Directors and Stockholders of
 China
Unitech Group, Inc.
  We have
audited the accompanying balance sheets of China Unitech, Inc.(the Company) as
of  June 30, 2009 and June 30, 2008, and the related statements of
income, stockholders’ equity and cash flows for the years  ended June
30, 2009 and June 30, 2008 and for the period March 14, 2006 (inception date) to
June 30, 2009. The Company’s management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial
statements based on our audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of China Unitech Group,Inc. as of June
30, 2009 and June 30, 2008, ,and the results of its operations and its cash
flows for each of the years then ended and for the period March 14,2006
(inception date) to June 30,2009 in conformity with accounting principles
generally accepted in the United States of America.
  The
financial statements referred to above have been prepared assuming that the
Company will continue as a going concern. However, at June 30, 2009 the Company
had an accumulated deficit of $116,535 and a net loss for the year ended June
30, 2009 of $36,135. These factors create substantial doubt as to the Company’s
ability to continue as a going concern. The Company is making an effort to
acquire a business with assets and operations. However, there is no assurance
that the Company will be successful in accomplishing this objective. The
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
  /s/
      Paula S. Morelli CPAPaula
      S. Morelli CPA P.C.Freeport,
      New YorkSeptember
      11, 2009
  F-1
 Certified Public
Accountants  |  280 Kenneth Drive, Suite 100  |
Rochester, New York 14623  | 585.427.8900|EFPRotenberg.com
   
 
  
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the
Board of Directors and
 Stockholders
of China Unitech Group, Inc.
 
 We have
audited the accompanying balance sheets of China Unitech Group, Inc. as of June
30, 2010 and 2009, and the related statements of operations, stockholders’
equity, and cash flows for each of the years ended June 30, 2010 and 2009, and
for the period since inception (March 14, 2006) to June 30, 2010. China Unitech
Group, Inc.’s management is responsible for these financial statements. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control 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 control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 China Unitech Group, Inc. as of
June 30, 2010 and 2009, and the results of its operations and its cash flows for
each of the years then ended and for the period since inception (March 14, 2006)
to June 30, 2010 in conformity with accounting principles generally accepted in
the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 8 to the financial
statements these conditions raise substantial doubt about its ability to
continue as a going concern.  Management's plans in regard to these
matters are also described in Note 8. The financial statements do not include
any adjustments relating to the recoverability and classification of asset
carrying amounts or the amount and classification of liabilities that might
result should the Company be unable to continue as a going concern.
  
 
 EFP
Rotenberg, LLP
 Rochester,
New York
 September
28, 2010
  F-2
  CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Balance
Sheets
 
 June
      30,
                                      
                                      
                                      June
      30,2010
                                      
                                      
                                      2009ASSETSCurrent
      assets:Cash
      and cash equivalents
                                      
                                      $
                                      382
                                      
                                      
                                      $
                                      2,673Prepaid
      rent
                                      
                                      
                                      3,333
                                      
                                      
                                      
                                      3,333Total
      current assets
                                      
                                      
                                      3,715
                                      
                                      
                                      
                                      6,006Other
      assets
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Total
      assets
                                      
                                      $
                                      3,715
                                      
                                      
                                      $
                                      6,006LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses payable
                                      
                                      $
                                      5,975
                                      
                                      
                                      $
                                      -Current
      portion of due to former majority stockholder
                                      
                                      
                                      10,000
                                      
                                      
                                      
                                      -Total
      current liabilities
                                      
                                      
                                      15,975
                                      
                                      
                                      
                                      -Due
      to former majority stockholder
                                      
                                      
                                      32,000
                                      
                                      
                                      
                                      10,000Total
      liabilities
                                      
                                      
                                      47,975
                                      
                                      
                                      
                                      10,000Stockholders'
      equity:Preferred
      stock, $.00001 par value; authorized 100,000,000 shares, issued and
      outstanding 0 shares
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Common
      stock, $.00001 par value; authorized 100,000,000 shares, issued and
      outstanding 6,173,600 and 6,173,600 shares, respectively
                                      
                                      
                                      62
                                      
                                      
                                      
                                      62Additional
      paid-in capital
                                      
                                      
                                      112,479
                                      
                                      
                                      
                                      112,479Deficit
      accumulated during the development stage
                                      
                                      
                                      (156,801
                                      )
                                      
                                      
                                      (116,535
                                      )Total
      stockholders' equity
                                      
                                      
                                      (44,260
                                      )
                                      
                                      
                                      (3,994
                                      )Total
      liabilities and stockholders' equity
                                      
                                      $
                                      3,715
                                      
                                      
                                      $
                                      6,006
 
 The
accompanying notes are an integral part of these financial
statements.
  F-3
 
 CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Statements
of Operations
  
 Cumulativeduring
      theDevelopmentStage
      (March 14,Year
      ended
                    
                    
                    Year
      ended
                    
                    
                    2006
      toJune 30, 2010
                    
                    
                    June 30, 2009
                    
                    
                    June 30, 2010)Revenues:
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Expenses:General
      and administrative
                    
                    
                    40,266
                    
                    
                    
                    36,135
                    
                    
                    
                    156,801Total
      expenses
                    
                    
                    40,266
                    
                    
                    
                    36,135
                    
                    
                    
                    156,801Net
      income (loss)
                    
                    $
                    (40,266
                    )
                    
                    $
                    (36,135
                    )
                    
                    $
                    (156,801
                    )Net
      income (loss) per share,Basic
      and diluted
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.01
                    )Number
      of common shares outstanding,Basic
      and diluted
                    
                    
                    6,173,600
                    
                    
                    
                    6,173,600
 
 The
accompanying notes are an integral part of these financial
statements.
  F-4
 
 CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Statements
of Changes in Stockholders' Equity
 For
the Period March 14, 2006 (Inception)
 to
June 30, 2010
 
 DeficitAccumulated
                  
                  
                  TotalCommon
      Stock,
                  
                  
                  Additional
                  
                  
                  During
                  
                  
                  Stockholders'$.00001
      par value
                  
                  
                  Paid-in
                  
                  
                  Development
                  
                  
                  EquityShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Stage
                  
                  
                  (Deficiency)Shares
      sold to officer and director at $.00001 per share in March
      2006
                  
                  
                  3,350,000
                  
                  
                  $
                  34
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  34Shares
      sold at $.00001 per share in June 2006
                  
                  
                  725,000
                  
                  
                  
                  7
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7Net
      loss for the period March 14, 2006 (inception) to June 30,
      2006
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,041
                  )
                  
                  
                  (4,041
                  )Balances,
      June 30, 2006
                  
                  
                  4,075,000
                  
                  
                  
                  41
                  
                  
                  
                  -
                  
                  
                  
                  (4,041
                  )
                  
                  
                  (4,000
                  )Shares
      sold in public offering at $.10 per share in February and March 2007, less
      offering costs of $20,000
                  
                  
                  1,325,000
                  
                  
                  
                  13
                  
                  
                  
                  112,487
                  
                  
                  
                  -
                  
                  
                  
                  112,500Net
      loss for the year ended June 30, 2007
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (13,464
                  )
                  
                  
                  (13,464
                  )Balances,
      June 30, 2007
                  
                  
                  5,400,000
                  
                  
                  
                  54
                  
                  
                  
                  112,487
                  
                  
                  
                  (17,505
                  )
                  
                  
                  95,036Stock
      dividend on August 24, 2007
                  
                  
                  21,600,000
                  
                  
                  
                  216
                  
                  
                  
                  (216
                  )
                  
                  
                  -
                  
                  
                  
                  -Return
      and cancellation of stock dividend shares of four largest shareholders on
      August 24, 2007
                  
                  
                  (20,826,400
                  )
                  
                  
                  (208
                  )
                  
                  
                  208
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      loss for the year ended June 30, 2008
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (62,895
                  )
                  
                  
                  (62,895
                  )Balances,
      June 30, 2008
                  
                  
                  6,173,600
                  
                  
                  
                  62
                  
                  
                  
                  112,479
                  
                  
                  
                  (80,400
                  )
                  
                  
                  32,141Net
      loss for the year ended June 30, 2009
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (36,135
                  )
                  
                  
                  (36,135
                  )Balances,
      June 30, 2009
                  
                  
                  6,173,600
                  
                  
                  
                  62
                  
                  
                  
                  112,479
                  
                  
                  
                  (116,535
                  )
                  
                  
                  (3,994
                  )Net
      loss for the year ended Jun 30, 2010
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (40,266
                  )
                  
                  
                  (40,266
                  )Balances,
      June 30, 2010
                  
                  
                  6,173,600
                  
                  
                  $
                  62
                  
                  
                  $
                  112,479
                  
                  
                  $
                  (156,801
                  )
                  
                  $
                  (44,260
                  )
 
 The
accompanying notes are an integral part of these financial
statements.
  F-5
 
 CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Statements
of Cash Flows
  
 Cumulativeduring
      theDevelopmentStage
      (March 14,Year
      ended
                      
                      
                      Year
      ended
                      
                      
                      2006
      toJune 30, 2010
                      
                      
                      June 30, 2009
                      
                      
                      June 30, 2010)Cash
      flows from operating activities:Net
      income (loss)
                      
                      $
                      (40,266
                      )
                      
                      $
                      (36,135
                      )
                      
                      $
                      (156,801
                      )Changes
      in operating assets and liabilities:Prepaid
      rent
                      
                      
                      -
                      
                      
                      
                      (3,333
                      )
                      
                      
                      (3,333
                      )Accounts
      payable and accrued expenses payable
                      
                      
                      5,975
                      
                      
                      
                      (3,930
                      )
                      
                      
                      5,975Net
      cash provided by (used for) operating activities
                      
                      
                      (34,291
                      )
                      
                      
                      (43,398
                      )
                      
                      
                      (154,159
                      )Cash
      flows from investing activities
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Cash
      flows from financing activities:Proceeds
      from sales of common stock
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      132,541Proceeds
      from (repayment of) loans payable to former majority
      stockholder
                      
                      
                      32,000
                      
                      
                      
                      10,000
                      
                      
                      
                      42,000Public
      offering costs incurred
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (20,000
                      )Net
      cash provided by (used for) financing activities
                      
                      
                      32,000
                      
                      
                      
                      10,000
                      
                      
                      
                      154,541Net
      increase (decrease) in cash and cash equivalents
                      
                      
                      (2,291
                      )
                      
                      
                      (33,398
                      )
                      
                      
                      382Cash
      and cash equivalents, beginning of period
                      
                      
                      2,673
                      
                      
                      
                      36,071
                      
                      
                      
                      -Cash
      and cash equivalents, end of period
                      
                      $
                      382
                      
                      
                      $
                      2,673
                      
                      
                      $
                      382Supplemental
      disclosures of cash flow information:Interest
      paid
                      
                      $
                      -
                      
                      
                      $
                      -Income
      taxes paid
                      
                      $
                      -
                      
                      
                      $
                      -
 
 The
accompanying notes are an integral part of these financial
statements.
  F-6
  CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Notes
to Financial Statements
 June
30, 2010
 
 NOTE
1 – ORGANIZATION
  China
Unitech Group, Inc. (the “Company”) was incorporated in the State of Nevada on
March 14, 2006.  Up to July 2, 2010, the Company planned to operate in
the online travel business.  A website was planned to offer viewers
the ability to book hotel rooms in China and earn the Company booking fees from
the respective hotels.
  On July
2, 2010 (see Note 7), the Company acquired Classic Bond Development Limited, a
British Virgin Islands corporation (“Classic Bond”), in exchange for 19,000,000
newly issued shares of Company common stock, representing approximately 94% of
the 20,200,000 issued and outstanding shares of common stock after the
transaction and after the coincident cancellation of 4,973,600 shares of common
stock held by the Company’s former majority stockholder.
  Classic
Bond, through its wholly owned subsidiary Shenzhen Zhonghefangda Internet
Technology Co. Limited (“Zhonghefangda”), a PRC company, and its variable
interest entity Shenzhen Junlong Culture Communications Co., Ltd. (“Junlong”), a
PRC company, operates internet cafés in Shenzhen, Guangdong, China.
  NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Basis of
presentation - The Company has been presented as a “development stage
enterprise” in accordance with Accounting Standards Codification (“ASC”) Topic
915, “Development Stage Entities”.  Up to July 2, 2010, the Company’s
activities were limited to organizational efforts, obtaining initial financing,
completing its public offering, and making periodic filings with the Securities
and Exchange Commission (“SEC”). The Company had no revenues from inception to
June 30, 2010.
  Cash and
cash equivalents – The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
  Use of
estimates – The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  Actual results could differ
from those estimates.
  Fair
value of financial instruments – The Company’s financial instruments consist of
cash and cash equivalents, accounts payable and accrued expenses payable, and
due to former majority stockholder. The carrying values approximate fair values
because of their short maturity.
  F-7
  CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Notes
to Financial Statements
 June
30, 2010
  Income
taxes – Income taxes are accounted for under the assets and liability
method.  Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax asset and liabilities are measured using enacted tax rates in
effect for the year in which those temporary differences are expected to be
recovered or settled.
  Net loss per share – Basic and diluted
net loss per share has been calculated based upon the weighted average number of
common shares outstanding.  For the periods presented, the Company did
not have any common stock equivalents outstanding such as stock options
orconvertible securities.
 
 NOTE
3 – DUE TO FORMER MAJORITY STOCKHOLDER
 
 On March
2, 2009, the Company’s majority stockholder advanced $10,000 to the Company.
Under the related loan agreement, the loan was non-interest bearing and was due
April 21, 2011. The loan contained certain restrictive covenants, including the
Company’s obligation not to declare any dividends without the lender’s prior
written consent.
  On August
13, 2009, the Company borrowed another $12,000 from its majority stockholder.
The loan was non-interest bearing, was due August 13, 2011, and contained
restrictive covenants.
  On
October 23, 2009, the Company borrowed an additional $10,000 from its majority
stockholder. The loan was non-interest bearing, was due October 23, 2011, and
contained restrictive covenants.
  On March
3, 2010, the Company borrowed another $10,000 from its majority stockholder. The
loan was non-interest bearing, was due March 2, 2012, and contained restrictive
covenants.
  On July
2, 2010 (see Note 7), the Company’s majority stockholder forgave the then
$42,000 balance due him.
  F-8
  CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Notes
to Financial Statements
 June
30, 2010
 
 NOTE
4 – STOCKHOLDERS’ EQUITY
 
 Public
offering - On August 30, 2006, the Company filed a Form SB-2 registration
statement with the Securities and Exchange Commission (which was declared
effective September 18, 2006) in connection with a public offering of up to
2,000,000 shares of common stock at $.10 per share, or $200,000
total.  In February and March 2007, a total of 1,325,000 shares of
common stock was sold to 59 investors at a price of $.10 per share, or $132,500
total (one of the 59 investors acquired 1,131,600 of the total 1,325,000 shares
sold).  Net proceeds to the Company, after deducting $20,000 of
offering costs incurred through September 30, 2007, were $112,500.
 
 Stock
dividend and stock cancellation – On August 24, 2007, the Company paid a stock
dividend of four shares of common stock (21,600,000 shares total) for each share
of common stock outstanding at August 22, 2007 (5,400,000 shares
total).  Simultaneously, the Company’s four largest stockholders (who
owned a total of 5,206,600 shares of common stock prior to the dividend)
returned to the Company their 20,826,400 dividend shares (which the Company
cancelled).  As a result of these transactions, the number of issued
and outstanding shares of common stock increased from 5,400,000 shares to
6,173,600 shares; the transactions had no effect on revenues or
expenses.
  NOTE
5 – INCOME TAXES
  No
provisions for income taxes have been recorded since the Company has incurred
net losses since inception.
  Based on
management’s present assessment, the Company has not yet determined it to be
more likely than not that a deferred tax asset of $53,312 (based on 34%
effective tax rate) at June 30, 2010 attributable to the future utilization of
the net operating loss carryforward of $156,801 will be
realized.  Accordingly, the Company has maintained a 100% allowance
against the deferred tax asset in the financial statements. The Company will
continue to review this valuation allowance and make adjustments as
appropriate.  The net operating loss carryforward expires $4,041 in
2026, $13,464 in 2027, $62,895 in 2028, $36,135 in 2029 and $40,266 in
2030.
  Current
United States income tax laws limit the amount of loss available to be offset
against future taxable income when a substantial change in ownership
occurs.  Therefore, the amount available to offset future taxable
income may be limited.
  F-9
  CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Notes
to Financial Statements
 June
30, 2010
  NOTE
6 – COMMITMENTS AND CONTINGENCIES
  Rental
agreement – From inception to October 31, 2008, the Company used office space
provided by its majority stockholder at no cost to the Company.  On
August 31, 2008, the Company executed a Lease Contract with its majority
stockholder.  The Lease Contract provided for the rental of this
office space to the Company for a one year term commencing November 1, 2008 and
ending November 1, 2009 at an annual rent of $10,000 due November 1, 2008 (which
was paid in August 2008). On October 23, 2009, the Lease Contract was extended
an additional one year to November 1, 2010 at the same annual rent of $10,000
due November 1, 2009 (which was paid in October 2009).
  NOTE
7 – SUBSEQUENT EVENTS
  On July
2, 2010, the Company’s former majority stockholder forgave the then $42,000
balance due him (see Note 3).
  On July
2, 2010, the Company entered into a share exchange transaction with Classic Bond
Development Limited, a British Virgin Islands corporation (“Classic Bond”), and
the shareholders of Classic Bond. Pursuant to the Share Exchange Agreement, the
Company acquired 100% of the issued and outstanding capital stock of Classic
Bond in exchange for 19,000,000 newly issued shares of the Company’s common
stock, which represented approximately 94% of the Company issued and outstanding
common stock immediately after the consummation of the transactions contemplated
by the Share Exchange Agreement.
  As a
condition precedent to the consummation of the Share Exchange Agreement, on July
2, 2010, the Company’s former majority stockholder cancelled 4,973,600 shares of
common stock owned by him.
  As
described in Note 1, Classic Bond owns Zhonghefangda, a PRC company which
controls through contractual agreements Junlong, a PRC company which operates
internet cafés in Shenzhen, Guangdong, China. According to audited financial
statements provided the Company, Junlong had total assets of $8,704,203 and
total stockholders’ equity of $7,049,832 at December 31, 2009. For the years
ended December 31, 2009 and 2008, Junlong had revenues of $14,038,931 and
$10,107,823, respectively, and net income of $4,388,449 and $3,013,565,
respectively.
  F-10
  CHINA
UNITECH GROUP, INC.
 (A
Development Stage Company)
 Notes
to Financial Statements
 June
30, 2010
  NOTE
8 – GOING CONCERN
  The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.  The
Company has an accumulated deficit of $156,801 at June 30, 2010 and has used
significant cash in support of its operating activities raising substantial
doubt about the Company's ability to continue as a going concern.  The
Company's 2010 cash flow needs were supplemented by shareholder
advances.
  The
ability of the Company to continue as a going concern is dependent on additional
sources of capital and the success of the Company's plan.  The financial
statements do not include any adjustments to the recoverability and
classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.
  F-11





Item
9. 
                 Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure.





None.




Item
9A. 
              Controls
and Procedures.





Evaluation
of Disclosure Controls and Procedures





The
Company maintains a set of disclosure controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports filed
under the Securities Exchange Act, is recorded, processed, summarized and
reported within the time periods specified by the SEC's rules and forms.
Disclosure controls are also designed with the objective of ensuring that this
information is accumulated and communicated to the Company's management,
including the Company's chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required
disclosure.




Pursuant
to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation
with the participation of the Company’s management, including Dishan Guo, the
Company’s chief executive officer, and chief financial officer, of the
effectiveness of the Company’s disclosure controls and procedures (as defined
under Rule 13a-15(e) under the Exchange Act) as of the fiscal year
ended  June 30, 2010. Based upon that evaluation, the Company’s chief
executive officer and chief financial officer concluded that the Company’s
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports that the Company files or
submits under the Exchange Act, is recorded, processed, summarized and reported,
within the time periods specified in the SEC’s rules and forms. Our chief
executive officer and chief financial officer also concluded that our disclosure
controls and procedures are effective to ensure that information required to be
disclosed in the reports required to be filed or submitted under the Exchange
Act is accumulated and communicated to the our management, including our chief
executive officer and chief financial officer, to allow timely decisions
regarding required disclosure.





Management’s
Report on Internal Control over Financial Reporting





The
Company’s management is responsible for establishing and maintaining adequate
internal control over our financial reporting as defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act.   The Company’s management is
also required to assess and report on the effectiveness of the Company’s
internal control over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002 (“Section 404”).    Internal control over
financial reporting is a process to provide reasonable assurance regarding the
reliability of the Company’s  financial reporting for external
purposes in accordance with generally accepted accounting principles. Internal
control over financial reporting includes policies and procedures that: (i)
pertain to maintaining records that in reasonable detail accurately and fairly
reflect the Company’s transactions; (ii) provide reasonable assurance that
transactions are recorded as necessary for preparation of the Company’s
financial statements and that receipts and expenditures of company assets are
made in accordance with management authorization; and (iii) provide reasonable
assurance that unauthorized acquisition, use or disposition of company assets
that could have a material effect on our financial statements would be prevented
or detected on a timely basis.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies and procedures may deteriorate.





The
Company’s management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2009. In making this assessment, it used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control—Integrated
Framework. This evaluation was conducted by Dishan Guo, the Company’s
chief executive officer and chief financial officer. Based on its assessment,
the Company’s management believes that, as of June 30, 2010, the Company’s
internal control over financial reporting is effective based on those
criteria.





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


29





Changes
in Internal Control over Financial Reporting





No
changes in the Company's internal control over financial reporting have come to
management's attention during the Company's last fiscal quarter that have
materially affected, or are likely to materially affect, the Company's internal
control over financial reporting.





Limitations
on Controls





Management
does not expect that the Company's disclosure controls and procedures or the
Company's internal control over financial reporting will prevent or detect all
error and fraud. Any control system, no matter how well designed and operated,
is based upon certain assumptions and can provide only reasonable, not absolute,
assurance that its objectives will be met. Further, no evaluation of controls
can provide absolute assurance that misstatements due to error or fraud will not
occur or that all control issues and instances of fraud, if any, within the
Company have been detected.  The Company's disclosure controls and
procedures are designed to provide reasonable assurance of achieving their
objectives and the Company's chief executive officer and chief financial officer
have concluded that the Company's disclosure controls and procedures are
effective at that reasonable assurance level.





Item
9B. 
              Other
Information.




None.


30


Part
III





Item
10. 
               Directors,
Executive Officers and Corporate Governance.




The names
of our current officers and directors, as well as certain information about
them, are set forth below:




NAME
              
              AGE
              
              POSITIONDishan
      Guo
              
              46
              
              Chairman,
      Chief Executive Officer and Chief Financial OfficerZhenquan
      Guo
              
              33
              
              DirectorLei
      Li
              
              45
              
              DirectorWenbin
      An
              
              70
              
              DirectorLizong
      Wang
              
              45
              
              Director




Dishan Guo. Mr. Guo became our
Chairman, CEO on July 2, 2010, the day that we consummated our reverse
acquisition of Classic Bond. As the founder of our variable interest entity,
Shenzhen Junlong Culture Communications Co., Ltd., a PRC company (“Junlong”),
Mr. Guo has served as the Managing Director and CEO of Junlong for over 7 years
since 2003, responsible for strategic planning of the company’s business and
growth and overseeing the operations of the company. He has extensive experience
and contact in the industry. He is the executive president of Shenzhen Longgang
District Internet Industry Association, which is the associate department of the
ministry of culture and sets the internet café industry standards, and a
director of Guangdong High-Tech Industry Association. Mr. Guo graduated from
Administrative Management Institute in Guangdong province in 1996, holding a
college degree in business management. Mr. Guo’s foregoing experience,
qualifications, attributes and skills led us to the conclusion that he should
serve as a director of our company, in light of our business and
structure.  Mr. Guo became our Chief Financial Officer on September 27,
2010.




Zhenquan Guo.Mr. Zhenquan Guo
joined our board on August 7, 2010. Mr. Guo joined Junlong in 2003, working in a
variety of roles. Since 2006, he has been the Operation Director. He is in
charge of the daily operations in the wholly owned internet cafés of Junlong.
Over the past five years, he has taken part in all the internet cafe set up and
license application tasks and gained extensive experience in the internet cafe
industry. Mr. Guo graduated in Gannan Normal University in 2000, majoring in
Mathematics and Applied Mathematics. He obtained is master’s degree in marketing
from Shenzhen University in 2008. Mr Guo’s foregoing experience, qualifications,
attributes and skills led us to the conclusion that he should serve as a
director of our company, in light of our business and structure.




Lei Li.Mr. Lei Li joined our
board on August 7, 2010. Mr. Li is the founder and managing director of the
Boardroom Advisors Company Limited, a Beijing-based financial advisory firm. He
is currently also a director of Universal Travel Group, a NYSE-listed company.
He served as chief financial officer of Synutra International, Inc., a
NASDAQ-listed company, from October 2007 to November 2009. From August 2004 to
September 2007, Mr. Li was vice president and chief financial officer of Kasen
International Holdings Limited, a public company listed on the Hong Kong Stock
Exchange. Prior to that, Mr. Li served as chief financial officer at Eagle Brand
Holdings Limited, a company listed on the Singapore Stock Exchange. Mr. Li’s
experience also includes serving as a financial controller at the Korean
division of Exel Plc, and serving as a senior auditor at Waste Management Inc.’s
international department in London. Mr. Li is a fellow member of the Association
of Chartered Certified Accountants (ACCA) in the UK. He received a bachelor’s
degree in management and engineering from Beijing Institute of Technology, a
master’s degree in economics from Renmin University of China, and a master’s
degree in accounting and finance from the London School of Economics. Mr. Li’s
foregoing experience, qualifications, attributes and skills led us to the
conclusion that he should serve as a director of our company, in light of our
business and structure.


31




Wenbin An.Mr. Wenbin An
joined our board on August 7, 2010. Mr. An was a diplomatic before retiring in
2002. He was deputy consul general in the PRC Consulate in Los Angeles from 1987
to 1994. In 1995, after returning to Beijing, he served as the Ministry of
Foreign Affairs’ Chief of Protocol for seven years, during which time he
organized many high profile events, including the Fourth World Conference on
Women in Beijing in 2005 and the celebration of the handover of Hong Kong in
1997, and he accompanied PRC leaders in visits to more than 30 foreign
countries. Mr. An graduated from Zhongshan University in Guangzhou, where he
major in English language. Since retirement, Mr. An has been serving as a
business consultant to PRC companies. Mr. An’s foregoing experience,
qualifications, attributes and skills led us to the conclusion that he should
serve as a director of our company, in light of our business and
structure.




Lizong Wang.Mr. Lizong Wang
joined the board on August 7, 2010. Mr. Wang currently serves as deputy
secretary of China Society for Promotion of The Guangcai Program, a program
initiated and implemented by PRC private enterprises to alleviate poverty. He
also serves as a strategic advisor and independent director of Universal Travel
Group, Shenzhen 3nod Electronics Co., Ltd, and Shenzhen Ruidefeng Pesticide. In
addition, he acts as economic consultant to a number of municipalities in the
PRC as well as Asan in Korea. Mr. Wang is a frequent lecturer at higher
education institutions in the Greater China Region. Mr. Wang’s foregoing
experience, qualifications, attributes and skills led us to the conclusion that
he should serve as a director of our company, in light of our business and
structure.




Except as
noted above, there are no agreements or understandings for any of our executive
officers or directors to resign at the request of another person and no officer
or director is acting on behalf of nor will any of them act at the direction of
any other person.




Directors
are elected until their successors are duly elected and qualified.




The
company is conducting a search for candidates to serve as chief financial
officer but for the time being, Mr. Dishan Guo, our chief executive officer will
function as our principal accounting officer.




Family
Relationships




Zhenquan
Guo, one of our directors, is the nephew of our Chairman and CEO, Dishan Guo.
There are no other family relationships between any of our directors or
executive officers.




Involvement
in Certain Legal Proceedings




To the
best of our knowledge, none of our directors or executive officers has been
convicted in a criminal proceeding, excluding traffic violations or similar
misdemeanors, or has been a party to any judicial or administrative proceeding
during the past ten years that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws, except for matters that were dismissed without
sanction or settlement. Except as set forth in our discussion below in
“Transactions with Related Persons,” none of our directors, director nominees or
executive officers has been involved in any transactions with us or any of our
directors, executive officers, affiliates or associates which are required to be
disclosed pursuant to the rules and regulations of the SEC.




Meetings
of Our Board of Directors





During
fiscal year ended June 30, 2010, our Board of Directors did not meet. We did not
hold an annual meeting in 2009.


32





Board
Committees




We
presently do not have an audit committee, compensation committee or nominating
committee or committees performing similar functions, as our management believes
that until this point it has been premature at the early stage of our management
and business development to form an audit, compensation or nominating committee.
However, our new management plans to form an audit, compensation and nominating
committee in the near future. We envision that the audit committee will be
primarily responsible for reviewing the services performed by our independent
auditors and evaluating our accounting policies and system of internal controls.
We envision that the compensation committee will be primarily responsible for
reviewing and approving our salary and benefits policies (including stock
options) and other compensation of our executive officers. The nominating
committee would be primarily responsible for nominating directors and setting
policies and procedures for the nomination of directors. The nominating
committee would also be responsible for overseeing the creation and
implementation of our corporate governance policies and procedures. Until these
committees are established, these decisions will continue to be made by our
Board of Directors. Although our Board of Directors has not established any
minimum qualifications for director candidates, when considering potential
director candidates, our Board of Directors considers the candidate’s character,
judgment, skills and experience in the context of the needs of our Company and
our Board of Directors.




We do not
have a charter governing the nominating process. The members of our Board of
Directors, who perform the functions of a nominating committee, are not
independent because they are also our officers. There has not been any defined
policy or procedure requirements for stockholders to submit recommendations or
nominations for directors. Our Board of Directors does not believe that a
defined policy with regard to the consideration of candidates recommended by
stockholders is necessary at this time because, given the early stages of our
development, a specific nominating policy would be premature and of little
assistance until our business operations are at a more advanced
level.




Code
of Ethics





We have
adopted a corporate code of ethics. We believe our code of ethics is reasonably
designed to deter wrongdoing and promote honest and ethical conduct; provide
full, fair, accurate, timely and understandable disclosure in public reports;
comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code.




Indemnification
of Directors and Officers




Section
78.138 of the Nevada Revised Statutes (“NRS”) provides that a director or
officer will not be individually liable unless it is proven that (i) the
director’s or officer’s acts or omissions constituted a breach of his or her
fiduciary duties, and (ii) such breach involved intentional misconduct, fraud or
a knowing violation of the law.




Section
78.7502 of NRS permits a company to indemnify its directors and officers against
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with a threatened, pending or completed
action, suit or proceeding if the officer or director (i) is not liable pursuant
to NRS 78.138 or (ii) acted in good faith and in a manner the officer or
director reasonably believed to be in or not opposed to the best interests of
the corporation and, if a criminal action or proceeding, had no reasonable cause
to believe the conduct of the officer or director was unlawful.




Section
78.751 of NRS permits a Nevada company to indemnify its officers and directors
against expenses incurred by them in defending a civil or criminal action, suit
or proceeding as they are incurred and in advance of final disposition thereof,
upon receipt of an undertaking by or on behalf of the officer or director to
repay the amount if it is ultimately determined by a court of competent
jurisdiction that such officer or director is not entitled to be indemnified by
the company. Section 78.751 of NRS further permits the company to grant its
directors and officers additional rights of indemnification under its articles
of incorporation or bylaws or otherwise.




Section
78.752 of NRS provides that a Nevada company may 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 company, or is or was serving at the
request of the company as a director, officer, employee or agent of another
company, 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 company has the authority to indemnify him against
such liability and expenses.


33




Our
amended and restated articles of incorporation provide that no director or
officer of will be personally liable to us or any of our stockholders for
damages for breach of fiduciary duty as a director or officer; provided,
however, that the foregoing provision shall not eliminate or limit the liability
of a director or officer (i) for acts or omissions which involve intentional
misconduct, fraud or knowing violation of law, or (ii) the payment of dividends
in violation of Section 78.300 of NRS. In addition, our amended and restated
articles of incorporation and bylaws implement the indemnification and insurance
provisions permitted by Chapter 78 of the NRS by providing that:




·
            We
      shall indemnify its directors and officers, or any person serving at our
      request, to the fullest extent permitted by the
  NRS.


·
            We
      may at the discretion of the Board of Directors purchase and maintain
      insurance on behalf of any person who holds or who has held any position
      identified in the paragraph above against any and all liability incurred
      by such person in any such position or arising out of his status as
      such.




Insofar
as indemnification by us for liabilities arising under the Securities Act may be
permitted to our directors, officers or persons controlling the company pursuant
to provisions of our articles of incorporation and bylaws, 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.
In the event that a claim for indemnification by such director, officer or
controlling person of us in the successful defense of any action, suit or
proceeding is asserted by such director, officer or controlling person in
connection with the securities being offered, we will, unless in the opinion of
our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
us is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.




Director
Independence




Except
for Dishan Guo and Zhenquan Guo, all our other directors are independent
directors, as the term “independent” is defined by the rules of the Nasdaq Stock
Market.




Section
16(a) of the Securities Exchange Act of 1934





As
of the date of this report, we are not subject to section 16(a) of the
Securities Exchange Act of 1934.





Item
11. 
               Executive
Compensation





The
following Summary Compensation Table sets forth, for the years indicated, all
cash compensation paid, distributed or accrued for services, including salary
and bonus amounts, rendered in all capacities by our chief executive officer and
all other executive officers who received or are entitled to receive
remuneration in excess of $100,000 during the stated periods.




Summary Compensation Table—
Fiscal Years Ended June 30, 2010 and 2009




The
following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the named persons for services
rendered in all capacities during the noted periods. No executive officer
received total annual salary and bonus compensation in excess of
$100,000.


34




Name and Principal Position
                
                Fiscal
                  Year
                
                Salary
                  ($)
                
                
                Total
                  ($)Dishan
      Guo,
                
                2010
                
                
                44,118
                
                
                
                44,118Chief
      Executive Officer (1)
                
                2009
                
                
                6,272
                
                
                
                6,272Xuezheng
      Yuan,
                
                2010
                
                
                -
                
                
                
                -Former
      Chief Executive Officer (2)
                
                2009
                
                
                -
                
                
                
                -




(1)
            On
      July 2, 2010, we acquired Classic Bond in a reverse acquisition
      transaction that was structured as a share exchange and in connection with
      that transaction, Mr. Guo became our Chief Executive Officer and
      President. Prior to the effective date of the reverse acquisition, Mr. Guo
      served at Classic Bond’s VIE Junlong as its CEO. The annual, long term and
      other compensation shown in this table include the amount Mr. Guo received
      from Junlong prior to the consummation of the reverse
      acquisition.




(2)
            Xuezheng
      Yuan resigned as our sole officer upon the closing of the reverse
      acquisition of Classic Bond on July 2,
2010.




Employment
Agreements




All of
our employees, including Mr. Dishan Guo, our Chief Executive Officer, have
executed our standard employment agreement. Our employment agreements with our
executives provide the amount of each executive officer’s salary and establish
their eligibility to receive a bonus. Mr. Guo’s employment agreement provides
for an annual salary of RMB 300,000 (approximately $44,118).




Other
than the salary and necessary social benefits required by the government, which
are defined in the employment agreement, we currently do not provide other
benefits to our officers at this time. Our executive officers are not entitled
to severance payments upon the termination of their employment agreements or
following a change in control.




Compensation
Discussion and Analysis





We strive
to provide our named executive officers (as defined in Item 402 of Regulation
S-K) with a competitive base salary that is in line with their roles and
responsibilities when compared to peer companies of comparable size in similar
locations.





It is not
uncommon for PRC private companies in the PRC to have base salaries as the sole
form of compensation. The base salary level is established and reviewed based on
the level of responsibilities, the experience and tenure of the individual and
the current and potential contributions of the individual. The base salary is
compared to the list of similar positions within comparable peer companies and
consideration is given to the executive’s relative experience in his or her
position.  Base salaries are reviewed periodically and at the time of
promotion or other changes in responsibilities.





We plan
to implement a more comprehensive compensation program, which takes into account
other elements of compensation, including, without limitation, short and long
term compensation, cash and non-cash, and other equity-based compensation such
as stock options. We expect that this compensation program will be comparable to
the programs of our peer companies and aimed to retain and attract talented
individuals.




Outstanding Equity Awards at Fiscal
Year End




None of
our executive officers received any equity awards, including, options,
restricted stock or other equity incentives during the fiscal year ended June
30, 2010.


35




Compensation
of Directors




During
the 2010 fiscal year, no member of our board of directors received any
compensation for his services as a director.




Item
12. 
               Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.




The
following table sets forth information regarding beneficial ownership of our
common stock as of  September 20, 2010 (i) by each person who is known
by us to beneficially own more than 5% of our common stock; (ii) by each of our
officers and directors; and (iii) by all of our officers and directors as a
group. Unless otherwise specified, the address of each of the persons set forth
below is in care of Junlong, 1-D-1010, Yuanjing Park, Long Xiang Road, Long Gang
District, Shenzhen, Guangdong Province, People’s Republic of China.




Name and Address of
                  Beneficial Owner
                
                Office, If Any
                
                Title of Class
                
                Amount and
                  Nature of
                  Beneficial
                  Ownership(1)
                
                
                Percent
                  of
                  Class(2)Officers and
      DirectorsDishan
      Guo
                
                Chairman
      and Chief Executive Officer
                
                Common
      stock, $0.001 par value
                
                
                12,008,750
                
                
                
                59.45
                %Xuezheng
      Yuan(3)
                
                Director
                
                Common
      stock, $0.001 par value
                
                
                20,510
                
                
                
                0.1
                %Zhenquan
      Guo(4)
                
                Director
                
                Common
      stock, $0.001 par value
                
                
                600,020
                
                
                
                2.97
                %Lei
      Li(4)
                
                Director
                
                Common
      stock, $0.001 par value
                
                
                —
                
                
                
                —Wenbin
      An(4)
                
                Director
                
                Common
      stock, $0.001 par value
                
                
                —
                
                
                
                —Lizong
      Wang(4)
                
                Director
                
                Common
      stock, $0.001 par value
                
                
                100,000
                
                
                
                0.50
                %All
      officers and directors as a group (2 persons named above)
                
                
                
                Common
      stock, $0.001 par value
                
                
                12,008,750
                
                
                
                59.45
                %5% Security
      HoldersDishan
      Guo
                
                
                
                Common
      stock, $0.001 par value
                
                
                12,008,750
                
                
                
                59.45
                %





* Less
than 1%


36




(1)
            Beneficial
      Ownership is determined in accordance with the rules of the SEC and
      generally includes voting or investment power with respect to securities.
      Each of the beneficial owners listed above has direct ownership of and
      sole voting power and investment power with respect to the shares of our
      common stock.




(2)
            A
      total of 20,200,000 shares of our common stock are considered to be
      outstanding pursuant to SEC Rule 13d-3(d)(1) as of September 20,
      2010.




(3)
            Xuezheng
      Yuan resigned as our sole officer upon the closing of the reverse
      acquisition of Classic Bond on July 2,
2010.


(4)
              Zhenquan
      Guo, Lei Li, Wenbin An and Lizong Wang joined our board of directors on
      August 7, 2010.


Item
13. 
               Certain
Relationships and Related Transactions, and Director Independence.




The
following includes a summary of transactions since the beginning of our 2010
fiscal year, or any currently proposed transaction, in which we were or are to
be a participant and the amount involved exceeded or exceeds the lesser of
$120,000 or one percent of the average of our total assets at year end for the
last two completed fiscal years, and in which any related person had or will
have a direct or indirect material interest (other than compensation described
under “Executive Compensation”). We believe the terms obtained or consideration
that we paid or received, as applicable, in connection with the transactions
described below were comparable to terms available or the amounts that would be
paid or received, as applicable, in arm’s-length transactions.




·
            On
      June 11, 2010, Zhonghefangda entered into the Management and Consulting
      Services Agreement with Junlong, pursuant to which Zhonghefangda agreed to
      provide management and consulting services to the VIE in exchange for
      service fees up to 100% of the VIE’s aggregate net profits during the term
      of the agreement.


·
            On
      June 11, 2010, Zhonghefangda entered into the Option Agreement with
      Junlong and the VIE Shareholders, whereby the VIE and the VIE Shareholders
      granted Zhonghefangda an exclusive, irrevocable option to purchase all or
      part of their equity interests in
Junlong.


·
            On
      June 11, 2010, Zhonghefangda entered into the Equity Pledge Agreement with
      Junlong and the VIE Shareholders, whereby the VIE Shareholders have
      pledged their entire equity interest in the VIE to Zhonghefangda. The
      equity interests are pledged as collateral to secure the respective
      obligations of the VIE and the VIE Shareholders under the Management and
      Consulting Services Agreement, the Option Agreement and the Voting Rights
      Proxy Agreement.


·
            On
      June 11, 2010, Zhonghefangda entered into the Voting Rights Proxy
      Agreement with the VIE and the VIE Shareholders. The agreement requires
      the VIE Shareholders to grant and entrust Zhonghefangda with all of the
      voting rights as shareholders of the VIE for the maximum period of time
      permitted by law.


·
            On
      July 2, 2010, we entered into a cancellation agreement with certain
      shareholders, namely, Xuezheng Yuan, First Prestige, Inc., Shuihua Cheng,
      Catalfa Holdings, Inc. and JD Infinity Holdings, Inc., whereby these
      shareholders agreed to the cancellation of 4,973,600 shares of our common
      stock owned by him. At the time he entered into the Cancellation
      Agreement, Mr. Yuan was our sole director and
  officer.




None of
our directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.




Promoters and Certain Control
Persons




We did
not have any promoters at any time during the past five fiscal
years.




Director
Independence




Except
for Dishan Guo and Zhenquan Guo, all our other directors are independent
directors, as the term “independent” is defined by the rules of the Nasdaq Stock
Market.


37




Item
14. 
               Principal
Accounting Fees and Services.





(1)
Audit Fees




The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for our audit of annual financial
statements and review of financial statements included in our Form 10-K or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years
were:




2010
                            
                            $
                            3,500
                            
                            EFP
      Rotenberg, LLP2010
                            
                            $
                            8,750
                            
                            Paula
      S. Morelli, CPA, P.C.2009
                            
                            $
                            0
                            
                            EFP
      Rotenberg, LLP2009
                            
                            $
                            8,750
                            
                            Paula
      S. Morelli, CPA,
P.C.




Audit Related
Fees





The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit or review of the registrant’s financial statements and
are not reported under Item 9(e)(1) of Schedule 14A are:




2009
      Junlong’s Audit
                        
                        $
                        90,0002010
      Q1 Junlong Review
                        
                        $
                        10,0002010
      Q2 Junlong Review
                        
                        $
                        10,000




Tax Fees




For the
Company’s fiscal years ended June 30, 2010 and 2009, we were not billed by our
principal accountants for professional services rendered for tax compliance, tax
advice, and tax planning.


38


PART
V





Item
15. 
               Exhibits,
Financial Statement Schedules





Exhibit No.
                            
                            Description2.1*
                            
                            Form
      of Share Exchange Agreement, dated July 2, 2010, among the Company,
      Classic Bond Development Limited and its shareholders.3.1**
                            
                            Articles
      of Incorporation of the Company3.2**
                            
                            Bylaws
      of the Company3.3***
                            
                            Amended
      and Restated Bylaws, adopted on July 30, 20104.1*
                            
                            Form
      of Cancellation Agreement, dated July 2, 2010, among the Company and
      certain shareholders.4.2**
                            
                            Specimen
      Stock Certificate10.1*
                            
                            Management
      Consulting Service Agreement, dated June 11, 2010, among Zhonghefangda,
      Junlong and Junlong’s shareholders.10.2*
                            
                            Equity
      Pledge Agreement, dated June 11, 2010, among Zhonghefangda, Junlong and
      Junlong’s shareholders.10.3*
                            
                            Option
      Agreement, dated June 11, 2010, among Zhonghefangda, Junlong and Junlong’s
      shareholders.10.4*
                            
                            Proxy
      Agreement, dated June 11, 2010, among Zhonghefangda, Junlong and Junlong’s
      shareholders.10.5*
                            
                            English
      Translation of Employment Agreement, dated April 1, 2009, between Junlong
      and Tu Fan.10.6*
                            
                            English
      Translation of Form of Non-disclosure and Non-competition Agreement, dated
      March 11, 2010, between Junlong and its employees.10.7*
                            
                            English
      Summary of Loan Agreement, dated October 23, 2009, between Junlong and
      Shenzhen Branch of China Construction Bank.10.8*
                            
                            English
      Summary of Guaranty Contract of Maximum Amount, dated October 23, 2009,
      between Dishan Guo and Shenzhen Branch of China Construction
      Bank.10.9*
                            
                            English
      Summary of Purchase Agreement, dated June 7, 2010, between Junlong and
      Shenzhen SEG Industrial Investment Co., Ltd.10.10*
                            
                            English
      Summary of Lease Contract, dated September 1, 2006, between Junlong and
      Zou Zhiwei.10.11*
                            
                            English
      Summary of Lease Contract, dated December 15, 2009, between Junlong and
      Hao
Changsheng


39




10.12
                  
                  Lease
      contract re: No. 1 Xinxin Garden, Fangjicun, Xudong Road, Wuchang, Wuhan,
      Hubei Province, China 430062 between the Company and Xuezheng
      Yuan.14.1****
                  
                  Code
      of Ethics21*
                  
                  Subsidiaries
      of the Company.31.1
                  
                  Certification
      of Principal Executive Officer and Principal Financial Officer Pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.32.1
                  
                  Certification
      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002.





*
Incorporated by reference to our current report on Form 8-K filed with the SEC
on July 9, 2010.




**
Incorporated by reference to our Registration Statement on Form SB-2 filed on
August 30, 2006.




*
**Incorporated by reference to our current report on Form 8-K filed with the SEC
on August 3, 2010.




*
***Incorporated by reference to our annual report on Form 10-K filed with the
SEC on June 30, 2008.


40


SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




CHINA UNITECH GROUP,
      INC./s/
      Dishan GuoBy:
      Dishan GuoTitle:
      Chief Executive Officer and Chief Financial
  Officer





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





Name
      and Title
                    
                    Date/s/
      Dishan Guo
                    
                    
                    September
      28, 2010Dishan
      GuoTitle:
      Chairman and Chief Executive Officer/s/
      Zhenquan Guo
                    
                    
                    September
      28, 2010Zhenquan
      GuoTitle:
      Director/s/
      Lei Li
                    
                    
                    September
      28, 2010Lei
      LiTitle:
      Director/s/Wenbin
      An
                    
                    
                    September
      28, 2010Wenbin
      AnTitle:
      Director/s/Lizong
      Wang
                    
                    
                    September
      28, 2010Lizong
      WangTitle:
      Director


41