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

                                    FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2008

                                       or

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

For the transition period from ________________ to ___________________________
Commission file number 000-20936

                              Jade Art Group, Inc.
             (Exact name of registrant as specified in its charter)

           Nevada                                         71-1021813
State or other jurisdiction of              (I.R.S. Employer Identification No.)
incorporation or organization

                             #35, Baita Zhong Road,
             Yujiang County, Jiangxi Province, P.R. of China 335200
               (Address of principal executive offices) (Zip Code)
                                 (646) 200-6328
               Registrant's telephone number, including area code

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

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

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

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

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

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

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

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 ( 229.405 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 |_|

<PAGE>

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 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 |_|

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
definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer |_|                        Accelerated filer |_|
Non-accelerated filer |X|                          Smaller reporting company |_|
Do not check if a smaller reporting company)

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

As of June 30, 2008, the aggregate market value of the common stock of the
registrant held by non-affiliates (excluding shares held by directors, officers
and others holding more than 10% of the outstanding shares of the class) was
$86,177,687.9 based upon a closing sale price of $1.85 on the Over the Counter
Bulletin Board.

As of May 18, 2009, the registrant had outstanding 79,980,000 shares of common
stock.

DOCUMENTS INCORPORATED BY REFERENCE

None.

<PAGE>

                                Table of Contents

Item 1.   Business                                                             2
Item 1A.  Risk Factors                                                        18
Item 2.   Properties                                                          19
Item 3.   Legal Proceedings                                                   19
Item 4.   Submission of Matters to a Vote of Security Holders                 19
PART II
Item 5.   Market for Registrant's Common Equity, Related Stockholder
          Matters and Issuer Purchases of Equity Securities                   20
Item 6.   Selected Financial and Other Data                                   22
Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                               22
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk          28
Item 8.   Financial Statements and Supplementary Data                         28
Item 9.   Changes in and Disagreements With Accountants on Accounting and
          Financial Disclosure                                                58
Item 9A.  Controls and Procedures                                             58
Item 9B.  Other Information                                                   59
PART III
Item 10.  Directors, Executive Officers and Corporate Governance              59
Item 11.  Executive Compensation                                              62
Item 12.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters                                     66
Item 13.  Certain Relationships and Related Transactions, and
          Director Independence                                               67
Item 14.  Principal Accounting Fees and Services                              68
PART IV
Item 15.  Exhibits and Financial Statement Schedules                          70
Signatures                                                                    72

<PAGE>

                                     PART I

Item 1. Business.

Introduction

      Jade Art Group, Inc. is a seller and distributor in China of raw jade,
ranging in uses from decorative construction material for both the commercial
and residential markets to high-end jewelry. For more than 30 years, the
Company's business consisted of manufacturing and selling hand and
machine-carved wood products, such as furniture, architectural accents and
Buddhist figurines in China. Commencing in 2007, we experienced a reduction of
revenue from our woodcarving business, which largely resulted from increased
competition. As a result, we decided to dispose of our wood products business
and to enter the business of raw jade sales and distribution, which management
believed presented a better long-term growth potential. On January 11, 2008, we
formed a new wholly-owned Chinese subsidiary, JiangXi SheTai Jade Industrial
Company Limited, to engage in the sale and distribution of raw jade throughout
China. Our goal is to meet China's increasing demand for jade and to eventually
vertically integrate our raw jade distribution activities with jade processing,
carving, polishing, and, at a later date, retail sales.

      The Company currently operates in one segment.

Our Corporate History

      The financial statements presented are those of Jade Art Group, Inc.
(formerly Vella Productions, Inc.) ("the Company") which was incorporated under
the laws of the State of Nevada on September 30, 2005.

      On October 1, 2007, Vella Productions Inc., the former registrant, entered
into an agreement and plan of merger with its wholly-owned subsidiary, VLLA
Merger Sub, Inc., and each of Guoxi Holding Limited ("GHL"), Hua-Cai Song,
Fu-Lan Chen, Mei-Ling Chen, Chen-Qing Luo, Mei-Qing Zhang, Song-Mao Cai,
Shenzhen Hua Yin Guaranty & Investment Company Limited, Top Good International
Limited, Total Giant Group Limited, Total Shine Group Limited, Sure Believe
Enterprises Limited, Think Big Trading Limited, Huge Step Enterprises Limited
and Billion Hero Investments Limited (the "Merger Agreement").

      Pursuant to the Merger Agreement, GHL merged with VLLA Merger Sub, Inc,
with GHL as the surviving entity. As a result of the Merger Transaction, GHL
became a wholly-owned subsidiary of the Registrant, which, in turn, made the
Registrant the indirect owner of the operating company subsidiary of GHL,
Jiangxi XiDa (formerly known as Jiangxi Xi Cheong Lacquer, Inc.). Under the
Merger Agreement, in exchange of surrendering their shares in GHL, the GHL
Shareholders received an aggregate of (i) 68,900,000 newly-issued shares of the
Registrant's common stock, par value $.001 per share (the "Common Stock") and
(ii) $14,334,500, in the form of promissory notes payable on or before the first
year anniversary of the Merger Transaction. Consideration was to be distributed
pro ratably among the GHL Shareholders in accordance with their respective
ownership interests in GHL immediately before the completion of the Merger
Transaction.

      The acquisition has been accounted for as a recapitalization and,
accordingly, these financial statements represent historical operations of
Jiangxi XiDa and the capital structure of the former Vella Productions, Inc.


                                      -2-
<PAGE>

      On November 8, 2007, the Company amended and restated its articles of
incorporation to reflect Jade Art Group, Inc. as its new corporate name and,
shortly thereafter, commenced operations as a distributor and seller of raw jade
sourced from the SheTai Jade Mine owned by Wulateqianqi XiKai Mining Co., Ltd.
("XiKai Mining").

The Company's Exclusive Distribution Agreement with XiKai Mining

      On January 17, 2008, the Company entered into an Exclusive Distribution
Rights Agreement (the "Exchange Agreement") with XiKai Mining. Under the
Exchange Agreement, XiKai Mining committed to sell to the Company 90% of the raw
jade material produced from its SheTai Jade mine, located in Wulateqianqi,
China, for a period of 50 years (the "Exclusive Rights"). In exchange for these
Exclusive Rights, the Company agreed to pay XiKai Mining RMB 60 million
(approximately $8.7 million) by March 31, 2009 and, to transfer to XiKai Mining
100% of our ownership interest in all of the Company's woodcarving operations,
which were contained in Jiangxi XiDa. This transfer of Jiangxi XiDa was made on
February 20, 2008.

      XiKai Mining is the Company's sole source for raw jade. Under the Exchange
Agreement, the price for the raw jade material has been set for the first five
years at RMB 2000 (approximately $285) per metric ton, and is subsequently
subject to renegotiation every five years with adjustments not to exceed 10%. A
chart summarizing the material terms of the Exchange Agreement is set forth
below:

Parties to the Agreement:       (a) GHL and its wholly owned subsidiary Jiangxi
                                    SheTai Jade Industrial Co., Ltd. ("STJ")
                                (b) XiKai Mining

Exclusive Commitment:            XiKai Mining committed to sell to the Company
                                 up to 90% of the raw jade material produced in
                                 the SheTai Jade mine

Term of Agreement:               50 years

Cost of Agreement:               The Company agreed to pay to XiKai Mining RMB
                                 60 million (approximately $8.8 million on the
                                 date of the agreement) by 3/31/09. This amount
                                 was paid on 3/1/08. The Company also agreed to
                                 transfer to XiKai Mining 100% ownership of the
                                 wholly owned Jiangxi XiDa Wooden Carving
                                 Lacquerware Co., Ltd. The transfer was
                                 completed on 2/20/08 and the agreement was
                                 finalized on 3/10/08.

Commitment to Purchase:          If the Company so requests, XiKai Mining
                                 committed to provide 40,000 tons of annual jade
                                 production.

Minimum Obligation               The Company is not obligated to purchase any
                                 specified amount of jade.

Average Cost / Ton:              The Company's average cost will not exceed RMB
                                 2,000 per ton (approximately $285 on the date
                                 of the Exchange Agreement). This cost will be
                                 renegotiated every five years with a maximum
                                 increase, in any, of 10% on each adjustment.

Failure to Perform:              XiKai Mining must pay to the Company RMB 18,000
                                 (approximately $2,500 at the date of the
                                 Exchange Agreement) for each ton below 40,000
                                 ordered by the Company but not delivered.


                                      -3-
<PAGE>

Miscellaneous Terms:              o XiKai Mining may not sell the remaining
                                    10% of SheTai output at less than the agreed
                                    upon price with the Company.
                                  o The Exchange Agreement may only be
                                    terminated by the consent of the Company and
                                    XiKai.
                                  o The agreement is subject to the laws of
                                    the People's Republic of China ("PRC"),
                                    where any dispute will be resolved through
                                    arbitration.

Jade from the SheTai Mine

      The SheTai Jade mine commenced operation in 2002 and is estimated to have
an annual operating capacity of approximately 40,000 tons by 2009. It has one of
the largest jade reserves in China. According to a survey report issued by the
Inner Mongolia Geological Institution, the mine has proven and probable reserves
of approximately six million tons. The SheTai Jade mine's reserves are unique,
in that they include some of the oldest (formed approximately 1.8 billion - 2.4
billion years ago) jade ore found in China and are considered to be of the
highest quality in terms of rigidity and relative size of its pieces.

      There are two types of jade: nephrite and jadeite. Jadeite's rarity,
higher degree of hardness and vivid colors have made it better known and more
expensive than nephrite. The SheTai Jade mine, in the mountain ranges of Inner
Mongolia, China, contains the jadeite variety of jade. The jade from the SheTai
mine is stainless, non-corrosive, non-weathering and does not fade. In addition,
SheTai Jade is abrasion resistant, smooth and highly reflective. The green is
pure and the gems are translucent, with a glassy luster. SheTai Jade is as hard
as quartz, with a degree of hardness between 7.1 and 7.3 on the Mohs scale,
which is much higher than that of most jade. As a result of such
characteristics, SheTai Jade has a broad spectrum of applications, ranging from
commercial and residential construction, and decorative jade artwork to
intricately carved jade jewelry.

      SheTai Jade Mine is located in Inner Mongolia, China's northern border
autonomous region. The location of the SheTai Jade mine is noted by the tan
shading in the map below. The star on the map denotes the capital, Beijing.

[GRAPHIC OMITTED]


                                      -4-
<PAGE>

Uses for SheTai Jade

      Jade has varied applications, ranging from jewelry to construction and
furniture manufacturing. Asians and, predominantly, the Chinese have a long
history of jade usage in jewelry and craftwork. The Chinese tradition of using
jade and the belief that jade protects its owners from evil has made it a
popular stone. Thus, jade is not merely valued as a commodity, but also as a
good luck charm for its owner. Jade's popularity has led to considerable demand
and has helped in commanding high prices.

      Our jade has a wide range of applications due to its unique
characteristics, broadening the potential customer base of the Company. Raw jade
has the following four major applications:

      o     As construction material such as tiles, mosaic, and cobblestone;

      o     In making sculptures and large-scale statues like Buddha figures,
            garden architecture, political leaders and corporate founder
            statues;

      o     In furniture and home furnishings such as lamps, countertops and
            kitchenware;

      o     In jewelry items (In spite of jewelry being the most common use of
            jade, the volume demanded in this segment is not substantial
            compared to potential commercial applications. The quantity required
            in jewelry markets is also highly cyclical. However, delicate
            artwork and jewelry command higher margins, which compensates for
            lower unit volumes.)

      Raw jade, which is used in furniture and construction materials, costs
around $3 per kilogram, while the purest form, used most commonly in jewelry
after considerable processing, is as expensive as $85-$100 per gram. The stone's
pricing is mainly dependent on factors like purity, color, hardness, clarity and
rarity of particular genres of the stone.

      The Company is promoting the usage of its SheTai brand jade in the
construction of high-end hotel, temples, restaurants, government and corporate
buildings as well as in home decor. The Company is also positioning SheTai Jade
as an alternative for marble and granite.

Customers of the Company

      We commenced the distribution and sale of raw jade in January 2008. During
the quarter ended March 31, 2008, we entered into five contracts for the sale of
raw jade to customers in China. During the quarter ended June 30, 2008, the
Company entered into one additional contract with an existing customer. The
total value of these contracts is estimated to be $42 million. Each contract
obligated the customer to purchase a specified amount of raw jade within a
specified amount of time ranging from six to twelve months. We have not entered
into any new contracts since June 30, 2008.

      The Company began shipments on February 1, 2008 and had distributed 9,330
tons as of December 31, 2008. As of the filing of this report, four of our six
contracts have been completed in full. Contracts with QuanZhou TianXia HuiCui
Jade Company Ltd. ("QZTX") for the purchase of 1,260 tons of raw jade and Putian
Licheng Qiyushengshi Co. ("QYSB") for the purchase of 2,490 tons of raw jade
remain outstanding. However, as a result of the adverse impact of the downturn
in the Chinese economy on these customers, the Company has informally agreed to
extend the period in which the customers must fulfill their purchase obligations
to a date to be mutually agreed upon in the future.


                                      -5-
<PAGE>

      These contracts have been negotiated with sub-distributors and processors
who in turn sell jade to the artisans responsible for crafting the final
products. There are approximately 150,000 jade-carving factories in China. The
province in which our customer, QZTX, operates is home to over 1,000 large jade
carving and processing factories, generating over $1.5 billion in annual
production. PuTian City, home to our customer, QYSB, contains 1,000 jade and
jewelry companies with annual production of $2 billion.

      Our major customers include the following:

                                                   Percentage of
      Customer                                    Revenues in 2008
      --------                                    ----------------
      Shenzhen Hongda Artcraft Co.                       23%
      Quanzhou Tianxia Huicui Jade Co.                   21%
      Suzhou Cuiping Jade Co.                            21%
      Putian Licheng Qiyushengshi Co.                    18%

      All of our sales of SheTai Jade to date are to customers located in China.
However, the Company intends to solicit customers elsewhere in Asia.

The Company's Jade Distribution Agreements

      Our contracts require customers to purchase specified amounts raw jade
over periods ranging from six months to one year at times which are at the
discretion of the customer. Xikai Mining mines the raw jade and prepares it for
pick-up by the Company's customers at a warehouse which Xikai Mining maintains
near its She Tai Jade mine. The customer is responsible for the shipment of the
jade, including the cost of shipment.

      The customers inspect the jade after delivery and make a determination as
to whether to accept such jade. Jade can only be returned to the Company in the
event that there are issues related to its quality. No customer has ever
returned jade to the Company due to quality issues or any other reasons.

      Our contracts for the sale of raw jade generally provide that the Company
will receive 30% of the contracted value of the order before shipment. The
balance is then due after shipment, within 10 days after customer's inspection
and acceptance of the jade. However, the Company's customers generally have,
instead, paid the balance within 45 days after shipment.

      The table below summarizes details regarding the Company's contracts with
the following customers (i) GuangFuGuoXiang Jade ("GFGX"), (ii) YangZhou GuoCui
Jade ("YZGC"); (iii) ShenZhen HongDa Craftwork Ltd. ("SZHD"), (iv) QuanZhou
TianXiaHuiCui Jade Company Ltd. ("QZTX"), and (v) Putian Licheng Qiyushengshi
Co. ("QYSB").

Business and Marketing Strategy

      The Company currently employs sales personnel to market its jade to
potential customers throughout China. We market our jade based on its excellent
quality and special characteristics which allow it to be used for varied
purposes including as construction materials.

Competition

      The Chinese jade industry is spread among a large number of companies
including Zheng Dong Jade Co., Xin Jiang Lao Shan, He Tian Jade Co. and Leung
Jade Co., Ltd. The industry is highly fragmented and consists of mostly private
companies, making detailed information difficult to uncover. We also compete
generally with distributors of other construction materials and gemstones
throughout China.


                                      -6-
<PAGE>

      We compete directly with other distributors of jade on the basis of
quality and price. We compete with distributors of other materials on the basis
of the unique characteristics of SheTai jade (e.g. color, hardness, durability
and beauty) and also on price.

Order Backlog

      We do not maintain any inventory. XiKai Mining maintains an inventory of
raw jade in its warehouse and fills our orders promptly after receipt.
Accordingly we do not have an order backlog.

Seasonality

      The Company is generally not affected by seasonality. The only seasonal
affect on our business could be a delay of shipments from the SheTai Mine in the
winter if the road leading from the mine becomes inoperable due to extremely
heavy snow.

Intellectual Property

      Except for certain trade secrets and unregistered trade names, the Company
currently has no trademarks, copyrights, patents or other intellectual property.

Research and Development

      The Company has incurred no costs related to research and development over
the last three years.

Employees

      The Company has approximately 38 full time employees, including 29 who
work in sales and 4 in administration. We believe that relations with our
employees are good.


                                      -7-
<PAGE>

1A. Risk Factors.

      The following are risks associated with our Company and business
operations. If any of these risks were to develop into actual events, our
business, financial condition or results of operations could be materially
adversely affected and the trading price of our common stock could decline
significantly. Our business activities are subject to various risks and
uncertainties, including the following:

Risk Related to the Company Business and Industry

Senior management has not operated in any aspect of the jade industry before,
and there is no guarantee that we will be able to do so successfully.

      Our senior management has no operating history on which an evaluation of
our business and prospects in the jade industry can be made. Accordingly, the
likelihood of our success must be considered in the light of the problems,
expenses, difficulties, complications and delays frequently encountered by
companies in early stages of development. Such risks generally include, but are
not necessarily limited to, the failure to develop or profitably exploit markets
for the sale of the jade; the failure of our current supplier to supply adequate
quantities of jade to allow us to operate profitably notwithstanding our
agreement; the failure to raise sufficient funds to acquire businesses we may
identify to facilitate obtaining new suppliers of jade production, or to
actually acquire any such businesses which we may so identify for which we may
have raised sufficient funds, or to successfully integrate any such business
which we may actually acquire; the failure to anticipate and adapt to developing
markets and/or to new governmental regulations or domestic or foreign trade
restrictions; the failure to successfully compete against current or new
competitors in the markets in which we compete; the rejection of our products by
our customers; and the failure to successfully complete any of our business
goals on a timely basis.

Our cash flow depends heavily on the market price for jade.

      The cash flow and profitability of our current operations are
significantly affected by the market price of jade that is affected by numerous
factors beyond our control. Specifically, the prices for jade may be affected by
the type and amount of commercial and residential construction in the People's
Republic of China (PRC) and elsewhere, for which construction jade such as ours
is used; and the prices for gem quality jade depend on market demand, which is
also beyond our control. Factors that could cause such volatility include, among
other things: conditions or trends in the mining industries and governmental
regulations that affect such industries; changes in the market valuations of
other companies against whom we compete; general market and economic conditions
domestically and worldwide; general trade restrictions imposed by various
countries; and political events, including actions by the PRC government which
could delay shipment of our products and could have a materially adverse effect
on our operating results and financial condition, as well as international
reaction to political and economic events and developments in the PRC.

Changes in consumer preferences could reduce the demand for jade.

      Although demand and prices for jade have been relatively strong in recent
years, we are unable to predict future demand and prices, and cannot provide any
assurance that current levels of demand and prices will continue or that any
future increases in demand or price can be sustained. Any change in the
preferences of consumers could reduce the demand for jade. Failure to anticipate
and respond to changes in consumer preferences and demands could lead to, among
other things, customer dissatisfaction, failure to attract demand for our jade,
loss of contracts with our third party distributors and lower profit margins.


                                      -8-
<PAGE>

The economic downturn in China could continue to reduce demand for our product.

      The Chinese economy has experienced a slowing growth rate due to a number
of factors, including but not limited to instability in the global financial
markets, the appreciation of the RMB, and economic and monetary policies adopted
by the Chinese government aimed at preventing overheating of the Chinese economy
and inflation. We have been affected by the economic downturn and continue to be
affected. The use of jade is a luxury product that is not a necessity. In the
current economic downturn, people are less willing to purchase luxuries such as
products made of jade. Consequently, the demand for our product has suffered and
will continue to suffer. We cannot predict how long the downturn will last, the
timing of any subsequent recovery, or how much of an impact the downturn will
have on our business and operating results.

In 2008, we depended on revenues from six customers, and any loss, cancellation,
reduction, or interruption in these relationships could harm our business.

      In 2008, we derived all of our revenue from only six customers. Of the six
customer contracts, four have been completed in full. We are not certain as to
when or how much jade the remaining two customers will require. If sales to such
customers were terminated or significantly reduced, our revenues and net income
could significantly decline. Our success will depend on our continued ability to
develop and manage relationships with our customers. Any adverse change in our
relationship with our customers may have a material adverse effect on our
business. Although we are attempting to expand our customer base, we expect that
our customer concentration will not change significantly in the near future. We
cannot be sure that we will be able to retain our customers or that we will be
able to attract additional customers or that our customers will continue to buy
our products in the same amounts as in prior years. The loss of one or more of
our customers, any reduction or interruption in sales to these customers, our
inability to successfully develop relationships with additional customers or
future price concessions that we may have to make could significantly harm our
business.

We face significant actual and potential competition for our products.

      We must compete in a market with companies that have significantly greater
experience and history in the jade industry, have resources greater than ours
and have established business relationships and distribution channels better
developed than ours. We will compete with numerous jade suppliers worldwide,
many of whom possess substantially greater financial and other resources than
us, including experience and the ability to leverage economies of scale and to
sell products competitive with ours at a price more attractive to our
purchasers, and who have established reputations in the markets in which we will
compete. There can be no assurance that our products could compete effectively
with such competitors.

      We also compete with other stone distributors, including distributors of
granite, marble, limestone, travertine and other natural stones. Additionally,
we compete with manufacturers of so-called "engineered stone" as well as
manufacturers of other building materials like concrete, aluminum, glass, wood
and other materials. We compete with providers of these materials on the basis
of price, availability of supply, end-user preference for certain colors,
patterns or textures, and other factors.


                                      -9-
<PAGE>

We currently rely on a single jade supplier for our raw jade, and we may lose
sales if our supplier fails to meet our needs.

      We have a distribution agreement with XiKai Mining whereby it has agreed
to sell to us 90% of the jade it produces from its SheTai Jade Mine which
represents our sole source of jade. There can be no assurance that we will be
able to find other supplies should that become necessary, and there can be no
guarantee that it will not become necessary.

We may not be able to enforce our agreement with XiKai Mining.

      We are wholly dependent on XiKai Mining for our jade. There is no
guarantee that XiKai Mining will choose to continue to honor its agreement or
that we would be able to enforce our agreement in the Chinese courts if it were
necessary to do so. Even if the courts are available to us, the costs of
litigation could be substantial and the results uncertain.

Our supplier could be unable to meet our needs.

      There can be no assurance that XiKai Mining will be able to continue to
successfully produce and distribute to us sufficient jade to enable us to
realize anticipated profits. Even if XiKai Mining desires to meet our needs it
could be unable to do so because of events beyond its control, including, but
not limited to: geological events, such as an earthquake, that disrupts or makes
temporarily or permanently impossible the continued exploitation of XiKai
Mining's mines; a loss of necessary government permits or unanticipated adverse
governmental regulation of jade production; labor unrest; equipment failures,
accidents and work injuries, a deterioration in the quality of the jade at
XiKai's mine or economic events that result in XiKai Mining's inability to mine
or supply jade.

The mine is concentrated in one geographic region, which could cause it to be
impacted by regional events.

      The jade that we distribute is located exclusively in the She Tai Jade
Mine in Inner Mongolia. Because of this geographic concentration, local or
regional events, such as natural disasters, may increase costs, reduce
availability of equipment or supplies, reduce demand or limit production. As a
result, any such event may impact our gross profit from our jade.

We will face strong competition from other companies should we ever need or
desire to establish a new or additional supplier of jade.

      We may need or otherwise desire to replace and/or expand our supplies
through the negotiation of new agreements with XiKai Mining and/or other
producers. There can be no assurance that we will be able to negotiate any such
agreement, or that if we do we will be able to negotiate such an agreement on
terms that are favorable to us, or even if we do negotiate favorable terms that
any such agreement will not also be subject to the same risks as our current
agreement with XiKai Mining described elsewhere herein. In addition, there is a
limited supply of desirable mining lands available in the PRC and elsewhere
where exploration, mining and/or production activities may be conducted. Because
we could face strong competition from other companies for favorable distribution
agreements with companies that mine and supply raw jade, some of whom may be
able to leverage greater economies in negotiating distribution arrangements than
we are, we may be unable to adequately replace or supplement the desired supply
arrangement that we currently have with XiKai Mining.

The mining industry in the PRC also has drawbacks that the mining industry does
not have within the United States.

      The mining industry in the PRC also has drawbacks that the mining industry
does not have within the United States. For instance:


                                      -10-
<PAGE>

      In China, insurance coverage is a relatively new concept compared to that
of the United States and for certain aspects of a business operation insurance
coverage is restricted or expensive. Workers' compensation for employees in the
PRC may be unavailable or, if available, insufficient to adequately cover such
employees.

      The environmental laws and regulations in the PRC set various standards
regulating certain aspects of health and environmental quality, including, in
some cases, the obligation to rehabilitate current and former facilities and
locations where operations are or were conducted.

      Violation of such standards could result in a temporary or permanent
restriction by the PRC of the mining operations of XiKai Mining and could
negatively impact our business.

Our expanding operations risk.

      We may not be able to manage our expanding operations effectively. We
anticipate significant continued expansion of this business as we address market
opportunities and growth in our customer base. To manage the potential growth of
our operations and personnel, we will need to improve operational and financial
systems, procedures and controls, and expand, train and manage our growing
employee base. We cannot assure you that our current and planned personnel,
systems, procedures and controls will be adequate to support our future
operations. There can be no assurance that new management will be able to
properly manage the direction of our Company or that any intended change in our
business focus will be successful. If our management fails to properly manage
and direct our Company, our Company may be forced to scale back or abandon our
existing operations, which could cause the value of our shares to decline.

We may be unsuccessful in any future strategy to acquire complementary
businesses or expand into carving, processing, and retail sale of jade.

      Our potential business strategy in the future includes expanding our
business capabilities through both internal growth and the acquisition of
complementary businesses related to the carving processing and retail sale of
jade. We may be unable to find additional complementary businesses to acquire or
we may be unable to enter into additional agreements in order to expand our
current business.

      Completion of future acquisitions also would expose us to potential risks,
including risks associated with:

      o     the assimilation of new operations, technologies and personnel;
      o     unforeseen or hidden liabilities;
      o     the diversion of resources from our existing businesses;
      o     the inability to generate sufficient revenue to offset the costs and
            expenses of acquisitions; and
      o     the potential loss of, or harm to relationships with, employees,
            customers and suppliers as a result of the integration of new
            businesses.

Our brand and reputation may be harmed by counterfeit jade products.

      The jade markets in China and elsewhere in Asia are tainted by counterfeit
products, the presence of which has the potential to create a negative impact on
the price of raw jade. Any counterfeit jade products could damage the SheTai
Jade brand and could adversely impact the perception of customers of jade.


                                      -11-
<PAGE>

Estimates of our future revenues and operating results are subject to inherent
uncertainties.

      Our short operating history and the rapidly changing nature of the markets
in which we compete make it difficult to accurately predict our revenues and
operating results. Furthermore, our revenues and operating results may fluctuate
in the future due to a number of factors, including the following:

      o     the introduction of competitive products by different or new
            competitors;

      o     reduced demand for raw jade;

      o     increased or uneven expenses, whether related to sales and
            marketing, product development or administration;

      o     deferral of recognition of our revenue in accordance with applicable
            accounting principles due to the time required to complete projects;
            and

      o     costs related to the expansion of the Company's business into
            related activities whether through acquisition or otherwise.

Due to these factors, predictions may not be achieved, either because expected
revenues do not occur or because they occur at lower prices or on terms that are
less favorable to us. In addition, these factors increase the chances that our
results could be lower than the expectations of investors and analysts. If so,
the market price of our stock would likely decline.

Risks related to doing business in China.

      Adverse changes in economic and political policies of government of the
PRC could have a material adverse effect on the overall economic growth of PRC,
which could adversely affect our business. Because our operations are all
located outside of the United States and are subject to Chinese laws, any change
of Chinese laws may adversely affect our business and results of operations.

      As all of our existing operations are located in the PRC, this exposes us
to risks, such as exchange controls and currency restrictions, currency
fluctuations and devaluations, changes in local economic conditions, changes in
Chinese laws and regulations, exposure to possible expropriation or other
Chinese government actions, and unsettled political conditions. These factors
may have a material adverse effect on our business, results of operations and
financial condition.

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


                                      -12-
<PAGE>

We face risks associated with currency exchange rate fluctuation, any adverse
fluctuation may adversely affect our anticipated operating margins.

      Although we are incorporated in the United States, all of our current
revenues are in Chinese currency. Conducting business in currencies other than
US dollars subjects us to fluctuations in currency exchange rates that could
have a negative impact on our operating results reported in US dollars.
Fluctuations in the value of the US dollar relative to the Renminbi could impact
our revenue, cost of revenues and operating margins. Historically, we have not
engaged in exchange rate hedging activities. Although we may implement hedging
strategies to mitigate this risk, these strategies may not eliminate our
exposure to foreign exchange rate fluctuations and involve costs and risks of
our own, such as ongoing management time and expertise, external costs to
implement the strategy and potential accounting implications.

The Chinese legal and judicial system may negatively impact foreign investors.

      In 1982, the National People's Congress amended the Constitution of China
to authorize foreign investment and guarantee the "lawful rights and interests"
of foreign investors in China. However, China's system of laws is not yet
comprehensive. The legal and judicial systems in China are still rudimentary,
and enforcement of existing laws is inconsistent. Many judges in China lack the
depth of legal training and experience that would be expected of a judge in a
more developed country. Because the Chinese judiciary is relatively
inexperienced in enforcing the laws that do exist, anticipation of judicial
decision-making is more uncertain than would be expected in a more developed
country. It may be impossible to obtain swift and equitable enforcement of laws
that do exist, or to obtain enforcement of the judgment of one court by a court
of another jurisdiction. China's legal system is based on written statutes; a
decision by one judge does not set a legal precedent that is required to be
followed by judges in other cases. In addition, the interpretation of Chinese
laws may be varied to reflect domestic political changes. The promulgation of
new laws, changes to existing laws and the pre-emption of local regulations by
national laws may adversely affect foreign investors. However, the trend of
legislation over the last 20 years has significantly enhanced the protection of
foreign investment and allowed for more control by foreign parties of their
investments in Chinese enterprises. There can be no assurance that a change in
leadership, social or political disruption, or unforeseen circumstances
affecting China's political, economic or social life, will not affect the
Chinese government's ability to continue to support and pursue these reforms.
Such a shift could have a material adverse effect on the Company's business and
prospects.

      The practical effect of the PRC legal system on our business operations in
China can be viewed from two separate but intertwined considerations. First, as
a matter of substantive law, the Foreign Invested Enterprise laws provide
significant protection from government interference. In addition, these laws
guarantee the full enjoyment of the benefits of corporate articles and contracts
to Foreign Invested Enterprise participants. These laws, however, do impose
standards concerning corporate formation and governance, which are not
qualitatively different from the general corporation laws of the several states.
Similarly, the PRC accounting laws mandate accounting practices, which are not
consistent with U.S. Generally Accepted Accounting Principles. China's
accounting laws require that an annual "statutory audit" be performed in
accordance with PRC accounting standards and that the books of account of
Foreign Invested Enterprises are maintained in accordance with Chinese
accounting laws. Article 14 of the PRC Wholly Foreign-Owned Enterprise Law
requires a Wholly Foreign-Owned Enterprise to submit certain periodic fiscal
reports and statements to designate financial and tax authorities, at the risk
of business license revocation. Second, while the enforcement of substantive
rights may appear less clear than United States procedures, the Foreign Invested
Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered
companies, which enjoy the same status as other Chinese registered companies in
business-to-business dispute resolution. Therefore, as a practical matter,
although no assurances can be given, the Chinese legal infrastructure, while
different in operation from its United States counterpart, should not present
any significant impediment to the operation of Foreign Invested Enterprises.


                                      -13-
<PAGE>

Because most of our directors and officers reside outside of the United States,
it may be difficult for you to enforce your rights against them or enforce U.S.
court judgments against them.

      All but one of our directors and officers reside outside of the United
States and all of our assets are located outside of the United States. It may
therefore be difficult for investors in the United States to enforce their legal
rights, to effect service of process upon our directors or officers or to
enforce judgments of United States courts predicated upon civil liabilities and
criminal penalties of our directors and officers under United States Federal
securities laws. Further, it is unclear if extradition treaties now in effect
between the United States and the PRC would permit effective enforcement of
criminal penalties of the United States Federal securities laws.

Economic reform issues.

      Although the Chinese government owns the majority of productive assets in
China, during the past several years the government has implemented economic
reform measures that emphasize decentralization and encourage private economic
activity. Because these economic reform measures may be inconsistent or
ineffectual, there are no assurances that:

      o     Our Company will be able to capitalize on economic reforms;

      o     The Chinese government will continue its pursuit of economic reform
            policies;

      o     The economic policies, even if pursued, will be successful;

      o     Economic policies will not be significantly altered from time to
            time; and

      o     Business operations in China will not become subject to the risk of
            nationalization.

      Since 1979, the Chinese government has reformed its economic systems.
Because many reforms are unprecedented or experimental, they are expected to be
refined and improved. Other political, economic and social factors, such as
political changes, changes in the rates of economic growth, unemployment or
inflation, or in the disparities in per capita wealth between regions within
China, could lead to further readjustment of the reform measures. This refining
and readjustment process may negatively affect our operations.

      Over the last few years, China's economy has registered a high growth
rate. Recently, there have been indications that rates of inflation have
increased. In response, the Chinese government recently has taken measures to
curb this excessively expansive economy. These measures have included
devaluations of the Chinese currency, the Renminbi (RMB), restrictions on the
availability of domestic credit, reducing the purchasing capability of certain
of its customers, and limited re-centralization of the approval process for
purchases of some foreign products. These austerity measures alone may not
succeed in slowing down the economy's excessive expansion or control inflation,
and may result in future dislocations in the Chinese economy. The Chinese
government may adopt additional measures to further combat inflation, including
the establishment of freezes or restraints on certain projects or markets.


                                      -14-
<PAGE>

      To date, reforms to China's economic system have not adversely impacted
our operations and are not expected to adversely impact operations in the
foreseeable future; however, there can be no assurance that the reforms to
China's economic system will continue or that we will not be adversely affected
by changes in China's political, economic, and social conditions and by changes
in policies of the Chinese government, such as changes in laws and regulations,
measures which may be introduced to control inflation, changes in the rate or
method of taxation, imposition of additional restrictions on currency conversion
and remittance abroad, and reduction in tariff protection and other import
restrictions

We may be exposed to liabilities under the Foreign Corrupt Practices Act, and
any determination that we violated the Foreign Corrupt Practices Act could have
a material adverse effect on our business.

      We are subject to the United States Foreign Corrupt Practices Act, or the
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 have operations, agreements with third parties and make sales in
China, which is known to experience corruption. Our activities in China create
the risk of unauthorized payments or offers of payments by one of the employees,
consultants, sales agents or distributors of our company or the companies in
which we invest may engage that could be in violation of various laws including
the FCPA, 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 the employees, consultants, sales agents or
distributors of our company or the companies in which we invest may engage in
conduct for which we might be held responsible. Violations of the FCPA 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 government may seek to hold us liable for
successor liability FCPA violations committed by companies in which we invest or
that we acquire.

Risks Related to the Company.

The relative lack of public company experience of our management team may put us
at a competitive disadvantage.

      Our management team lacks public company experience, which could impair
our ability to comply with legal and regulatory requirements such as those
imposed by Sarbanes-Oxley Act of 2002. Certain individuals who now constitute
our senior management have never had responsibility for managing a publicly
traded company. Such responsibilities include complying with federal securities
laws and making required disclosures on a timely basis. Our senior management
may not be able to implement programs and policies in an effective and timely
manner that adequately respond to such increased legal, regulatory compliance
and reporting requirements. Our failure to comply with all applicable
requirements could lead to the imposition of fines and penalties and distract
our management from attending to the growth of our business.

We will continue to incur significant increased costs as a result of operating
as a public company, and management will be required to devote substantial time
to compliance requirements.

      As a public company we incur significant legal, accounting and other
expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented
by the Securities and Exchange Commission and applicable market regulators.
These rules impose various requirements on public companies, including requiring


                                      -15-
<PAGE>

certain corporate governance practices. Our management and other personnel will
need to devote a substantial amount of time to these compliance requirements.
Moreover, these rules and regulations will increase our legal and financial
compliance costs and will make some activities more time-consuming and costly.

      In addition, the Sarbanes-Oxley Act requires, among other things, that we
maintain effective internal controls for financial reporting and disclosure
controls and procedures. In particular, we must perform system and process
evaluations and testing of our internal controls over financial reporting to
allow management and our independent registered public accounting firm to report
on the effectiveness of our internal controls over financial reporting, as
required by Section 404 of the Sarbanes-Oxley Act. Such testing, or the
subsequent testing by our independent registered public accounting firm, may
reveal deficiencies in our internal controls over financial reporting that are
deemed to be material weaknesses. Compliance with Section 404 may require that
we incur substantial accounting expenses and expend significant management
efforts. If we are not able to comply with the requirements of Section 404 in a
timely manner, or if our accountants later identify deficiencies in our internal
controls over financial reporting that are deemed to be material weaknesses, the
market price of our common stock could decline and we could be subject to
sanctions or investigations by the Commission or other applicable regulatory
authorities.

Insiders have substantial control over us, and they could delay or prevent a
change in our corporate control even if our other stockholders want it to occur.

      Our executive officers, directors, and principal stockholders who hold 5%
or more of the outstanding common stock and their affiliates beneficially owned
as of December 31, 2008, in the aggregate, approximately 53% of our outstanding
common stock. These stockholders will be able to exercise significant control
over all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. This could delay
or prevent an outside party from acquiring or merging with us even if our other
stockholders wanted it to occur.

We depend on key personnel and have no key man insurance.

      We depend on our key management and other personnel. Our future success
depends to a significant extent upon the continued service of our executive
officers and other key management and on our ability to continue to attract,
retain and motivate executive and other key employees, including those in
managerial and sales positions. The loss of the services of one or more of our
key employees or our failure to attract, retain and motivate qualified personnel
could have a material adverse effect on our business, financial condition and
results of operations. Although most of these personnel are founders and
stockholders, there can be no assurance that we can be successful in retaining
them. We do not have key man insurance.

Our Executives do not speak any English and may have different perspectives on
business situations based on differences between Chinese and American culture.

      Our management is comprised of individuals born and raised in the PRC who
do not speak English. As a result of differences in culture, educational
background and business experiences, our management may analyze, evaluate and
present business opportunities and results of operations differently from the
way they are analyzed, evaluated and presented by management teams of public
companies in Europe and the United States. In addition, our management has very
limited skills in English. Consequently, it is possible that our management team
will emphasize or fail to emphasize aspects of our business that might
customarily be emphasized in a different manner by comparable public companies
from different geographical and political areas.


                                      -16-
<PAGE>

Risks Related to the Common Stock

There is a limited public market for the common stock.

      There is currently a limited public market for our common stock. Holders
of our common stock may, therefore, have difficulty selling their common stock,
should they decide to do so. In addition, there can be no assurances that such
markets will continue or that any shares of common stock, which may be
purchased, may be sold without incurring a loss. Any such market price of the
common stock may not necessarily bear any relationship to our book value,
assets, past operating results, financial condition or any other established
criteria of value, and may not be indicative of the market price for the common
stock in the future. Further, our market price for the common stock may be
volatile depending on a number of factors, including business performance,
industry dynamics, and news announcements or changes in general economic
conditions.

We may issue shares of our capital stock or debt securities to complete an
acquisition, which would reduce the equity interest of our stockholders or
subject our company to risks upon default

      We may issue our securities to acquire companies or assets. Most likely,
we will issue additional shares of our common stock or preferred stock, or both,
to complete acquisitions. If we issue additional shares of our common stock or
shares of our preferred stock, the equity interest of our existing stockholders
may be reduced significantly, and the market price of our common stock may
decrease. The shares of preferred stock we issue are likely to provide holders
with dividend, liquidation and voting rights, and may include participation
rights, senior to, and more favorable than, the rights and powers of holders of
our common stock. If we issue debt securities as part of an acquisition, and we
are unable to generate sufficient operating revenues to pay the principal amount
and accrued interest on that debt, we may be forced to sell all or a significant
portion of our assets to satisfy our debt service obligations, unless we are
able to refinance or negotiate an extension of our payment obligation.

Future sales of our common stock, or the perception that such sales could occur,
could have an adverse effect on the market price of our common stock.

      We have approximately 79,980,000 shares of our common stock outstanding.
There are a limited number of holders of our common stock. Future sales of our
common stock, pursuant to a registration statement or Rule 144 under the
Securities Act, or the perception that such sales could occur, could have an
adverse effect on the market price of our common stock. Any attempt to sell a
substantial number of our shares could severely depress the market price of our
common stock. As noted above, we may use our capital stock in the future to
finance acquisitions and to compensate employees and management, which would
further dilute the interests of our existing shareholders and could also depress
the trading price of our common stock.

The common stock may be deemed penny stock with a limited trading market.

      Our common stock is currently listed for trading in the Over-The-Counter
Bulletin Board, owned and operated by FINRA, Inc. (formerly NASD, Inc.) which is
generally considered to be less efficient than the NASDAQ market or other
national exchanges, and which may cause difficulty in conducting trades and
difficulty in obtaining future financing. Further, our securities are subject to
the "penny stock rules" adopted pursuant to Section 15 (g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The penny stock rules
apply to non-NASDAQ companies whose common stock trades at less than $5.00 per


                                      -17-
<PAGE>

share or which have tangible net worth of less than $5,000,000 ($2,000,000 if
the company has been operating for three or more years). Such rules require,
among other things, that brokers who trade "penny stock": to persons other than
"established customers" complete certain documentation, make suitability
inquiries of investors and provide investors with certain information concerning
trading in the security, including a risk disclosure document and quote
information under certain circumstances. Many brokers have decided not to trade
"penny stock" because of the requirements of the penny stock rules and, as a
result, the number of broker-dealers willing to act as market makers in such
securities is limited. In the event that we remain subject to the "penny stock
rules" for any significant period, there may develop an adverse impact on the
market, if any, for our securities. Because our securities are subject to the
"penny stock rules" investors will find it more difficult to dispose of our
securities.

      Further, for companies whose securities are traded in the Over-The-Counter
Market, it is more difficult: (i) to obtain accurate quotations; (ii) to obtain
coverage for significant news events because major wire services, such as the
Dow Jones News Service, generally do not publish press releases about such
companies, and (iii) to obtain needed capital.

We have not and do not anticipate paying any dividends on our common stock;
because of this our securities could face devaluation in the market.

      We have paid no dividends on our common stock to date and it is not
anticipated that any dividends will be paid to holders of our common stock in
the foreseeable future. While our dividend policy will be based on the operating
results and capital needs of the business, it is anticipated that any earnings
will be retained to finance our future expansion and for the implementation of
our business plan. Additionally, current regulations in China would permit our
operating company in China to pay dividends to us only out of its accumulated
distributable profits, if any, determined in accordance with Chinese accounting
standards and regulations. In addition, our operating company in China will be
required to set aside at least 10% (up to an aggregate amount equal to half of
its registered capital) of its accumulated profits each year. Such reserve
account may not be distributed as cash dividends. In addition, if our operating
company in China incurs debt on its own behalf in the future, the instruments
governing the debt may restrict its ability to pay dividends or make other
payments to us. Lack of a dividend can further affect the market value of our
common stock, and could significantly affect the value of any investment in us.

Risks related to financial reports and estimates.

      We are subject to critical accounting policies and actual results may vary
from our estimates. We follow generally accepted accounting principles in the
United States in preparing our financial statements. As part of this work, we
must make many estimates and judgments concerning future events. These affect
the value of the assets and liabilities, contingent assets and liabilities, and
revenue and expenses reported in our financial statements. We believe that these
estimates and judgments are reasonable, and we make them in accordance with our
accounting policies based on information available at the time. However, actual
results could differ from our estimates, and this could require us to record
adjustments to expenses or revenues that could be material to our financial
position and results of operations in the future.

Item 1A. Unresolved Staff Comments

      The Company had no unresolved Securities and Exchange Commission staff
comments as of December 31, 2008.


                                      -18-
<PAGE>

Item 2. Properties

      On December 10, 2007, the Company entered into a lease agreement with
GuoXi Group for office space located at Yujiang City of Jiangxi Province. The
lease has a term of two years and requires monthly payments of RMB 20,000
(approximately $2,900).

      The Company does not own any real property. Management believes that the
Company's facilities are adequate to meet its current needs and should continue
to be adequate for the foreseeable future.

Item 3. Legal Proceedings

      The Company is not a party to any legal proceedings as of the date of this
filing.

Item 4. Submission of Matters to a vote of Security Holders

      There were no matters submitted to a vote of the security holders of the
Company through the solicitation of proxies or otherwise during the fourth
quarter of the year ended December 31, 2008.


                                      -19-
<PAGE>

                                     PART II

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

Market for Our Common Stock

      Our common stock is traded in the over-the-counter market (the OTC
Bulletin Board). On May 14, 2008, Jade Art Group Inc. has been informed by
NASDAQ that its ticker symbol was being changed from JADG to JADA, effective as
of the open of business on May 15, 2008.

      On May 15, 2008, a reverse stock split of the Company's issued and
outstanding common stock on a one (1) for three (3) basis became effective.

      The Company declared a three-for-one (3:1)forward stock split, in the
nature of a share dividend, with respect to the shares of our common stock
issued and outstanding at the close of business on December 28, 2007.

      The prices set forth below reflect the quarterly high and low bid price
information for shares of our common stock for the periods indicated.

                                            High      Low
                                            ----      ---
      2008

      First Quarter                         $2.60     $0.60
      Second Quarter                        $4.00     $0.50
      Third Quarter                         $5.25     $1.80
      Fourth Quarter                        $2.97     $0.25

      2007
      Fourth Quarter                        $2.50     $1.02

Holders

      As of December 31, 2008, our common stock was held of record by 306
stockholders.

Dividend Policy

      We have never paid cash dividends on our common stock. 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 in the forseeable
future.

Equity Compensation Plans

      The Company does not currently have any equity compensation plans.

Performance Graph

      The graph compares the yearly cumulative total shareholder return on the
Company's Common Stock with the yearly cumulative total return of (a) the NASDAQ
Market and (b) a peer group of companies that have a market capitalization
similar to that of the Company.


                                      -20-
<PAGE>

      The Company does not believe that it can reasonably identify a peer group
of companies, on an industry or line-of-business basis, for the purpose of
developing a comparative performance index. While the Company is aware that some
other publicly-traded companies market products in similar lines-of-business,
none of these other companies distribute raw jade. Moreover, some of these other
companies that engage in the Company's line-of-business do so through divisions
or subsidiaries that are not publicly-traded. Furthermore, many of these other
companies are substantially more highly capitalized than the Company. For these
reasons, any such comparison would not, in the opinion of the Company, provide a
meaningful index of comparative performance.

      The comparisons in the graph below are based on historical data and are
not indicative of, or intended to forecast, the possible future performance of
the Company's Common Stock.

[GRAPHIC OMITTED]

              COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
          COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS

       ------------------------ FISCAL YEAR ENDING ----------------------

COMPANY/INDEX/MARKET          10/23/2007   12/31/2007   12/31/2008

Jade Art Group, Inc.            100.00       250.00       255.26
Peer Group Index                100.00        52.52        25.92
NASDAQ Market Index             100.00        92.83        54.78

Purchases of Equity Securities by the Company and Affiliated Purchasers

      During the fiscal year ended December 31, 2008, neither the Company nor
any affiliated purchasers purchased any shares of our common stock.


                                      -21-
<PAGE>

Item 6. Selected Financial Data.

      The selected financial information for each of the two years ended
December 31, 2008 and 2007 has been derived from, and should be read in
conjunction with, our audited consolidated financial statements and other
financial information presented elsewhere herein. Capitalized terms are as
defined and described in the consolidated financial statements or elsewhere
herein.

Year Ended December 31,

                                                       2008            2007
                                                  -------------    ------------
Sales                                             $  30,537,079    $         --
Cost of sales                                        -5,225,273              --
                                                  -------------    ------------
Gross profit                                         25,311,806              --
Operating expenses:
   Selling, general and administrative expenses      -2,806,341              --
                                                                   ------------
Operating income                                     22,505,465              --
Other income (expenses):
   Interest expense                                    -421,507              --
   Interest income                                      132,087              --
   Loss on forgiveness of debt                                         -132,087
                                                  -------------    ------------
Income before taxes from continuing operations       22,083,958
Income tax expense                                   -6,693,841              --
                                                  -------------    ------------
Net income from continuing operations                15,390,117              --
Discontinued operations, net of tax
Income from woodcarving operations, net of tax           96,751         764,906
   Gain from transfer of woodcarving operations,
   net of tax                                        55,322,615              --
Net income from discontinued operations              55,419,366         764,906
                                                  -------------    ------------
Net Income                                        $  70,809,483    $    764,906
                                                  =============    ============
Earnings Per Share:
   Basic                                          $        0.88    $       0.01
                                                  =============    ============
   Diluted                                        $        0.88    $       0.01
                                                  =============    ============
Weighted-average Common Shares Outstanding
Basic                                                79,980,000      76,058,432
Diluted                                              80,665,131      76,058,432
                                                  =============    ============

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.

Special Note Regarding Forward Looking Information

      This report contains forward-looking statements that reflect management's
current views and expectations with respect to our business, strategies, future
results and events, and financial performance. All statements made in this
report other than statements of historical fact, including statements that
address operating performance, events or developments that management expects or
anticipates will or may occur in the future, including statements related to
future reserves, cash flows, revenues, profitability, adequacy of funds from
operations, statements expressing general optimism about future operating
results and non-historical information, are forward-looking statements. In


                                      -22-
<PAGE>

particular, the words "believe," "expect," "intend," "anticipate," "estimate,"
"plan," "may," "will," variations of such words and similar expressions identify
forward-looking statements, but are not the exclusive means of identifying such
statements and their absence does not mean that the statement is not
forward-looking. Readers should not place undue reliance on forward-looking
statements which are based on management's current expectations and projections
about future events, are not guarantees of future performance, are subject to
risks, uncertainties and assumptions. Our actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include those discussed in this report, particularly under the
caption "Risk Factors." Except as required under the federal securities laws, we
do not undertake any obligation to update the forward-looking statements in this
report.

Critical Accounting Policies and Estimates

      The following discussion and analysis of financial condition and results
of operations are based upon the Company's consolidated financial statements,
which have been prepared in conformity with accounting principles generally
accepted in the United States of America. The Company's significant accounting
policies are more fully described in Note 1 of the Notes to Consolidated
Financial Statements. Certain accounting estimates are particularly important to
the understanding of the Company's financial position and results of operations
and require the application of significant judgment by the Company's management
or can be materially affected by changes from period to period in economic
factors or conditions that are outside the control of management. The Company's
management uses their judgment to determine the appropriate assumptions to be
used in the determination of certain estimates. Those estimates are based on
historical operations, future business plans and projected financial results,
the terms of existing contracts, the observance of trends in the industry,
information provided by customers and information available from other outside
sources, as appropriate. The following discusses the Company's critical
accounting policies and estimates.

Accounting Method

      The consolidated financial statements are prepared using the accrual
method of accounting. The Company changed its fiscal year-end from July 31 to
December 31 in fiscal year 2007.

Principles of Consolidation

      The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant inter-company
transactions and balances have been eliminated on consolidation.

Use of Estimates

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances. Actual results could differ from those
estimates.

Foreign Currency Translation

      The Company's functional currency is the Chinese Yuan Renminbi ("RMB"),
and reporting currency is the United States Dollar. The financial statements of
the Company are translated to United States Dollars in accordance with SFAS
No.52 "Foreign Currency Translation". Monetary assets and liabilities
denominated in foreign currencies are translated using the exchange rate
prevailing at the balance sheet date. Transactions affecting the Company's
revenue and expense accounts are translated using an average exchange rate
during the period presented. Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances are included
in the determination of income. Foreign currency transactions are primarily
undertaken in RMB. Foreign Currency Translation Adjustments are included in
Other Comprehensive Income and disclosed as a separate category of Stockholders'
Equity.

Accounts Receivable and Notes Receivable

      The Company extends unsecured credit to its customers in the ordinary
course of business but mitigates the associated risks by performing credit
checks and actively pursuing past due accounts. An allowance for doubtful
accounts is established and recorded based on management's assessment of the
credit history with the customer and current relationships with them.

      The Company makes provision for bad debts based on an assessment of the
recoverability of accounts receivable. Specific provisions are applied to
related-party receivables and third-party receivables where events or changes in
circumstances indicate that the balances may not be collectible. However, due to
the Company's experience in the sale and distribution of raw jade in 2008, and
the nature of the Company's business, management did not expect any
uncollectible receivables. As of December 31, 2008, and December 31, 2007, there
was no allowance recorded for the doubtful accounts.

Inventories

      During 2007, raw materials and supplies are stated at the lower of cost
(computed on an average cost basis) or market. Work-in-process and finished
goods are stated at the lower of average cost or market. If required, the
Company provides inventory allowances based on excess and obsolete inventories
determined principally by customer demand. This policy only applied to the
Company's woodcarving business that was discontinued in early 2008.

Revenue Recognition

      The Company applies the provisions of SEC Staff Accounting Bulletin
("SAB") No. 104, Revenue Recognition in Financial Statements ("SAB 104"), which
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements filed with the SEC. SAB 104 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosure
related to revenue recognition policies. Sales revenue is recognized when (1)
persuasive evidence of an arrangement exists; (2) delivery has occurred or
services rendered; (3) the fee is fixed and determinable; and (4) collectibility
is reasonably assured. The Company determines whether criteria (3) and (4) are
met based on judgments regarding the nature of the price charged for products
and the collectibility of those fees. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as advances
from customers. Advances from customers at December 31, 2008 and December 31,
2007 are $146,314 and $59,191, respectively. Returns are not permitted after the
customer accepts the product.

Accounting for Stock-Based Compensation

      The Company accounts for stock-based compensation in accordance with the
fair value recognition provisions of Statement of Financial Accounting Standards
("SFAS") No. 123R. Share Based Payments ("SFAS 123R."). The Company uses the
Black-Scholes option-pricing model, which involves certain subjective
assumptions. These assumptions include estimating the length of time employees
will retain their vested stock options before exercising them ("expected term"),
the number of options for which vesting requirements will not be completed
("forfeitures"). Changes in the subjective assumptions can materially affect
estimates of fair value stock-based compensation, and the related amount
recognized on the consolidated statement of operations.

Overview

      The Company is a seller and distributor in China of raw jade, ranging in
uses from decorative construction material for both the commercial and
residential markets to high-end jewelry. For more than 30 years, the Company's
business consisted of manufacturing and selling hand and machine-carved wood
products, such as furniture, architectural accents and Buddhist figurines in
China. Commencing in 2007, we experienced a reduction of revenue from our
woodcarving business, which largely resulted from increased competition. As a
result, we decided to dispose of our wood products business and to enter the
business of raw jade sales and distribution, which management believed presented
a better long-term growth potential. On January 11, 2008, we formed a new
wholly-owned Chinese subsidiary, JiangXi SheTai Jade Industrial Company Limited
("STJ"), to engage in the sale and distribution of raw jade throughout China.
Our goal is to meet China's increasing demand for jade and to eventually
vertically integrate our raw jade distribution activities with jade processing,
carving, polishing, and, at a later date, retail sales.

      On January 17, 2008, the Company entered into an Exclusive Distribution
Rights Agreement (the "Exchange Agreement") with Wulateqianqi XiKai Mining Co.,
Ltd. ("XiKai Mining"). Under the Exchange Agreement, XiKai Mining committed to
sell to the Company 90% of the raw jade material produced from its SheTai Jade
mine, located in Wulateqianqi, China, for a period of 50 years (the "Exclusive
Rights"). In exchange for these Exclusive Rights, the Company agreed to pay
XiKai Mining RMB 60 million (approximately $8.8 million) by March 31, 2009 and,
to transfer to XiKai Mining 100% of our ownership interest in all of the
Company's woodcarving operations, which were contained in Jiangxi XiDa. This
transfer of Jiangxi XiDa was made on February 20, 2008.


                                      -23-
<PAGE>

      XiKai Mining is the Company's sole source for raw jade. Under the Exchange
Agreement, the price for the raw jade material has been set for the first five
years at RMB 2000 (approximately $285) per metric ton, and is subsequently
subject to renegotiation every five years with adjustments not to exceed 10%.
This mine commenced operation in 2002 and is estimated to have an annual
operating capacity of approximately 40,000 metric tons by 2009. It has one of
the largest jade reserves in China. According to a survey report issued by the
Inner Mongolia Geological Institution, the mine has proven and probable reserves
of approximately six million metric tons. SheTai Jade is a form of jadeite found
in the mountain ranges of Inner Mongolia, China. The jade from the SheTai mine
is stainless, non-corrosive, non-weathering and unfadable. It has a glassy
luster and a pure and an attractive green color. It is also much harder and more
durable than other forms of jade. As a result of such characteristics, SheTai
Jade has a broad spectrum of applications, ranging from commercial and
residential construction, and decorative jade artwork to intricately carved jade
jewelry.

      We commenced the distribution and sale of jade in January 2008. During the
quarter ended March 31, 2008, we entered into five contracts for the sale of raw
jade. During the quarter ended June 30, 2008, the Company entered into one
additional contract. The total value of these contracts is approximately $42
million. The contracts require the customers to purchase specified amounts raw
jade over periods ranging from six months to one year at times which are at the
discretion of the customer. The contracts for the sale of raw jade generally
provide that the Company is to receive 30% of the contracted value of the order
before shipment, with the balance to be paid within 10 days after customer's
inspection and acceptance of the jade. However, the Company's customers
generally have, instead, paid the balance within 45 days after shipment. Xikai
Mining mines the raw jade and prepares the raw jade for pick-up by the Company's
customers at a warehouse which Xikai Mining maintains near its She Tai Jade
mine.

      The supply of Jade from XiKai Mining was interrupted on June 10, 2008,
when an earthquake damaged the sole road on which raw jade is transported from
Xikai Mining's warehouse. A smaller service road was still navigable, allowing
basic mining operations to continue. The mine was able to continue to mine raw
jade, cut jade and prepared for pick-up by the Company's customers at warehouse,
however due to the larger tonnage requirements, the shipment of raw jade from
the warehouse by the Company's customers was completely halted. The road was
subsequently repaired and the shipment of raw jade from the mine commenced again
on September 23, 2008. As a result of the interruption in the shipment of raw
jade from the SheTai Jade mine, the Company's revenues in its second quarter
ended June 30, 2008, and its third quarter ended September 30, 2008, were
substantially below the levels which the Company had anticipated.

      The Company had sales revenue of $7,609,684 during the third quarter ended
September 30, 2008. These sales resulted from orders for raw jade received by
the Company from existing customers prior to the interruption of shipping caused
by the earthquake. Commencing on September 23, 2008, upon the opening of the
road on which new jade shipped from Xikai Mining Warehouse approximately 2,300
metric tons were shipped by the end of September 2008. As of November 14, 2008
the Company had received payment in full for all of the raw jade sold in the
Company's quarter ended September 30, 2008.

      The Company had sales revenue of $5,763,635 during the fourth quarter
ended December 31, 2008. These sales resulted from orders for raw jade received
by the Company from existing customers.


                                      -24-
<PAGE>

RESULTS OF OPERATIONS

      The following table presents certain information derived from the
consolidated statements of operations of the Company for the twelve months ended
December 31, 2008.

<TABLE>
<CAPTION>
                                                     Twelve months ended      Twelve months ended
                                                      December 31, 2008        December 31, 2007
-------------------------------------------------------------------------------------------------
<S>                                                      <C>                      <C>
REVENUES                                                 $30,537,079                     -
-------------------------------------------------------------------------------------------------
COST OF SALES                                              5,225,273                     -
-------------------------------------------------------------------------------------------------
GROSS PROFIT                                              25,311,806                     -
-------------------------------------------------------------------------------------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES               2,806,341                     -
-------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS                                    22,505,465                     -
-------------------------------------------------------------------------------------------------
INTEREST EXPENSE                                           (421,507)                     -
-------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES            22,083,958                     -
-------------------------------------------------------------------------------------------------
INCOME TAX EXPENSE                                       (6,693,841)                     -
-------------------------------------------------------------------------------------------------
NET INCOME FROM CONTINUING OPERATIONS                     15,390,117                     -
-------------------------------------------------------------------------------------------------
NET INCOME                                               $70,809,483              $764,906
-------------------------------------------------------------------------------------------------
</TABLE>

REVENUE

      The Company's sales revenue is derived solely from the sale of raw jade
for the year 2008. The revenue from the sale of raw jade was $30,537,079 for the
twelve months ended December 31, 2008. As discussed above, in the first quarter
of 2008, the Company transitioned its business from woodcarving to the sale of
raw jade. The first sales of jade were made at the end of January 2008 and there
were no comparable sales during 2007. Therefore, any financial comparison
between year 2007 and 2008 is irrelevant, due to the different business nature
of the wood-carving business which was disposed of in 2007.

COST OF SALES

      The cost of sales was $5,225,273 during the twelve months ended December
31, 2008.

GROSS PROFIT

      The resulting gross profit for the twelve months ended December 31, 2008
was $25,311,806.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling, General and Administrative Expenses (SG&A) were $2,806,341 for
the twelve months ended December 31, 2008, including $1,025,000 representing the
value of options and warrants granted for services.


INCOME BEFORE TAXES FROM CONTINUING OPERATIONS

      Income before taxes from continuing operations was $22,083,958 for the
twelve months ended December 31, 2008.


                                      -25-
<PAGE>

INCOME TAX EXPENSE

      The income tax expense pertaining to continuing operations for the twelve
months ended December 31, 2008 was $6,693,841.

INCOME FROM CONTINUING OPERATIONS

      The Company recorded Net Income from Continuing Operations of $15,390,117
during the twelve months ended December 31, 2008.

NET INCOME

      The Net income for the twelve months ended December 31, 2008 was
$70,809,483, which is 9157% of the total net income $764,906 in 2007. As noted
above, the significant gain in net income is primarily due to the net income
from discontinued operation from Jade Art Group's previous disposed wood-carving
business, totaling $55,419,366, which contributes 78.26% of the total net income
increase. As the previous explanation, any financial comparison between year
2007 and 2008 is irrelevant, due to the different business nature of Jade Art
Group's previous disposed wood-carving business.

LIQUIDITY AND CAPITAL RESOURCES

      As of December 31, 2008, the Company's cash was $68,956 as compared to
$301,203 as of December 31, 2007. The components of this $232,247 decrease are
reflected below.

Cash Flow

                                                    ---------------------------
                                                          Twelve Months Ended
                                                              December 31
                                                    ---------------------------
                                                         2008            2007
                                                    ---------------------------
Net cash provided by operating activities           $ 19,780,956     $  338,455
                                                    ------------     ----------
Net cash (used by) investing activities             $ (8,839,519)    $   (1,178)
                                                    ------------     ----------
Net cash used by financing activities               $(12,069,649)    $ (252,120)
                                                    ------------     ----------
Effect of exchange rate changes                     $    895,965     $  110,037
                                                    ------------     ----------
Net cash inflow (outflow)                           $   (232,247)    $  106,009
                                                    ------------     ----------

      During the year ended December 31, 2008, the Company met its working
capital and capital investment requirements by using operating cash flows, and
borrowing through the issuance of Notes payable totaling $10,000,000, including
$3,000,000 to a related party. The Company repaid all of such borrowings,
together with applicable interest, during 2008. The Company is obligated to pay
the remaining balance of $903,074 owed to former GHL shareholders in connection
with the Merger Transaction on or before March 31, 2010, together with interest
at the rate of 4% per year.

Net Cash Provided by Operating Activities

      During the twelve months ended December 31, 2008, the Company had net cash
flow from operating activities of $19,780,956, comparing $338,455 provided in
2007, primarily attributable to net income from continuing operations of
$15,390,17.


                                      -26-
<PAGE>

Net Cash Used by Investing Activities

      During the twelve months ended December 31, 2008, the Company had net cash
flow used in investing activities of $8,839,519, comparing $1,178 used in 2007.
It is primarily due to the Company's payment of $8,806,166 for the Exclusive
Rights.

Net Cash Used by Financing Activities

      During the twelve months ended December 31, 2008, the Company had net cash
flow used in financing activities of $12,096,649 comparing $252,120 used in
2007, primarily attributable to cash paid in dividend.

      The Chinese economy has experienced a slowing growth rate due to a number
of factors, including the global economic crisis, the appreciation of the RMB
and economic and monetary policies adopted by the Chinese government aimed at
preventing overheating of the Chinese economy and inflation. This has had a
negative impact on the commercial and residential construction markets and the
high-end jewelry markets into which the Company sells raw jade. As demand has
declined, our customers have been negatively affected which, in turn, has
resulted in a slowdown in customer orders and the inability of the Company to
obtain new customers in the second half of 2008. The Company cannot predict how
long the downturn in the Chinese economy will last, the continuing impact of the
downturn on its business and operating results and the timing of any subsequent
recovery.

      The Company has continued to receive orders from and make sales to its
existing customers through its first quarter ended March 2009. However, the
Company has not obtained new customers since the second quarter ended June 30,
2008. Four of the Company's six customers have fulfilled their purchase
obligations under their respective contracts with the Company. Two of the
Company's customers remain obligated to purchase a total of 3,750 metric tons of
raw jade, for a total purchase price of $11.5 million. However, as a result of
the adverse impact of the downturn in the Chinese economy on these customers,
the Company has informally agreed to extend the period in which the customers
must fulfill their purchase obligations to a date to be mutually agreed upon in
the future.

      Due to the nature of the Company's business as a reseller and distributor
of raw jade, principal components of the Company's overhead, such as salaries
and lease obligations, are relatively low. Management presently anticipates that
the Company's present cash on hand and cash expected to be generated from
operating activities will, under current conditions, be sufficient to finance
the Company's planned operations until December 31, 2009. Subsequent to that
time, in the event that the Company does not obtain new customers or new orders
from existing customers, the Company will not be able to meet its operating
expenses with cash flow from operations. Under such circumstances, the Company
would need to obtain additional debt or equity financing.

      The Company does not have any credit facilities with banks or other
lenders. Furthermore, the economic downturn and the deterioration in equity and
credit markets generally has made obtaining financing more difficult and costly
and potentially more dilutive to our existing investors. The failure to secure
any necessary additional financing in a timely manner and on favorable terms
could have a material adverse affect on our ability to conduct our operations,
satisfy our existing debt obligations and to implement our expansion plans.


                                      -27-
<PAGE>

Off-Balance Sheet Arrangements

      We do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

      In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests
in Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopted this Statement beginning January 1, 2009. It is not believed that
this will have an impact on the Company's financial position, results of
operations or cash flows.

      In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations.'This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. This statement
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. An entity may not apply it before that date. The
effective date of this statement is the same as that of the related FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. The Company has adopted this statement beginning January 1, 2009. It
is not believed that this will have an impact on the Company's financial
position, results of operations or cash flows.

      In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities--Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available to
all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of entities first
fiscal year that begins after November 15, 2007.Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company adopted SFAS No.
159 beginning March 1, 2008. The adoption of this pronouncement did not have an
impact on the Company's financial position, results of operations or cash flows.

      In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
This statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. This statement applies under other
accounting pronouncements that require or permit fair value measurements, the
Board having previously concluded in those accounting pronouncements that fair
value is the relevant measurement attribute. Accordingly, this statement does
not require any new fair value measurements. However, for some entities, the
application of this statement will change current practice. This statement is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. Earlier
application is encouraged, provided that the reporting entity has not yet issued
financial statements for that fiscal year, including financial statements for an
interim period within that fiscal year. The Company adopted this statement March
1, 2008. The adoption of this pronouncement did not have an impact on the
Company's financial position, results of operations or cash flows.

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

      The Company's principal wholly owned subsidiary operates in China, and is
exposed to foreign exchange rate fluctuations related to the translation of the
financial results of our operations in China into U.S. dollars during
consolidation. The value of the RMB-to-U.S. dollar and other currencies may
fluctuate and is affected by, among other things, changes in political and
economic conditions. As exchange rates fluctuate, these results, when
translated, may vary from expectations and adversely impact overall expected
profitability.

      Since 1994, the conversion of RMB into foreign currencies, including U.S.
dollars, had been based on rates set by the People's Bank of China, which are
set daily based on the previous day's inter-bank foreign exchange market rates
and current exchange rates on the world financial markets. Since 1994, the
official exchange rate for the conversion of RMB to U.S. dollars had generally
been stable and RMB had appreciated slightly against the U.S. dollar.

      However, on July 21, 2005, the Chinese government changed its policy of
pegging the value of RMB to the U.S. dollar. Under the new policy, RMB may
fluctuate within a narrow and managed band against a basket of certain foreign
currencies. Recently there has been increased political pressure on the Chinese
government to decouple the RMB from the United States dollar. At the recent
quarterly regular meeting of People's Bank of China, its Currency Policy
Committee affirmed the effects of the reform on RMB exchange rate.

      Since February 2006, the new currency rate system has operated; the
currency rate of RMB has become more flexible while basically maintaining
stability and the expectation for a larger appreciation range is shrinking.

      The Company has never engaged in currency hedging operations and has no
present intention to do so.


                                      -28-
<PAGE>

Item 8. Financial Statements.

                              FINANCIAL INFORMATION

                      JADE ART GROUP INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                   (US DOLLAR)

<TABLE>
<CAPTION>
                                                                             DECEMBER 31,    DECEMBER 31,
                                                                                2008            2007
                                                                             ------------    ------------
<S>                                                                          <C>             <C>
ASSETS
Current Assets:
Cash                                                                         $     68,956    $    301,203
Accounts receivable                                                             1,477,770         595,808
Related party receivable                                                               --       2,909,696
Other receivable                                                                   19,014              --
Inventory                                                                              --       1,312,673
Prepaid expenses and other current assets                                              --          32,256
                                                                             ------------    ------------
Total current assets                                                            1,565,740       5,151,636

Property and equipment, net                                                         5,942         210,045

Distribution right, net                                                        65,978,151              --
                                                                             ------------    ------------

Total Assets                                                                 $ 67,549,833    $  5,361,681
                                                                             ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses                                        $    622,208    $     70,294
Advance from customers                                                            146,314          59,191
Taxes payable                                                                   1,268,617         380,147
Dividend payable                                                                2,264,851              --
                                                                             ------------    ------------
Total current liabilities                                                       4,301,990         509,632
                                                                             ------------    ------------

LONG TERM LIABILITES:
Dividends payables                                                                     --      14,334,500
                                                                             ------------    ------------

Total Liabilities                                                               4,301,990      14,844,132
                                                                             ------------    ------------

COMMITMENTS                                                                            --              --

STOCKHOLDERS' EQUITY(DEFICIT):
Common stock par value $0.001; 500,000,000 shares authorized;
 79,980,000 shares issued and outstanding, retroactively restated                  79,980          79,980
Additional paid in capital                                                      3,229,016       2,204,172
Statutory earnings reserve                                                      2,008,152         590,266
Retained earnings(accumulated deficit)                                         56,868,296     (12,523,301)
Accumulated other comprehensive income                                          1,062,399         166,432
                                                                             ------------    ------------
Total stockholders' equity (deficit)                                           63,247,843      (9,482,451)
                                                                             ------------    ------------

Total Liabilities and Stockholders' Equity (Deficit)                         $ 67,549,833    $  5,361,681
                                                                             ============    ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      -29-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                  FOR THE                FOR THE
                                                                 YEARS ENDED         FIVE MONTHS ENDED
                                                                  DECEMBER 31,          DECEMBER 31,
                                                                     2008                   2007
                                                              ------------------     ------------------
<S>                                                           <C>                    <C>
Sales                                                         $       30,537,079     $               --
Cost of sales                                                         (5,225,273)                    --
                                                              ------------------     ------------------
Gross profit                                                          25,311,806                     --

Operating expenses:
   Selling, general and administrative
     expenses                                                         (2,806,341)                    --
                                                              ------------------     ------------------
Operating income                                                      22,505,465                     --
Other income (expenses):
   Interest expense                                                     (421,507)                    --
   Interest income                                                       132,087                     --
   Loss on forgiveness of debt                                          (132,087)
                                                              ------------------     ------------------
Income before taxes from continuing operations                        22,083,958

Income tax expense                                                    (6,693,841)                    --
                                                              ------------------     ------------------
Net income from continuing operations                                 15,390,117                     --

Discontinued operations, net of tax
   Income from woodcarving operations, net of tax                         96,751                764,906
   Gain from transfer of woodcarving
     operations, net of tax                                           55,322,615                     --
                                                              ------------------     ------------------
Net income from discontinued operations                               55,419,366                764,906
                                                              ------------------     ------------------
Net Income                                                    $       70,809,483     $          764,906
                                                              ==================     ==================

Earnings Per Share:
    Basic
        Income from continuing operations                                   0.19                     --
        Income from discontinued operations, net of tax                     0.69                   0.01
                                                              ------------------     ------------------
        Net income                                            $             0.88     $             0.01
                                                              ==================     ==================
   Diluted
        Income from continuing operations                                   0.19                     --
        Income from discontinued operations, net of tax                     0.69                   0.01
                                                              ------------------     ------------------
        Net income                                            $             0.88     $             0.01
                                                              ==================     ==================
Weighted-average Common Shares Outstanding
   Basic                                                              79,980,000             76,058,432
   Diluted                                                            80,665,131             76,058,432
                                                              ==================     ==================

OTHER COMPREHENSIVE INCOME:
Net Income                                                    $       70,809,483     $          764,906
   Foreign Currency
   Translation Adjustment                                                895,967                 91,483
                                                              ------------------     ------------------
Total Other Comprehensive Income                              $       71,705,450     $          856,389
                                                              ==================     ==================
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      -30-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

             FOR THE PERIOD JULY 31, 2007 THROUGH DECEMBER 31, 2008

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                              Additional    Statutory      Retained         Other
                                        Common Stock           Paid-in       Earnings      Earnings     Comprehensive
                                    Shares       Amount        Capital       Reserve       (Deficit)        Income         Total
                                  ----------   ----------   ------------   ------------   ------------   ------------  ------------
<S>                               <C>          <C>          <C>            <C>            <C>            <C>           <C>
Balance, July 31, 2007            68,900,000   $   68,900   $    715,252   $         --   $  1,636,559   $     74,949  $  2,495,660
Issuance of dividends in the
  form of notes payable for
  acquisition of subsidiary               --           --             --             --    (14,334,500)            --   (14,334,500)

Recapitalization                   6,080,000        6,080         (6,080)            --             --                           --

Common stock issued for services   5,000,000        5,000      1,495,000             --             --             --     1,500,000

Statuory earnings reserve                 --          --              --        590,266       (590,266)            --            --

Foreign currency translation              --          --              --             --             --         91,483        91,483
Net income for the five months
  ended December 31, 2007                 --          --              --             --        764,906             --       764,906
                                  ----------   ----------   ------------   ------------   ------------   ------------  ------------
Balance, December 31, 2007        79,980,000   $   79,980   $  2,204,172   $    590,266   $(12,523,301)  $    166,432  $ (9,482,451)
                                  ----------   ----------   ------------   ------------   ------------   ------------  ------------
Valuation of warrants granted             --           --        959,366             --             --             --       959,366
for services
Valuation of stock options
  granted                                 --           --         65,478             --             --             --        65,478
Distribution of a subsidiary              --           --             --       (590,266)       590,266             --            --
Statuory earnings reserve                 --           --             --      2,008,152     (2,008,152)            --            --
Foreign currency translation              --           --             --             --             --        895,967       895,967
Net income for 2008                       --           --             --             --     70,809,483             --    70,809,483
                                  ----------   ----------   ------------   ------------   ------------   ------------  ------------
Balance, December 31, 2008        79,980,000   $   79,980   $  3,229,016   $  2,008,152   $ 56,868,296   $  1,062,399  $ 63,247,843
                                  ==========   ==========   ============   ============   ============   ============  ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      -31-
<PAGE>

                       JADE ART GROUP INC. & SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                      FOR THE
                                                        FOR THE     FIVE MONTHS
                                                      YEARS ENDED      ENDED
                                                      DECEMBER 31,  DECEMBER 31,
                                                          2008          2007
                                                      -----------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continuing operations                  15,390,117            --
Adjustments to reconcile net income to net
    Cash provided by operating activities:
Net income from discontinued operations                55,419,366       764,906
    Gain from transfer of woodcarving operations      (55,322,615)           --
    Common stock issued for services                           --     1,500,000
    Depreciation and amortization                       2,863,482        36,010
    Valuation of warrants and options granted           1,024,844            --
    Loss on forgiveness of interest receivable            132,087            --
Changes in operating assets and liabilities, net
  of sale of subsidiary:
    Accounts receivables                               (1,218,308)    3,072,403
    Related party receivables                            (401,040)   (2,680,510)
    Prepaid expenses and deposit                               --      (133,077)
    Other receivable                                       13,242            --
    Inventories                                           (95,631)      149,810
    Other payables                                        352,960            --
    Accounts payable and accrued expenses                 597,751    (1,763,772)
    Advances from customers                                87,125        47,161
    Taxes payable                                         937,576      (654,476)
                                                      -----------   -----------
Net cash provided by operating activities              19,780,956       338,455
                                                      -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of Distribution Right                     (8,806,166)           --
    Cash paid for notes receivable                    (14,652,653)
    Cash received from notes receivable                14,652,653            --
    Purchases of Property and Equipment                   (33,353)       (1,178)
                                                      -----------   -----------
Net cash used by investing activities                  (8,839,519)       (1,178)
                                                      -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Short-term borrowings                                      --       607,080
    Payment on short-term borrowings                           --      (859,200)
    Cash paid for dividends                           (12,069,649)           --
    Proceeds from loans from related party              3,000,000            --
    Payment on loans from related party                (3,000,000)           --
    Proceeds from notes payable                         7,000,000            --
    Payment on notes payable                           (7,000,000)           --
                                                      -----------   -----------
Net cash used by financing activities                 (12,069,649)     (252,120)
                                                      -----------   -----------

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH           895,965       110,037
                                                      -----------   -----------

NET (DECREASE)INCREASE IN CASH AND EQUIVALENTS           (232,247)      195,194

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                 301,203       106,009
                                                      -----------   -----------

CASH AND EQUIVALENTS, END OF PERIOD                        68,956       301,203
                                                      ===========   ===========

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      -32-
<PAGE>

                       JADE ART GROUP INC. & SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

                                                       2008             2007
                                                    ----------      ----------
SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION:

  Cash paid during the period for
       Taxes                                        $5,805,371      $1,365,837
       Interest                                     $  421,507      $      842

Non Cash Transactions:

       Options and warrants granted for service     $1,024,844      $       --

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      -33-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES

            Basis of Presentation and Organization

            Jade Art Group, Inc. (the "Company"), was incorporated in the State
            of Nevada on September 30, 2005, , under the name of Vella
            Productions, Inc. ("Vella") and entered into an agreement and plan
            of merger (the "Merger Agreement"). On October 1, 2007, with its
            wholly-owned subsidiary, VELLA Merger Sub, Inc., and each of Guoxi
            Holding Limited ("GHL"), Hua-Cai Song, Fu-Lan Chen, Mei-Ling Chen,
            Chen-Qing Luo, Mei-Qing Zhang, Song-Mao Cai, Shenzhen Hua Yin
            Guaranty & Investment Company Limited, Top Good International
            Limited, Total Giant Group Limited, Total Shine Group Limited, Sure
            Believe Enterprises Limited, Think Big Trading Limited, Huge Step
            Enterprises Limited and Billion Hero Investments Limited.

            Pursuant to the Merger Agreement, GHL merged with VELLA Merger Sub,
            Inc, with GHL as the surviving entity. GHL has an operating
            subsidiary, Jiangxi XiDa (formerly known as Jiangxi Xi Cheong
            Lacquer, Inc.) (the "Merger Transaction"). Jiangxi XiDa was
            incorporated under the laws of the People's Republic of China on
            December 4, 2006. JiangXi XiDa is located in Yujiang, Jiangxi
            Province. Jiangxi XiDa then was engaged in the production of
            traditional art products, including religious woodcut lacquer,
            woodcut decorated furniture and woodcut decorations used in
            buildings and for display. As a result of the Merger Transaction,
            GHL became a wholly-owned subsidiary of the Company, which, in turn,
            made the Company the indirect owner of Jiangxi XiDa. Under the
            Merger Agreement, in exchange of surrendering their shares in GHL,
            the GHL shareholders received an aggregate of (i) 206,700,000
            (68,900,000 before forward split) newly-issued shares of the
            Company's common stock, par value $.001 per share (the "Common
            Stock") and (ii) $14,334,500, in the form of promissory notes
            (representing payment for dividends). Under accounting principles
            generally accepted in the United States, the share exchange is
            considered to be a capital transaction in substance, rather than a
            business combination. Thus, the share exchange is equivalent to the
            issuance of stock by GHL for the net monetary assets of Vella
            Productions, Inc. Based on the consent of the Jade Art Group's Board
            and all the GHL shareholders, the promissory notes are due to be
            paid on or before March 31, 2009. Subsequent to year end the Company
            paid an additional $1,361,777 in dividend payments. The remaining
            $903,074 is due and payable on or before March 31, 2010, and has
            been amended to include a 4% interest rate.


                                      -34-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES (continued)

            Consideration, including participation in the promissory notes, was
            distributed pro ratably among the GHL shareholders in accordance
            with their respective ownership interests in GHL immediately before
            the completion of the Merger Transaction.

            The acquisition has been accounted for as a recapitalization and,
            accordingly, these consolidated financial statements represent
            historical operations of Jiangxi XiDa and the capital structure of
            the former Vella Productions, Inc.

            On November 8, 2007, the Company amended and restated its Articles
            of Incorporation to reflect Jade Art Group, Inc. as its new
            corporate name. On January 11, 2008, the Company formed a new
            wholly-owned Chinese subsidiary, JiangXi SheTai Jade Industrial
            Company Limited ("STJ"), to engage in the processing and sale of
            jadeite and jade.

            On January 17, 2008, the Company entered into an Exclusive
            Distribution Rights Agreement (the "Agreement") with Wulateqianqi
            XiKai Mining Co., Ltd. ("XiKai Mining"). Under the Agreement, XiKai
            Mining commited to sell to the Company 90% of the raw jade material
            produced from its SheTai Jade mine, located in Wulateqianqi, China,
            for a period of 50 years (the "Exclusive Rights"). In exchange for
            these Exclusive Rights, the Company agreed to pay RMB 60 million
            (approximately $8.8 million) by March 31, 2009 to XiKai Mining and,
            to transfer to XiKai Mining 100% of our ownership interest in all of
            the Company's woodcarving operations, which were contained in
            Jiangxi XiDa. This transfer of Jiangxi XiDa was made on February 20,
            2008.

            The Agreement further provides that, if the Company requests,
            production from XiKai Mining will be no less than 40,000 metric tons
            per year (the "Minimum Commitment"), with an initial average cost
            per ton to be paid by the Company not to exceed RMB 2,000
            (approximately $285). The cost per ton paid by the Company shall be
            subject to renegotiation every five years during the term of the
            Agreement, with adjustments not to exceed 10% of the cost for the
            immediately preceding five year period. Failure by XiKai Mining to
            supply raw jade material ordered by the Company within the Minimum
            Commitment level during any of the initial five years of the
            Agreement entitles the Company to payment from XiKai Mining of RMB
            18,000 (approximately $2,500) for each such ton ordered by but not
            supplied to the Company during any such fiscal year.

            Production of raw jade by XiKai Mining is limited to 40,000 metric
            tons per year under applicable Chinese regulations.

            The Company's approved scope of business operations includes the
            production and sale of jade and related products. For the year ended
            December 31, 2008, the principal activity of the Company was the
            distribution of raw jade.


                                      -35-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES (continued)

            Accounting Method

            The consolidated financial statements are prepared using the accrual
            method of accounting. The Company changed its fiscal year-end from
            July 31 to December 31 in fiscal year 2007.

            Principles of consolidation

            The accompanying consolidated financial statements include the
            accounts of the Company and its wholly-owned subsidiaries. All
            significant inter-company transactions and balances have been
            eliminated on consolidation.

            Use of Estimates

            The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States of
            America 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. The Company bases its estimates on historical
            experience and on various other assumptions that are believed to be
            reasonable under the circumstances. Actual results could differ from
            those estimates.

            Foreign Currency Translation

            The Company's functional currency is the Chinese Yuan Renminbi
            ("RMB"), and reporting currency is the United States Dollar. The
            financial statements of the Company are translated to United States
            Dollars in accordance with SFAS No.52 "Foreign Currency
            Translation". Monetary assets and liabilities denominated in foreign
            currencies are translated using the exchange rate prevailing at the
            balance sheet date. Transactions affecting the Company's revenue and
            expense accounts are translated using an average exchange rate
            during the period presented. Gains and losses arising on translation
            or settlement of foreign currency denominated transactions or
            balances are included in the determination of income. Foreign
            currency transactions are primarily undertaken in RMB. Foreign
            Currency Translation Adjustments are included in Other Comprehensive
            Income and disclosed as a separate category of Stockholders' Equity.

            Accounts Receivable and Notes Receivable

            The Company extends unsecured credit to its customers in the
            ordinary course of business but mitigates the associated risks by
            performing credit checks and actively pursuing past due accounts. An
            allowance for doubtful accounts is established and recorded based on
            management's assessment of the credit history with the customer and
            current relationships with them.

            The Company makes provision for bad debts based on an assessment of
            the recoverability of accounts receivable. Specific provisions are
            applied to related-party receivables and third-party receivables
            where events or changes in circumstances indicate that the balances
            may not be collectible. However, due to the Company's experience in
            the sale and distribution of raw jade in 2008, and the nature of the
            Company's business, management did not expect any uncollectible
            receivables. As of December 31, 2008, and December 31, 2007, there
            was no allowance recorded for the doubtful accounts.


                                      -36-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES (continued)

            Inventories

            During 2007, raw materials and supplies are stated at the lower of
            cost (computed on an average cost basis) or market. Work-in-process
            and finished goods are stated at the lower of average cost or
            market. If required, the Company provides inventory allowances based
            on excess and obsolete inventories determined principally by
            customer demand. This policy only applied to the Company's
            woodcarving business that was discontinued in early 2008.

            Property and Equipment

            Property and equipment is stated at cost. Betterments and
            improvements are depreciated over their estimated useful lives and
            leaseholds are depreciated over the lesser of lease life or useful
            life. Repairs and maintenance expenditures are charged to expense as
            incurred. When assets are disposed of, the cost and accumulated
            depreciation (the net book value of the assets) is eliminated and
            any resulting gain or loss is reflected in the statements of
            operations. Depreciation is computed using the straight-line method
            over the estimated useful lives of the assets. The estimated useful
            lives are as follows:

            Buildings                          20 years
            Plant and machinery                10 years
            Furniture and equipment             5 years

            Cash and Cash Equivalents

            For purposes of financial statement presentation, the Company
            considers all highly liquid investments with a maturity of three
            months or less, from the date of purchase, to be cash equivalents.

            Revenue Recognition

            The Company applies the provisions of SEC Staff Accounting Bulletin
            ("SAB") No. 104, Revenue Recognition in Financial Statements ("SAB
            104"), which provides guidance on the recognition, presentation and
            disclosure of revenue in financial statements filed with the SEC.
            SAB 104 outlines the basic criteria that must be met to recognize
            revenue and provides guidance for disclosure related to revenue
            recognition policies. Sales revenue is recognized when (1)
            persuasive evidence of an arrangement exists; (2) delivery has
            occurred or services rendered; (3) the fee is fixed and
            determinable; and (4) collectibility is reasonably assured. The
            Company determines whether criteria (3) and (4) are met based on
            judgments regarding the nature of the price charged for products and
            the collectibility of those fees. Payments received before all of
            the relevant criteria for revenue recognition are satisfied are
            recorded as advances from customers. Advances from customers at
            December 31, 2008 and December 31, 2007 are $146,314 and $59,191,
            respectively. Returns are not permitted after the customer accepts
            the product.


                                      -37-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES (continued)

            Fair Value of Financial Instruments

            On January 1, 2008, the Company adopted SFAS No. 157, "Fair Value
            Measurements. SFAS No. 157 defines fair value, establishes a
            three-level valuation hierarchy for disclosures of fair value
            measurement and enhances disclosure requirements for fair value
            measures. The three levels are defined as follows:

            Level 1 inputs to the valuation methodology are quoted prices
            (unadjusted) for identical assets or liabilities in active markets.
            Level 2 inputs to the valuation methodology include quoted prices
            for similar assets and liabilities in active markets, and inputs
            that are observable for the asset or liability, either directly or
            indirectly, for substantially the full term of the financial
            instrument.
            Level 3 inputs to valuation methodology are unobservable and
            significant to the fair measurement.

            The carrying amounts reported in the balance sheets for the cash and
            cash equivalents, receivables and current liabilities each qualify
            as financial instruments and are a reasonable estimate of fair value
            because of the short period of time between the origination of such
            instruments and their expected realization and their current market
            rate of interest. The carrying value of notes payable approximates
            fair value because negotiated terms and conditions are consistent
            with current market rates as of December 31, 2008 and 2007.

            Earnings per share

            The computation of net earnings per share of common stock is based
            on the weighted average number of shares outstanding during each
            period presented. The Company utilizes the treasury stock method to
            calculate diluted earnings per share, which considers potentially
            issuable shares on common stock equivalents. In accordance with SFAS
            No. 128, "Earnings per Share," common stock warrants and options
            have a dilutive effect when the average market price of the common
            stock during the period exceeds the exercise price of the warrants
            and options. The average market price of the Company's common stock
            during the year ended December 31, 2008 was $3.43. As such,
            potentially issuable common shares related to options were not
            considered in the earnings per share calculation for the year ended
            December 31, 2008 because the average fair market value of the
            Company's common stock was below the exercise price of all
            outstanding options. Potentially issuable common shares totaling
            1,000,000 related to warrants were considered in the calculation of
            diluted earnings per share for the year ended December 31, 2008 and
            the incremental shares of 685,131 related to the warrants have been
            included in the calculation. The Company had no common stock
            equivalents outstanding at December 31, 2007.


                                      -38-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES (continued)

            Earnings per share (continued)

            The following table summarizes the calculation for the basic and
            diluted earnings per share computation for period indicated:

<TABLE>
<CAPTION>
                                                                      Year Ended December 31,
                                                                       2008               2007
                                                                  --------------    --------------
<S>                                                               <C>               <C>
Statement of Operations Summary Information:
Numerator:

        Income from continuing operations                         $   15,390,117    $           --
        Income from discontinued operations, net of tax               55,419,366           764,906
                                                                  --------------    --------------
        Net income                                                $   70,809,483    $      764,906
                                                                  ==============    ==============

Denominator:

Weighted-average common shares outstanding
        Basic                                                         79,980,000        76,058,432
        Warrants - Incremental shares                                    685,131                --
                                                                  --------------    --------------
        Diluted                                                       80,665,131        76,058,432
                                                                  ==============    ==============

EARNINGS  (LOSS) PER SHARE:
        Basic
           Income from continuing operations                      $         0.19    $           --
           Income from discontinued operations, net of tax                  0.69              0.01
                                                                  --------------    --------------
           Net income                                             $         0.88    $         0.01
                                                                  ==============    ==============

        Diluted
           Income from continuing operations                      $         0.19    $           --
           Income from discontinued operations, net of tax                  0.69              0.01
                                                                  --------------    --------------
           Net income                                             $         0.88    $         0.01
                                                                  ==============    ==============
</TABLE>

            Accounting for Stock-Based Compensation

            The Company accounts for stock-based compensation in accordance with
            the fair value recognition provisions of Statement of Financial
            Accounting Standards ("SFAS") No. 123R. Share Based Payments ("SFAS
            123R."). The Company uses the Black-Scholes option-pricing model,
            which involves certain subjective assumptions. These assumptions
            include estimating the length of time employees will retain their
            vested stock options before exercising them ("expected term"), the
            number of options for which vesting requirements will not be
            completed ("forfeitures"). Changes in the subjective assumptions can
            materially affect estimates of fair value stock-based compensation,
            and the related amount recognized on the consolidated statement of
            operations.

            Impairment of Long-Lived Assets

            In accordance with Financial Accounting Standards Board Statement
            No. 144, "Accounting for the Impairment or Disposal of Long-Lived
            Assets," we record impairment of long-lived assets to be held and
            used or to be disposed of when indicators of impairment are present
            and the undiscounted cash flows estimated to be generated by those
            assets are less than the carrying amount.


                                      -39-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES (continued)

            Recent Accounting Pronouncements

            In June 2008, the FASB issued FASB Staff Position EITF 03-6-1,
            Determining Whether Instruments Granted in Share-Based Payment
            Transactions Are Participating Securities, ("FSP EITF 03-6-1"). FSP
            EITF 03-6-1 addresses whether instruments granted in share-based
            payment transactions are participating securities prior to vesting,
            and therefore need to be included in the computation of earnings per
            share under the two-class method as described in FASB Statement of
            Financial Accounting Standards No. 128, "Earnings per Share." FSP
            EITF 03-6-1 is effective for financial statements issued for fiscal
            years beginning on or after December 15, 2008 and earlier adoption
            is prohibited. We are not required to adopt FSP EITF 03-6-1; neither
            do we believe that FSP EITF 03-6-1 would have material effect on our
            consolidated financial position and results of operations if
            adopted.

            In May 2008, the Financial Accounting Standards Board ("FASB")
            issued SFAS No. 163, "Accounting for Financial Guarantee Insurance
            Contracts-and interpretation of FASB Statement No. 60". SFAS No. 163
            clarifies how Statement 60 applies to financial guarantee insurance
            contracts, including the recognition and measurement of premium
            revenue and claims liabilities. This statement also requires
            expanded disclosures about financial guarantee insurance contracts.
            SFAS No. 163 is effective for fiscal years beginning on or after
            December 15, 2008, and interim periods within those years. SFAS No.
            163 has no effect on the Company's financial position, statements of
            operations, or cash flows at this time.

            In May 2008, the Financial Accounting Standards Board ("FASB")
            issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting
            Principles". SFAS No. 162 sets forth the level of authority to a
            given accounting pronouncement or document by category. Where there
            might be conflicting guidance between two categories, the more
            authoritative category will prevail. SFAS No. 162 will become
            effective 60 days after the SEC approves the PCAOB's amendments to
            AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has
            no effect on the Company's financial position, statements of
            operations, or cash flows at this time.

            In March 2008, the Financial Accounting Standards Board, or FASB,
            issued SFAS No. 161, Disclosures about Derivative Instruments and
            Hedging Activities--an amendment of FASB Statement No. 133. This
            standard requires companies to provide enhanced disclosures about
            (a) how and why an entity uses derivative instruments, (b) how
            derivative instruments and related hedged items are accounted for
            under Statement 133 and its related interpretations, and (c) how
            derivative instruments and related hedged items affect an entity's
            financial position, financial performance, and cash flows. This
            Statement is effective for financial statements issued for fiscal
            years and interim periods beginning after November 15, 2008, with
            early application encouraged. The Company has not yet adopted the
            provisions of SFAS No. 161, but does not expect it to have an impact
            on its financial position, results of operations or cash flows.


                                      -40-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES (continued)

            Recent Accounting Pronouncements (continued)

            In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No.
            110 regarding the use of a "simplified" method, as discussed in SAB
            No. 107 (SAB 107), in developing an estimate of expected term of
            "plain vanilla" share options in accordance with SFAS No. 123 (R),
            Share-Based Payment. In particular, the staff indicated in SAB 107
            that it will accept a company's election to use the simplified
            method, regardless of whether the company has sufficient information
            to make more refined estimates of expected term. At the time SAB 107
            was issued, the staff believed that more detailed external
            information about employee exercise behavior (e.g., employee
            exercise patterns by industry and/or other categories of companies)
            would, over time, become readily available to companies. Therefore,
            the staff stated in SAB 107 that it would not expect a company to
            use the simplified method for share option grants after December 31,
            2007. The staff understands that such detailed information about
            employee exercise behavior may not be widely available by December
            31, 2007. Accordingly, the staff will continue to accept, under
            certain circumstances, the use of the simplified method beyond
            December 31, 2007. The Company currently uses the simplified method
            for "plain vanilla" share options and warrants, and will assess the
            impact of SAB 110 for fiscal year 2009. It is not believed that this
            will have an impact on the Company's financial position, results of
            operations or cash flows.

            In December 2007, the FASB issued SFAS No. 160, Noncontrolling
            Interests in Consolidated Financial Statements--an amendment of ARB
            No. 51. This statement amends ARB 51 to establish accounting and
            reporting standards for the noncontrolling interest in a subsidiary
            and for the deconsolidation of a subsidiary. It clarifies that a
            noncontrolling interest in a subsidiary is an ownership interest in
            the consolidated entity that should be reported as equity in the
            consolidated financial statements. Before this statement was issued,
            limited guidance existed for reporting noncontrolling interests. As
            a result, considerable diversity in practice existed. So-called
            minority interests were reported in the consolidated statement of
            financial position as liabilities or in the mezzanine section
            between liabilities and equity. This statement improves
            comparability by eliminating that diversity. This statement is
            effective for fiscal years, and interim periods within those fiscal
            years, beginning on or after December 15, 2008 (that is, January 1,
            2009, for entities with calendar year-ends). Earlier adoption is
            prohibited. The effective date of this statement is the same as that
            of the related Statement 141 (revised 2007). The Company will
            adopted this Statement beginning January 1, 2009. It is not believed
            that this will have an impact on the Company's financial position,
            results of operations or cash flows.


                                      -41-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 1 -    NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES (continued)

            Recent Accounting Pronouncements (continued)

            In December 2007, the FASB, issued FAS No. 141 (revised 2007),
            Business Combinations.'This Statement replaces FASB Statement No.
            141, Business Combinations, but retains the fundamental requirements
            in Statement 141. This Statement establishes principles and
            requirements for how the acquirer: (a) recognizes and measures in
            its financial statements the identifiable assets acquired, the
            liabilities assumed, and any noncontrolling interest in the
            acquiree; (b) recognizes and measures the goodwill acquired in the
            business combination or a gain from a bargain purchase; and (c)
            determines what information to disclose to enable users of the
            financial statements to evaluate the nature and financial effects of
            the business combination. This statement applies prospectively to
            business combinations for which the acquisition date is on or after
            the beginning of the first annual reporting period beginning on or
            after December 15, 2008. An entity may not apply it before that
            date. The effective date of this statement is the same as that of
            the related FASB Statement No. 160, Noncontrolling Interests in
            Consolidated Financial Statements. The Company has adopted this
            statement beginning January 1, 2009. It is not believed that this
            will have an impact on the Company's financial position, results of
            operations or cash flows.

            In February 2007, the FASB, issued SFAS No. 159, The Fair Value
            Option for Financial Assets and Liabilities--Including an Amendment
            of FASB Statement No. 115. This standard permits an entity to choose
            to measure many financial instruments and certain other items at
            fair value. This option is available to all entities. Most of the
            provisions in FAS 159 are elective; however, an amendment to FAS 115
            Accounting for Certain Investments in Debt and Equity Securities
            applies to all entities with available for sale or trading
            securities. Some requirements apply differently to entities that do
            not report net income. SFAS No. 159 is effective as of the beginning
            of entities first fiscal year that begins after November 15,
            2007.Early adoption is permitted as of the beginning of the previous
            fiscal year provided that the entity makes that choice in the first
            120 days of that fiscal year and also elects to apply the provisions
            of SFAS No. 157 Fair Value Measurements. The Company adopted SFAS
            No. 159 beginning March 1, 2008. The adoption of this pronouncement
            did not have an impact on the Company's financial position, results
            of operations or cash flows.

            In September 2006, the FASB issued SFAS No. 157, Fair Value
            Measurements This statement defines fair value, establishes a
            framework for measuring fair value in generally accepted accounting
            principles (GAAP), and expands disclosures about fair value
            measurements. This statement applies under other accounting
            pronouncements that require or permit fair value measurements, the
            Board having previously concluded in those accounting pronouncements
            that fair value is the relevant measurement attribute. Accordingly,
            this statement does not require any new fair value measurements.
            However, for some entities, the application of this statement will
            change current practice. This statement is effective for financial
            statements issued for fiscal years beginning after November 15,
            2007, and interim periods within those fiscal years. Earlier
            application is encouraged, provided that the reporting entity has
            not yet issued financial statements for that fiscal year, including
            financial statements for an interim period within that fiscal year.
            The Company adopted this statement March 1, 2008. The adoption of
            this pronouncement did not have an impact on the Company's financial
            position, results of operations or cash flows.


                                      -42-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 2 -    DISCONTINUED OPERATIONS

            As discussed in Note 1, on January 18, 2008, the Company announced
            that it would transfer 100% of its ownership interest in Jiangxi
            XiDa and pay approximately $8.8 million to XiKai Mining and in
            return it would receive the Exclusive Rights to purchase 90% of the
            raw jade produced by XiKai Mining's SheTai jade mine at a
            predetermined price. The Company commenced its purchasing and
            subsequent resale of raw jade in late January 2008. Jiangxi XiDa
            held all of the Company's woodcarving operations, which constituted
            all of the Company's previous business operations. The results of
            operations for the woodcarving business and the gain resulting from
            the transfer are presented in the Company's Consolidated Statements
            of Operations as Discontinued Operations.

            Accounting Principles Board Opinion No. 29, "Accounting for
            Non-monetary Transactions" ("APB 29"), requires that the cost of a
            non-monetary asset acquired in exchange for another non-monetary
            asset be the fair value of the asset surrendered to acquire it and
            that a gain or loss be recognized as a result of the exchange. The
            Company's woodcarving business was appraised at RMB 430,035,000
            (then equivalent to approximately $60,400,000). The value of the
            exclusive jade distribution rights is determined as follows:

            Fair value of Jiangxi XiDa wood carving
              (RMB 430,035,000)                                $ 60,390,543
            Cash consideration (RMB 60,000,000)                   8,778,861
            Foreign currency translation                           (352,962)
                                                               ------------
                                                               $ 68,816,442
                                                               ============

            The Exchange Agreement between the two companies was entered into in
            January 2008, however, the cash portion of the agreement was not
            paid until March 2008. As such, the exchange rate had fluctuated
            during that time period. Therefore, the Company adjusted the amount
            by $352,962. The value allocated to the Exclusive Distribution
            Rights acquired in the exchange is $68,816,442 which will be
            amortized on a straight-line basis over 25 years.

            The net gain on the transfer of the Company's woodcarving business
            was $55,322,615 after the deduction of the carrying value of the net
            assets of that business. The exchange of the assets and liabilities
            of Jiangxi XiDa, and the resulting gain on discontinued operations
            is as follows:

            Fair value of Jiangxi XiDa wood carving
              (RMB 430,035,000)                                     $60,390,543
                 Total assets of Jiangxi XiDa         (5,151,444)
                 Total liabilities of Jiangxi XiDa        83,516
                                                      ----------
                                                                     (5,067,928)
                                                                    -----------
            Realized gain from the exchange of discontinued
              operations                                            $55,322,615
                                                                    ===========


                                      -43-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 2 -    DISCONTINUED OPERATIONS (Continued)

            The following table summarizes the operating results of the
            discontinued operations for Jiangxi XiDa for the period January 1,
            2008 through February 20, 2008 and for the year ended December 31,
            2007, respectively.

                                                    February 20,    December 30,
                                                       2008             2007
                                                    ----------      -----------
            Revenue                                 $  615,930      $ 8,919,633
            Operating expenses                        (519,179)      (8,154,727)
                                                    ----------      -----------
            Income from discontinued operations,
            net of tax                              $   96,751      $   764,906
                                                    ==========      ===========


                                      -44-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 3 -    RELATED PARTY TRANSACTIONS

            Note Receivable

            The Company has occasionally advanced funds to GuoXi Group, a
            founder, and was considered as a related party entity during 2007.
            The advances were for operating purposes and were non-interest
            bearing. The Company and the GuoXi Group entered into an agreement
            in early 2008 stating that the amount would accrue 8% interest and
            would be paid by December 31, 2008. However, due to the exchange
            transaction that occurred in February 2008, the advances between the
            Company and GuoXi Group did not exist during 2008. Therefore, the
            balance due as of December 31, 2008 and December 31, 2007 was $0 and
            $2,909,696, respectively.

            Note Payable

            During the first quarter 2008 the Company received an unsecured loan
            of $3,000,000 from a shareholder of the Company. The loan is
            unsecured, carries an interest rate of 5% and is due and payable on
            December 31, 2008. This amount was used to serve as registered
            capital for the wholly-owned subsidiary , STJ, of the Company to
            provide working capital for the subsidiary's operations. The
            principal amount of the loan of $3,000,000 with interest, in the
            amount of $139,726, was paid in full on November 24, 2008.

NOTE 4 -    NOTE RECEIVABLE

            The Company has extended financial support to XiKai Mining, who
            supplies 100% of the Company's jade product, in the form of
            advances. During 2008, the Company advanced a total of $14,652,653
            to XiKa Mining. Per the terms of this receivable agreement, the note
            carries an interest rate of 4%, commencing on July 1, 2008 and is
            payable by December 31, 2008. Interest is recognized on a monthly
            basis. During the year ended December 31, 2008, XiKai Mining repaid
            the entire principal balance of $14,652,653. Interest was accrued in
            the total amount of $132,087. The Company forgave the total accrued
            interest and recorded the loss on forgiveness of debt as of December
            31, 2008 in the Company's statements of operations.


                                      -45-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2008

NOTE 5 -    INVENTORIES

            Inventories consisted of the following at December 31, 2008 and
            December 31, 2007:

                                       December 31, 2008      December 31, 2007

            Raw materials                  $      --              $  412,274
            Work in progress                      --                  85,646
            Finished goods                        --                 814,753
                                           ---------              ----------
                 Total                            --              $1,312,673
                                           =========              ==========

            At December 31, 2007, no provision for obsolete inventory was deemed
            necessary by the Company, because production is done based on orders
            and inventory is purchased for each job when ordered. No inventory
            existed at December 31, 2008 due to the nature of the Company's
            business subsequent to the exchange transaction in January 2008 (See
            note 1).

NOTE 6 -    PROPERTY AND EQUIPMENT

            Property and equipment consisted of the following at December 31,
            2008 and December 31, 2007:

                                                        2008            2007
                                                    -----------     -----------
            Buildings                               $        --     $   227,586
            Plant and machinery                              --         744,511
            Furniture and office equipment                6,526          90,821
                                                    -----------     -----------
            Total Property and Equipment, at cost   $     6,526     $ 1,062,918
            Less: Accumulated depreciation                 (584)       (852,873)
                                                    -----------     -----------
               Net Property and equipment           $     5,942     $   210,045
                                                    ===========     ===========

            Depreciation expense on property and equipment was $584 and $119,711
            for the years ended December 31, 2008, and 2007, respectively.


                                      -46-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 7 -    NOTES PAYABLE

            During the year ended December 31, 2008, the Company received
            funding from four parties, one of whom is a shareholder of the
            Company and treated as a related party. This funding totaled
            $10,000,000, and is represented by four separate notes. Each note
            carries an annual interest rate of 5%, with all principal and
            interest being due on various dates from December 6, 2008, through
            June 1, 2009. The funds were used to serve as registered capital for
            a wholly-owned subsidiary of the Company to provide working capital
            for the subsidiary's operations. The amount received from the
            related party was $3,000,000. As at December 31, 2008, the Company
            has paid, in full, all of the notes and related interest of $
            421,507.

            As discussed in Note 1, in exchange for the Exclusive Rights to
            distribute jade, the Company agreed to pay RMB 60 million
            (approximately $8.8 million) to XiKai Mining by March 1, 2009. The
            entire amount of RMB 60 million (approximately $8.8 million) was
            paid on March 1, 2008.

            On October 1, 2007, the Board of Directors of the Company declared
            dividends of $14,334,500 in the form of non-interest bearing
            promissory notes, initially to be payable on or before the first
            year anniversary of the Merger Transaction. The dividends
            (i.e.promissory notes) were distributed pro rata among the GHL
            shareholders in accordance with their respective ownership interests
            in GHL immediately before the completion of the Merger Transaction.
            Subsequently, the Company and the GHL shareholders agreed to defer
            payment of these notes until March 31, 2009. See Note 15. As of
            December 31, 2008, the Company had paid dividends in the amount of
            $12,069,649. Subsequent to year end the Company paid an additional
            $1,361,777 in dividend payments. The remaining $903,074 is due and
            payable on or before March 31, 2010, and has been amended to include
            a 4% interest rate.

NOTE 8 -    INTANGIBLE ASSETS

            Jade Distribution Rights

            The Company accounts for intangible assets in accordance with SFAS
            No. 142, "Goodwill and Other Intangible Assets," which requires that
            intangible assets that have indefinite lives not be amortized but
            instead be tested at least annually for impairment, or more
            frequently when events or a change in circumstances indicate that
            the asset might be impaired. For indefinite lived intangible assets,
            impairment is tested by comparing the carrying value of the asset to
            its fair value and assessing the ongoing appropriateness of the
            indefinite life classification. For intangible assets with a
            definite life classification, the Company amortizes the asset over
            its useful or economic life, whichever is shorter. At least
            quarterly, the Company performs an analysis of impairment of the
            definite life intangible assets. In performing this assessment,
            management considers current market analysis and appraisal of the
            asset, along with estimates of future cash flows. The Company
            recognizes impairment losses when undiscounted cash flows estimated
            to be generated from long-lived assets are less than the amount of
            unamortized assets. If the Company determines that the asset has
            been impaired, a charge to the Company's statements of operations is
            recorded. At December 31, 2008, the Company determined that there
            was no impairment to the intangible assets.


                                      -47-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 8 -    INTANGIBLE ASSETS (Continued)

            As discussed in Note 2, the Company transferred its woodcarving
            operations and agreed to pay RMB 60 million (approximately $8.8
            million) to XiKai Mining. In return, the Company received the
            Exclusive Distribution Rights to purchase 90% of the raw jade
            produced by XiKai's SheTai mine at a fixed price for 5 years,
            subject to adjustment every 5 years thereafter. The woodcarving
            operations were assessed as having a fair value of $60,400,000 at
            the time of the exchange agreement. The assessed value plus the cash
            payment (approximately $8.8 million) is the basis of the exclusive
            distribution rights.

            Intangible assets consisted of the following at December 31, 2008
            and December 31, 2007:

                                                     December 31,   December 31,
                                                        2008           2007
                                                     ------------   ------------
            Exclusive Jade Distribution rights       $ 68,816,442   $         --

            Less: Accumulated amortization             (2,838,291)            --
                                                     ------------   ------------

            Net Exclusive Jade Distribution rights     65,978,151             --
                                                     ============   ============

            The Company has elected to amortize the exclusive jade distribution
            rights using a straight-line basis over an economic useful life of
            25 years.

            Amortization expense on the intangible asset has been included in
            Cost of Sales as it represents a component of the cost of the jade
            product acquired by the Company. The amortization expense was
            $2,838,291, and $0 for the years ended December 31, 2008 and 2007,
            respectively.

            Future amortization of these costs is as follows:

                   Year                           Amount
                ----------------------------------------
                   2009                      $ 2,749,090
                   2010                        2,749,090
                   2011                        2,749,090
                   2012                        2,749,090
                   2013                        2,749,090
                Thereafter                    52,232,701
                                             -----------
                                             $65,978,151
                                             ===========


                                      -48-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 9 -    COMMITMENTS AND CONTINGENCIES

            Employee Benefits

            As required under certain relevant Chinese laws, the Company
            participates in the following employee benefits plans: (i) medical
            insurance plan; (ii) unemployment insurance plan, and (iii) state
            pension plan, all of which are organized by Chinese municipal and
            provincial governments (collectively, the "General Employee
            Benefits"). The Company is required to contribute a fixed percentage
            of payroll costs to the General Employee Benefits scheme to fund the
            benefits. The only obligation of the Company with respect to the
            plan is to make the specified contributions. The Company's
            contributions to the plan for the year ended December 31, 2008 and
            2007 were $11,745 and $141,860, respectively.

            Lease Agreement

            On December 10, 2007, the Company entered into a lease agreement
            with GuoXi Group located at Yujiang City of Jiangxi Province in PRC
            for administrative operations. The lease has a term of two years and
            requires monthly payments of RMB 20,000 (approximately $2,900).
            Future minimum lease payments are as follows:

                           Year                   Amount
                      ---------------        -----------------
                           2009                  $ 33,960
                                             =================

            Rent expense for the years ended December 31, 2008 and 2007 was
            $33,960 and $280,080 respectively. The rent expense incurred in 2007
            period was for the whole plant and office space for the woodcarving
            operation. However, the rent expenses incurred in year 2008 was only
            for the office space relating to manage the operations of the jade
            distribution business.

NOTE 10 -STATUTORY EARNINGS RESERVE

            As stipulated by the Company Law of the People's Republic of China
            ("PRC"), net income after taxes can only be distributed as dividends
            after appropriation has been made for the following: (i) making up
            cumulative prior years' losses, if any; (ii) allocations to the
            "reserve fund" of at least 10% of income after taxes, as determined
            under PRC accounting rules and regulations, until the fund amounts
            to 50% of the Company's registered capital; and (iii) allocations to
            the "enterprise expansion fund" and " Staff and worker's bonus and
            welfare fund" of at least 10% and 5%,respectively, if approved in
            the stockholders' general meeting. This regulation was included in
            the articles of incorporation when the Company was formed and
            applied by the Company. At December 31, 2008 and December 31, 2007,
            the total reserves of $2,008,152 and $590,266 were distributed,
            respectively.


                                      -49-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 11 -   STOCKHOLDERS' EQUITY

            The Company has one class of stock. The Company has voting common
            stock of 500,000,000 shares authorized, with 79,980,000 shares
            issued and outstanding. Dividends relating to the Merger Transaction
            of $12,069,649 were paid during the year ended December 31, 2008. No
            dividends were declared or paid during the year ended December 31,
            2007.

            On November 28, 2007, the Company issued 15,000,000 shares
            (previously 5,000,000 shares before forward split) of its common
            stock to consultants for services rendered on behalf of the company.
            The shares were valued at $1,500,000, which the Board determined was
            the fair value of the shares on the date they were issued.

            On December 7, 2007, the Company's Board of Directors approved a 3:1
            forward stock split, in the nature of a share dividend, with respect
            to the shares of the Company's common stock issued and outstanding
            at the close of business on December 28, 2007. The effect of the
            forward stock split has been retroactively applied to all prior
            stock transactions of the Company.

            On April 28, 2008, the Company announced that it's Board of
            Directors authorized a one-for-three reverse stock split of its
            outstanding common stock. The reverse stock split was approved by a
            majority of the Company's shareholders. The Company's Board of
            Directors established May 15, 2008 as the effective date for the
            reverse stock split. The effect of the reverse split has been
            retroactively applied to all prior stock transactions of the
            Company.


                                      -50-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 12 -   COMMMON STOCK WARRANTS AND OPTIONS

            Warrants

            On January 17, 2008, the Company granted warrants to purchase
            1,000,000 shares of the Company's common stock at a price of $1.08
            to its investor relations firm pursuant to a consulting agreement
            which the Company entered into with this firm. Neither the exercise
            price per share of the warrants, nor the number of shares for which
            the warrants are exercisable, were affected by the Company's
            one-for-three reverse stock split in May 2008. These warrants can be
            exercised over a three year period. The consulting expense for these
            services is recognized on a straight-line basis over the one year
            period of the related consulting contract. The Company estimated the
            fair value of warrants using the Black-Scholes pricing model and
            recorded the compensation expenses ratably over the warrants'
            vesting period. The related expense for the year ended December 31,
            2008 amounted to $959,366.

            The fair value of each warrant granted has been estimated on the
            date of grant using the Black-Scholes pricing model, using the
            following assumptions:

                                                             2008       2007
                                                             ----       ----
            Five Year Risk Free Interest Rate                2.46%         --
            Dividend Yield                                   0.00%         --
            Volatility                                        314%         --
            Average Expected Term (Years to Exercise)           3          --

            A summary of the status of warrants granted at December 31, 2008 is
            as follows:

                                                       For the year Ended
                                                       December 31, 2008

                                                                   Weighted
                                                               Average Exercise
                                                     Shares         Price
                                                   ----------    -----------
            Outstanding at January 1, 2008                 --             --
            Granted                                 1,000,000    $      1.08
            Exercised                                      --             --
            Forfeited                                      --             --
            Expired                                        --             --
                                                   ----------    -----------
            Outstanding at December 31, 2008        1,000,000    $      1.08
                                                   ==========    ===========

            Exercisable at December 31, 2008        1,000,000    $      1.08
                                                   ==========    ===========


                                      -51-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 12 - COMMMON STOCK WARRANTS AND OPTIONS (Continued)

            A summary of the status of warrants outstanding at December 31, 2008
            is presented below:

<TABLE>
<CAPTION>
                         Warrants Outstanding                    Warrants Exercisable
            ---------------------------------------------    ---------------------------

                               Weighted           Weighted                       Weighted
Range of                        Average           Average                        Average
Exercise       Number          Remaining         Exercise      Number           Exercise
 Prices     Outstanding       Life (Years)         Price     Exercisable          Price
--------    -----------       ------------       --------    -----------        --------
<S>          <C>                  <C>             <C>         <C>                <C>
 $ 1.08      1,000,000            2.04            $ 1.08      1,000,000          $ 1.08
</TABLE>

            At December 31, 2007 there were no warrants outstanding or
            exercisable.

            The aggregate intrinsic value of stock warrants outstanding and
            exercisable at December 31, 2008 totaled $2,340,000. The weighted
            average grant date fair value of warrants granted during the year
            ended December 31, 2008 was $2.58 post reverse split. The fair value
            of warrants vested during the year ended December 31, 2008 totaled
            $959,366.

            Options

            On April 15, 2008, the Company granted to Mr. Khaleel, a member of
            the Company'sBoard of Directors, nonqualified stock options to
            purchase up to 100,000 shares (33,333 post reverse split) of the
            Company's common stock (the "Option Shares"), exercisable at a price
            of $1.15 per share ($3.45 per share post reverse split) (a price
            equal to the closing price per share of the Company's common stock
            on April 15, 2008, as reported by the Over-the-Counter Bulletin
            Board). Options to purchase one third of the Option Shares were
            exercisable immediately; options to purchase an additional one third
            of the Option Shares may be exercised commencing April 15, 2009, and
            options to purchase the remaining one third of the Option Shares may
            be exercised commencing April 15, 2010. All outstanding and
            unexercised options shall expire on the date that Mr. Khaleel is no
            longer serving as a member of the Board of Directors of the Company
            or otherwise engaged by the Company to provide services to the
            Company. Subject to the foregoing, the options may be exercised
            until April 15, 2018, at which time any such options that have not
            been exercised shall automatically expire.

            The fair value of each option granted has been estimated on the date
            of grant using the Black-Scholes pricing model, using the following
            assumptions:

                                                              2008          2007
                                                              ----          ----
               Five Year Risk Free Interest Rate                 3%           --
               Dividend Yield                                 0.00%           --
               Volatility                                      248%           --
               Average Expected Term (Years to Exercise)        10            --

            A summary of the status of options granted at December 31, 2008 is
            as follows:


                                      -52-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 12 -   COMMMON STOCK WARRANTS AND OPTIONS (Continued)

                                                         For the year Ended
                                                         December 31, 2008

                                                                   Weighted
                                                                Average Exercise
                                                       Shares        Price
                                                     ----------    ---------
              Outstanding at January 1, 2008                --            --
              Granted                                   33,333     $    3.45
              Exercised                                     --            --
              Forfeited                                     --            --
              Expired                                       --            --
                                                     ----------    ---------
              Outstanding at December 31, 2008          33,333     $    3.45
                                                     ==========    =========

                                                     ----------    ---------
              Exercisable at December 31, 2008          11,111     $    3.45
                                                     ==========    =========

            A summary of the status of options outstanding at December 31, 2008
            is presented below:

<TABLE>
<CAPTION>
                          Options Outstanding                     Options Exercisable
            ----------------------------------------------   ----------------------------

                               Weighted           Weighted                       Weighted
Range of                        Average           Average                        Average
Exercise       Number          Remaining         Exercise      Number           Exercise
 Prices     Outstanding       Life (Years)         Price     Exercisable          Price
--------    -----------       ------------       --------    -----------        --------
<S>          <C>              <C>                 <C>          <C>               <C>
$ 3.45       33,333           9.375 years         $ 3.45       11,111            $ 3.45
</TABLE>

            At December 31, 2007 there were no options outstanding or
            exercisable.

            The aggregate intrinsic value of stock options outstanding and
            exercisable at December 31, 2008 totaled $0. The weighted average
            grant date fair value of options granted during the year ended
            December 31, 2008 was $3.42 post reverse split. The fair value of
            options vested during the year ended December 31, 2008 totaled
            $65,478.


                                      -53-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 13 -   CONCENTRATIONS OF RISK

            Concentration of Credit Risk

            Foreign Operations: All of the Company's operations and operational
            assets are located in China. The Company may be adversely affected
            by possible political or economic instability in China. The effect
            of these factors cannot be accurately predicted.

            Cash: The Company's cash accounts are held in foreign bank accounts
            which are not insured by the FDIC. At December 31, 2008 and 2007 the
            Company's cash balances, net of outstanding checks, in its foreign
            bank accounts was $68,956 and $301,203, respectively.

            Major Customers

            For the year ended December 31, 2008, the Company had four major
            customers that generated sales totaling $25,199,945 or 83% of its
            total revenues. At December 31, 2008, the receivable balance from
            these customers was $1,306,408 or 88% of the Company's accounts
            receivable. All of the Company's revenue is derived from sources
            within the People's Republic of China. The sales to major customers
            were as follows:

                                                            2008
                                                            ----

            Customers
            A                                                23%
            B                                                21%
            C                                                21%
            D                                                18%

            Major Suppliers

            For the year ended December 31, 2008, the Company had one major
            supplier of raw jade, XiKai Mining, from which the Company purchased
            100% of its raw jade. The total purchase price of raw jade purchased
            in that year from this supplier was $2,386,982. At December 31,
            2008, the accounts payable due to this vendor was $0. If there were
            any interruption of this source of supply, the Company would have to
            cease operations until an alternative source of supply could be
            found.


                                      -54-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 14 -   INCOME TAX

            The Company has adopted Financial Accounting Standards No. 109,
            which requires the recognition of deferred tax liabilities and
            assets for the expected future tax consequences of events that have
            been included in the financial statements or tax returns. Under this
            method, deferred tax liabilities and assets are determined based on
            the difference between financial statements and tax bases of assets
            and liabilities using enacted tax rates in effect for the year in
            which the differences are expected to reverse. Temporary differences
            between taxable income reported for financial reporting purposes and
            income tax purposes are insignificant.

            Components of deferred tax assets as of December 31, 2008 and 2007
            respectively are as follows:

                                                          As of December 31
                                                         2008          2007
                                                      ----------    ----------
            Net operating loss carry forward          $       --    $      --
            Valuation allowance                               --           --
                                                                           --
                                                                           --
            Net deferred tax asset                    $       --    $      --
                                                      ==========    =========

            The components of current income tax expense as of December 31, 2008
            and 2007 respectively are as follows:

                                                          As of December 31
                                                        2008          2007
                                                     ----------    ----------
            Domestic - Current                       $       --    $       --
            Foreign - Current                         6,693,841     2,597,066
            Domestic - Deferred                              --            --
            Foreign - Deferred                               --            --
                                                     ----------    ----------
             Income tax expense                      $6,693,841    $2,597,066
                                                     ==========    ==========

            Because all of the Company's operations are conducted by a
            subsidiary in China, the income tax provision is not applicable to
            U.S. taxation.


                                      -55-
<PAGE>

                      JADE ART GROUP INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2008

NOTE 14 -   INCOME TAX (Continued)

            The following is a reconciliation of the provision for income taxes
            at the prevailing PRC income tax rate to the income taxes reflected
            in the statements of operations:

                                      Twelve months ended    Twelve months ended
                                          December 31            December 31
                                              2008                  2007
                                      -------------------    -------------------

            Tax expense at
            statutory PRC rate                         25%                  33%

            Effect of
            non-deductible items                        5%                  26%

                                      -------------------    -------------------
            Tax expense at actual
            rate                                       30%                  59%
                                      -------------------    -------------------

            Due to uncertainty of the deductibility of the $1,500,000 of
            consulting and professional expense incurred during the year ending
            December 31, 2007 and other G&A expenses incurred during the years
            ending December 31, 2008 and 2007, the tax provision did not assume
            that this expense would be deductible. The total income tax expense
            was $6,693,841 and $2,597,066, for the years ended December 31, 2008
            and 2007, respectively.

NOTE 15 -   SUBSEQUENT EVENT

            Subsequent to December 31, 2008, the Company paid dividends in the
            amount of $1,361,777 on March 13, 2009. The Company also amended the
            dividend payable agreement on March 13, 2009, to extend the payment
            date to March 31, 2010. The amendment included the inclusion of an
            interest rate of 4% to be calculated on the remaining balance of
            $903,074.


                                      -56-
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Jade Art Group, Inc. (formerly Vella Productions, Inc.)
Yujiang County, Jiangxi Province, P.R. of China 335200

We have audited the accompanying consolidated balance sheets of Jade Art Group,
Inc. (formerly Vella Productions, Inc.) as of December 31, 2008 and 2007, and
the related consolidated statements of operations and comprehensive income,
stockholders' equity (deficit) and cash flows for the year ended December 31,
2008 and for the five months ended December 31, 2007. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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, audits 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 Jade Art Group, Inc. (formerly
Vella Productions, Inc.) as of December 31, 2008 and 2007, and the results of
their operations and their cash flows for the year ended December 31, 2008 and
the five months ended December 31, 2007 in conformity with accounting principles
generally accepted in the United States of America.

Chisholm Bierwolf, Nilson & Morrill LLC
Bountiful, Utah
May 15, 2009


                                      -57-
<PAGE>

Item 9. Changes and Disagreements with Accountants on Accounting and Financial
Disclosure

None.

Item 9A(T). Controls and Procedures

Disclosure Controls and Procedures

      We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our reports under the Securities
Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission (the "SEC"), and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 15d-15(e) under the Exchange Act. In designing
and evaluating the disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

      At the end of the period covered by this Annual Report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based upon the foregoing, our Chief Executive Officer and Chief
Financial Officer concluded that, as of December 31, 2008, the disclosure
controls and procedures of the Company were effective to ensure that the
information required to be disclosed in our Exchange Act reports was recorded,
processed, summarized and reported on a timely basis.

      The Company's independent registered public accounting firm advised the
Company's Board of Directors of the following material weakness in its financial
reporting: lack of sufficient resources to identify and properly address
technical SEC reporting issues.

Internal Control Over Financial Reporting

Management's Annual Report on Internal Control Over Financial Reporting

      Management's Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting. The Company's internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles in the United States of America. The Company's internal
control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately


                                      -58-
<PAGE>

and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles in the United States of America, and
that receipts and expenditures of the Company are being made only in accordance
with authorizations of management and directors of the Company; and (iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company's assets that could
have a material effect on the financial statements.

      Any system of internal control, no matter how well designed, has inherent
limitations, including the possibility that a control can be circumvented or
overridden and misstatements due to error or fraud may occur and not be detected
in a timely manner. Also, because of changes in conditions, internal control
effectiveness may vary over time. Accordingly, even an effective system of
internal control will provide only reasonable assurance with respect to
financial statement preparation.

      Management assessed the effectiveness of the Company's internal control
over financial reporting as of December 31, 2008. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in "Internal Control-Integrated
Framework." Based on management's assessment using the COSO criteria, management
has concluded that the Company's internal control over financial reporting was
effective as of December 31, 2008.

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

Changes in Internal Control Over Financial Reporting

      There were no changes in our internal control over financial reporting
that occurred during the quarter ended December 31, 2008, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

Item 9B. Other Information.

None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

      The following table sets forth information with respect to the Company's
executive officers' and Directors' names, ages, and positions and terms.
Executive officers serve until the annual meeting of the Board of Directors and
until his successor shall have been duly elected and qualified, subject to
earlier termination by his death, resignation or removal.


                                      -59-
<PAGE>

     -----------------------------------------------------------------------
     Executive Officers and Directors        Age   Position
     -----------------------------------------------------------------------
     Huacai Song                             44    Chief Executive Officer &
                                                   Director
     -----------------------------------------------------------------------
     Chenqing Luo                            36    Chief Financial Officer
     -----------------------------------------------------------------------
     Richard Khaleel                         58    Independent Director
     -----------------------------------------------------------------------

Biographies

Hua-Cai Song, Chief Executive Officer and Director

      Mr. Song has been Chief Executive Officer and a Director of the Company
since October 2007. Hua-Cai Song, age 44, has over 20 years of experience in
international trade and the wood carving industry, including the production,
manufacture and marketing of wood carving products. For more than 10 years,
Hua-Cai Song had been deputy manager of Jiangxi XiDa Wood-carving Company
Limited ("JXD"), which is the operating subsidiary of Guoxi Holding Limited
("GHL"), in charge of development, sales and marketing of those wood carving
products. GHL was acquired by JADA under that merger transaction consummated on
October 2, 2007 (the "Merger Transaction"), which Merger Transaction was
previously reported on Form 8-K filed with the Securities and Exchange
Commission on October 3, 2007. During his years working with Jiangxi XiDa,
Hua-Cai Song successfully expanded the market and distribution system for Buddha
Shrines in Japan.

Chen-Qing Luo, Chief Financial Officer.

      Mr. Luo has been Chief Financial Officer of the Company since October
2007. Chen-Qing Luo graduated from Jiangxi College of Finance and Economics with
a degree in Foreign Accounting. He joined JXD as Chief Financial Officer in
1995. He has several years of experience in financial management and strategic
capital allocation.

Richard E. Khaleel, Director.

      Mr. Khaleel has been a director of the Company since April 2008. Mr.
Khaleel's career includes extensive experience as a chief marketing executive.
Mr. Khaleel has been an Executive Vice President of Nielsen IAG, responsible for
strategy development and growth of the financial industry sector since 2008.
From 2004-2007, Richard served as Executive Vice President & Chief Marketing
Officer for The Bank of New York, where he helped create and implement programs
that significantly grew its institutional asset servicing, wealth management,
and asset management businesses. From 1996-2004, Mr. Khaleel was Chief Creative
Marketing Officer at Alliance Bernstein LP, where he led development and
execution of marketing programs as the firm grew from $150 billion to $500
billion in assets under management. Prior to joining Alliance in 1996, he was
vice president of marketing at CNBC, where he successfully re- launched the
channel as the market leader for business news and information. In addition, he
served as President of the software division of Scholastic, Inc. and has held
senior positions at leading advertising agencies managing global financial
services and consumer products clients. He received a B.A. from Princeton and an
M.B.A. in Finance from New York University


                                      -60-
<PAGE>

Board of Directors

      All of our Directors serve until the next annual meeting of shareholders
and until their successors are elected by the holders of our common stock, or
until their earlier death, resignation or removal. Our Bylaws set the authorized
number of Directors at not less than one or more than nine. The number of
Directors may be fixed and changed from time to time by ordinary resolution of
the shareholders of the Company. Currently, our Board of Directors consists of
two members.

      The Board presently consists of Mr. Song, the Chief Executive Officer, and
Mr. Khaleel. The Board has determined that Richard Khaleel is "independent"
within the meaning of the applicable listing standards of the NYSE Alternext.
See more detailed discussion on Director Independence in Item 13, below.

Committees of the Board

      Our Bylaws authorize the Board of Directors to designate committees, as
they deem desirable, each consisting of one or more of the Directors, with such
powers and authority (to the extent permitted by law, the certificate of
incorporation and the Bylaws) as may be provided in such resolution.

      Our Board of Directors has not established any audit, nomination or
compensation, or other committees to date. The entire Board performs the
equivalent functions that such committees would perform.

Compensation of Directors

      Our Bylaws provide that the compensation of Directors may be determined by
the Board of Directors, or if the Board of Directors decide, by the
shareholders. Members of the Board of Directors who are members of management
presently do not receive compensation for their service as a member of the
Board.

      Effective April 2008, our non-employee director, Richard Khaleel entered
into an agreement with us to serve as our non-executive independent director
commencing in 2008, until he is removed, resigns, or is not reelected in
accordance with our Bylaws ("Khaleel Director Agreement"). As a director, Mr.
Khaleel is entitled to receive cash compensation of $40,000 per year payable
monthly. In addition, Mr. Khaleel may participate in any of our medical, dental
and other programs as are available to non-employee members of our Board of
Directors. (The Company currently does not maintain any such programs.) Further,
the Company will reimburse Mr. Khaleel for any reasonable expenses incurred in
furtherance of his performance of his duties and responsibilities. The Company
has not yet paid to Mr. Khaleel the full amount of the director's fees payable
to him for his services in 2008. At December 31, 2008, the Company owed Mr.
Khaleel $23,333.31.

      On April 15, 2008, we granted to Mr. Khaleel nonqualified stock options to
purchase up to 100,000 shares (33,333 post reverse split) of the Company's
common stock (the "Option Shares"), exercisable at a price of $1.15 per share
($3.45 per share post reverse split) (a price equal to the closing price per
share of the Company's common stock on April 15, 2008, as reported by the


                                      -61-
<PAGE>

Over-the-Counter Bulletin Board). Options to purchase one third of the Option
Shares were exercisable immediately; options to purchase an additional one third
of the Option Shares were exercisable on April 15, 2009, and options to purchase
the remaining one third of the Option Shares may be exercised commencing April
15, 2010. All outstanding and unexercised options shall expire on the date that
Mr. Khaleel is no longer serving as a member of the Board of Directors of the
Company or otherwise engaged by the Company to provide services to the Company.
Subject to the foregoing, the options may be exercised until April 15, 2018, at
which time any such options that have not been exercised shall automatically
expire.

Section 16(a) Beneficial Ownership Reporting Compliance

      Due to the fact that the Company does not have any Section 12(b) or
Section 12(g) registered securities, our Directors, executive officers and
beneficial owners of more than 10% of our common stock are not subject to
Section 16(a) of the Securities Exchange Act of 1934 requirement as to filing
with the SEC reports of their holdings of, and transactions in, our common
stock. However, some of our Directors, executive officers or beneficial owners
of more than 10% of our common stock have voluntarily filed such reports in the
past.

Family Relationships

      There are no family relationships among our Directors or officers.

Code of Ethics

      We have adopted a code of ethics that applies to all of our executive
officers, Directors and employees. Code of ethics codifies the business and
ethical principles that govern all aspects of our business. This document will
be made available in print, free of charge, to any shareholder requesting a copy
in writing from our principal executive office at #35, Baita Zhong Road, Yujiang
County, Jiangxi Province, P.R. of China.

Item 11. Executive Compensation.

Compensation Discussion and Analysis

      Executive Compensation Philosophy

      The Company has its main operating subsidiary in China and almost all of
its employees are Chinese who are located and working in China. Based on the
economic circumstances in China, our compensation program is designed to
attract, retain and motivate highly qualified executives and drive sustainable
growth. We compensate our executives named in the summary compensation table,
which we refer to as "named executive officers or NEOs," through a competitive
base salary and cash bonuses. This compensation program is designed to be
competitive with comparable companies and to align executive compensation with
the long-term interests of our owner. To the extent determined to be
appropriate, the Company also considers general economic conditions, the
Company's financial performance, and the individual's performance in
establishing the compensation opportunities for the named executive officers. As
discussed in Item 10, above, we have not established any compensation committee
to date and, accordingly, our full Board performs the functions of a
compensation committee.


                                      -62-
<PAGE>

Elements of Our Compensation

      The compensation framework for our named executive officers consists of
the base salary, annual cash bonuses, and medical, retirement and unemployment
benefits (as such will be addressed in more detail under the caption "Employee
Benefits," below. In addition to the key element of compensation, our
compensation framework includes limited fringe benefits (such as reimbursement
of cellular phone bills), perquisites, and other benefits, which are not a
significant or necessary element of our executive's compensation. We do not have
any long-term incentive compensation mechanisms because our key employees are
engaging in sales and they tend to change jobs frequently and we believe that
the use of non-cash, equity incentive compensation opportunities will not be
effective or appropriate to attract, motivate and retain such individuals. We do
not have any long-term incentive compensation mechanisms for our NEOs because
each of our NEOs has already owned substantial equity interests in the Company.

Base Salaries

      Our named executive officers receive a majority of their overall cash
compensation as base salary, which is usually determined in the beginning of
each calendar year. Generally, base salaries have not been based upon specific
measures of corporate performance, but are determined by our Board, based upon
their determination of each employee's individual performance, position and
responsibilities, and contributions to both our financial performance and
ethical culture. Base salaries are also determined based on external factors,
such as cost of living in the areas in which our NEOs reside and current market
conditions. Our NEOs' base salaries are at least comparable with those of whom
hold similar positions in the similar industries within the region where our
NEOs reside.

Annual Bonuses

      Annual cash bonuses to our named executive officers, which are usually
determined at the end of each calendar year, are discretionary and intended to
reward company-wide performance and, to a lesser extent, individual performance
during the year.

Employee Benefits

      As required under certain relevant Chinese laws, the Company participates
in the following employee benefits plans: (i) medical insurance plan; (ii)
unemployment insurance plan, and (iii) state pension plan, all of which are
organized by Chinese municipal and provincial governments (collectively, the
"General Employee Benefits"). All of the Company's employees are entitled to the
General Employee Benefits.

Conclusion

      The foregoing discussion describes the compensation objectives and
policies which were utilized with respect to our named executive officers during
2008 and our intended compensation framework for 2009. In the future, as our
Board continues to review each element of the executive compensation program
with respect to our named executive officers, the objectives of our executive
compensation program, as well as the methods which our Board utilizes to
determine both the types and amounts of compensation to award to our named
executive officers, may change.


                                      -63-
<PAGE>

Summary Compensation Table

      The following table sets forth information with respect to the amounts
awarded to, earned by, or paid to, our principal executive officer for services
provided in all capacities to us and our subsidiaries for the fiscal year ended
December 31, 2008.


                                      -64-
<PAGE>

Summary Compensation Table

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                               Change in
                                                                                              pension value
                                                                               Non-equity   and nonqualified
                                                                               incentive        deferred
Name and                                              Stock       Option         plan         compensation     All other
principal                       Salary     Bonus      awards      awards      compensation      earnings      compensation    Total
position               Year      ($)        ($)         ($)        ($)            ($)             ($)               ($)        ($)
(a)                    (b)       (c)        (d)         (e)        (f)            (g)             (h)               (i)        (j)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>     <C>        <C>           <C>        <C>            <C>              <C>              <C>     <C>
Huacai Song
Chief Executive        2008    $ 4,411    $ 8,088       --         --             --               --               --      $12,499
Officer                2007    $ 4,411    $ 5,147       --         --             --               --               --      $ 9,558
-----------------------------------------------------------------------------------------------------------------------------------
Chenqing Luo
Chief Financial        2008    $ 3,688    $ 6,617       --         --             --               --               --      $10,305
Officer                2007    $ 3,688    $ 4,411       --         --             --               --               --      $ 8,099
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

      The following table discloses the cash, equity awards and other
compensation earned, paid or awarded, as the case may be, to each of the
Company's directors during the fiscal year ended December 31, 2008.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                            Director Compensation
----------------------------------------------------------------------------------------------------------------------
                                                                               Non-qualified
               Fees earned                                   Non-Equity        deferred
               or paid in                                    incentive plan    compensation     All other
Name           cash           Stock Awards    Option Awards  compensation      earnings         Compensation   Total
----------------------------------------------------------------------------------------------------------------------
<S>            <C>                            <C>                                                              <C>
Richard
Khaleel        $30,000(1)                     $65,478                                                          $95,478
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Mr. Khaleel became a director in April 2008. The above amount represents a
prorated portion of his annual director's fees amounting to $40,000 per fiscal
year.

      Compensation to Mr. Khaleel is set forth in more detail in Item 10, above,
under the caption "Compensation of Directors."

Board Compensation Report

      The Board has reviewed and discussed the Compensation Discussion and
Analysis with management and, based on such review and discussions, and the
Board determines to include the Compensation Discussion and Analysis in this
Annual Report on Form 10-K.

      Huacai Song
      Richard Khaleel


                                      -65-
<PAGE>

Employment Agreements

      We have not entered into any written employment or consulting agreement
with any of our executive officers, and the Company is not contractually
obligated to pay severance or other enhanced benefits to executive officers upon
termination of their employment (except that the Company will be obligated to
make certain severance payment to the named executives pursuant to the relevant
Chinese labor laws and regulations). Our named executives serve at the will of
our Board. Except for the General Employee Benefits, our executive officers are
not presently entitled to any company-sponsored benefits plans.

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

      The following table sets forth certain information as of May 1, 2009
concerning the beneficial ownership of our common stock by (i) each person who,
to our knowledge, beneficially owns more than 5% of our common stock; (ii) each
of our Directors and executive officers; and (iii) all of our Directors and
executive officers as a group. As of May 1, 2009, we had 79,980,000 outstanding
shares of common stock. Under SEC rules, a person is deemed to be the beneficial
owner of securities that he may acquire within 60 days upon the exercise of
warrants or options, or conversion or exchange of other of our securities. The
percent of common stock owned by each beneficial owner is determined assuming
the acquisition by him (but not any other beneficial owner) of all shares he may
acquire within 60 days upon exercise, conversion of exchange of all derivative
securities.

--------------------------------------------------------------------------------
Name of Beneficial Owner/Address                    Number of Shares     Percent
                                                    Beneficially Owned
--------------------------------------------------------------------------------
Chenqing Luo                                                 2,756,000     3.45%
--------------------------------------------------------------------------------
#47 He ping Street Dengbu Town
--------------------------------------------------------------------------------
Yujiang County JiangXi Province
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Richard Khaleel                                              22,222(1)     0.03%
13515 38th. Avenue,
--------------------------------------------------------------------------------
Flushing, NY 11354
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Fu Xian Mao                                                  5,512,000     6.89%
--------------------------------------------------------------------------------
No 888 Xin Jian Alley
--------------------------------------------------------------------------------
Zhan Qian Nan Rd. Yu jiang District
--------------------------------------------------------------------------------
Ying Tang City, JiangXi Province, China
--------------------------------------------------------------------------------


                                      -66-
<PAGE>

--------------------------------------------------------------------------------
ShenZhen Huayin Guaranty & Investment Company Limi           4,340,700     5.43%
--------------------------------------------------------------------------------
15/F Anlian Bldg
--------------------------------------------------------------------------------
No. 4018 Jintian Road
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Huacai Song                                                 20,670,000    25.84%
--------------------------------------------------------------------------------
#47 He ping Street Dengbu Town
--------------------------------------------------------------------------------
Yujiang County JiangXi Province
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Yong ming Zhan                                               9,094,800    11.37%
--------------------------------------------------------------------------------
No 35 Diao Ke Alley, Xi Qing Rd
--------------------------------------------------------------------------------
Yu Jiang District Ying Tan City, Jiangxi Province
--------------------------------------------------------------------------------
China
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
All Directors and executive officers as a group          23,448,222(1)   29.317%
--------------------------------------------------------------------------------

(1) Includes 22,222 shares issuable upon exercise of stock options.

Changes in Control

      We know of no plans or arrangements that will result in a change of
control at our company.

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

      In the last fiscal year, none of our directors, officers or principal
shareholders, nor any family member of the foregoing, nor, to the best of our
information and belief, any of our former Directors, senior officers or
principal shareholders, nor any family member of such former Directors, officers
or principal shareholders, has or had any material interest, direct or indirect,
in any transaction, or in any proposed transaction which has materially affected
or will materially affect us.

Director Independence

      The Board of Directors annually determines the independence of Directors.
No director is considered independent unless the Board has determined that he or
she has no material relationship with the Company, either directly or as a
partner, shareholder, or officer of an organization that has a material
relationship with the Company or otherwise. Material relationships can include
commercial, banking, consulting, legal, accounting, charitable, and familial
relationships, among others.

      Independent Directors are Directors who, in the view of the Board of
Directors, are free of any relationship that would interfere with the exercise
of independent judgment. Under NYSE Alternext U.S., LLC (formerly, the American
Stock Exchange) rules, the following persons are not considered independent:


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<PAGE>

      (a)   a director who is or was employed by the Company or any of its
            affiliates for the current year or any of the past three years;

      (b)   a director who accepted or who has an immediate family member who
            accepted any compensation from the Company or any of its affiliates
            in excess of $120,000 during any period of twelve consecutive months
            within the three years preceding the determination of independence
            (other than certain specified types of compensation, including,
            e.g., compensation for Board or Committee service, benefits under a
            tax-qualified retirement plan, or non-discretionary compensation);

      (c)   a director who is a member of the immediate family of an individual
            who is, or has been in any of the past three years, employed by the
            Company as an executive officer;

      (d)   a director who is, or has an immediate family member who is, a
            partner in, or a controlling shareholder or an executive officer of,
            any organization to which the Company made, or from which the
            Company received payments (other than those arising solely from
            investments in the Company's securities) that exceed 5% of the
            organization's consolidated gross revenues for that year, or
            $200,000, whichever is more, in any of the past three years;

      (e)   a director who is, or has an immediate family member who is employed
            as an executive of another entity where at any time during the most
            recent three fiscal years, any of the Company's executive officers
            serve on that other entity's compensation committee; and

      (f)   a director who is, or has an immediate family member who is, a
            current partner of the Company's outside auditor, or was a partner
            or employee of the Company's outside auditor who worked on the
            Company's audit at any time during any of the past three years.

Immediate family includes a person's spouse, parents, children, sibling,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such person's home.

      The Board has determined that Richard Khaleel is "independent" within the
meaning of the applicable listing standards of the NYSE Alternext.

Item 14. Principal Accounting Fees and Services.

      Our Board of Directors pre-approved the engagement of Chisholm, Bierwolf,
Nilson & Morrill LLC for all audit and permissible non-audit services. The Board
annually reviews the audit and permissible non-audit services performed by our
principal accounting firm and reviews and approves the fees charged by our
principal accounting firm.


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<PAGE>

      During fiscal year 2008, the aggregate fees which we paid to or were
billed by Chisholm, Bierwolf, Nilson & Morrill LLC for professional services,
which only included audit fees, were as follows:

                                 Fiscal Year Ended December 31,
                                  2008                   2007
                                  ----                   ----
Audit Fees (1)                    $40,000                $29,000 (*)
Audit-Related Fees (2)            $-0-                   $-0-
Tax Fees (3)                      $-0-                   $-0-
All Other Fees                    $-0-                   $-0-

(*)The audit fees of $29,000 are for services rendered from August 2008 to
December 2008.

(1) Fees for services to perform an audit or review in accordance with generally
accepted auditing standards and services that generally only our independent
registered public accounting firm can reasonably provide, such as the audit of
our consolidated financial statements, the review of the financial statements
included in our quarterly reports on Form 10-Q, and for services that are
normally provided by independent registered public accounting firms in
connection with statutory and regulatory engagements.

(2) Fees, if any, for assurance and related services that are traditionally
performed by our independent registered public accounting firm, such as audit
attest services not required by statute or regulation, and consultation
concerning financial accounting and reporting standards.

(3) Fees for tax compliance. Tax compliance generally involves preparation of
original and amended tax returns, claims for refunds and tax payment planning
services.


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<PAGE>

                                     PART IV

Item 15. Exhibits

      (a) (1) We have filed the following Financial Statements as part of this
Annual Report on Form 10-K (see Item 8):

            Reports of Independent Registered Public Accounting Firm

            Consolidated Balance Sheets

            Consolidated Statements of Operations and Comprehensive Income

            Consolidated Statements of Stockholders' Equity

            Consolidated Statements of Cash Flows

            Notes to Consolidated Financial Statements

      (a)(2) Financial Statement Schedules

            All schedules have been omitted because they are not required, not
applicable, or the required information is otherwise included.

      (a)(3) The exhibits listed under Item 15(b) are filed or incorporated by
reference herein.

      (b) The following is a list of exhibits filed as part of this Annual
Report on Form 10-K. Where indicated by footnote, exhibits, which have been
previously filed, are incorporated by reference. For exhibits incorporated by
reference, the location of the exhibit in the previous filing is indicated in
parenthesis.

Exhibit Nos.      Description of Exhibit
------------      ----------------------

2.1               Agreement and Plan of Merger, dated October 1, 2007, by and
                  between the Company, VLLA Merger Sub, Inc., Guoxi Holding
                  Limited and the shareholders of Guoxi Holding Limited.
                  (incorporated herein by reference to Exhibit 10.1 of the
                  Company's current report on Form 8-K, filed October 3, 2007).

3.1               Articles of Incorporation (incorporated herein by reference to
                  Exhibit 3.1 to the Company's registration statement on Form
                  SB-2, filed September 6, 2006).

3.1.1             Amended and Revised Articles of Incorporation (incorporated
                  herein by reference to Exhibit 3.1.1 to the Company's Amended
                  Current Report on Form 8-K/A, filed November 9, 2007).

3.2               By-Laws (incorporated herein by reference to Exhibit 3.2 of
                  the Company's registration statement on Form SB-2, filed
                  September 6, 2006).

10.1              Affiliate Stock Purchase Agreement dated as of August 16, 2007
                  by and between Olga Lenova and Max Time Enterprises, Ltd.
                  (incorporated herein by reference to Exhibit 10.1 to the
                  Company's Current Report on Form 8-K, filed August 23, 2007).

10.2              Amendment to Consulting Agreement, dated as of December 6,
                  2007, between Registrant and Jin-Jun Xiong (incorporated
                  herein by reference to Exhibit 10.1 to the Company's Current
                  Report on Form S-8, filed December 12, 2007).

10.3              Amendment to Consulting Agreement, dated as of December 6,
                  2007, between Registrant and Yun Ding (incorporated herein by
                  reference to Exhibit 10.2 to the Company's Current Report on
                  Form S-8, filed December 12, 2007).

10.4              Amendment to Consulting Agreement, dated as of December 6,
                  2007, between Registrant and Jiao-Mei Wu (incorporated herein
                  by reference to Exhibit 10.3 to the Company's Current Report
                  on Form S-8, filed December 12, 2007).

10.5              Amendment to Consulting Agreement, dated as of December 6,
                  2007, between Registrant and Shuang-Hua Xu (incorporated
                  herein by reference to Exhibit 10.4 to the Company's Current
                  Report on Form S-8, filed December 12, 2007).


                                      -70-
<PAGE>

10.6              Exclusive Distribution Right Agreement, dated January 17,
                  2008, between the Company and Wulateqianqi XiKai Mining Co.,
                  Ltd. (incorporated herein by reference to Exhibit 10.1 to the
                  Company's Current Report on Form 8-K, filed January 22, 2008).

10.7              Form of sales agreement (Contract No. 2008 ST 0001), dated as
                  of February 22, 2008. (incorporated herein by reference to
                  Exhibit 10.1 to the Company's Current Report on Form 8-K,
                  filed February 25, 2008).

10.8              Form of sales agreement (Contract No. 2008 ST 0002), dated as
                  of February 22, 2008. (incorporated herein by reference to
                  Exhibit 10.2 to the Company's Current Report on Form 8-K,
                  filed February 25, 2008).

10.9              Form of sales agreement (Contract No. 2008 ST 0004), dated as
                  of February 27, 2008. (incorporated herein by reference to
                  Exhibit 10.1 to the Company's Current Report on Form 8-K,
                  filed February 27, 2008).

10.10             Form of sales agreement (Contract No. 2008 ST 0005), dated as
                  of February 29, 2008. (incorporated herein by reference to
                  Exhibit 10.1 to the Company's Current Report on Form 8-K,
                  filed March 3, 2008).

10.11             Term Note, dated February 20, 2008, from the Company to
                  Wulatequianqi XiKai Mining Co., Ltd. (incorporated herein by
                  reference to Exhibit 10.1 to the Company's Current Report on
                  Form 8-K, filed March 10, 2008).

10.12             Agreement between Richard E. Khaleel and Jade Art Group Inc.,
                  dated April 15, 2008 (incorporated herein by reference to
                  Exhibit 10.1 to the Company's Current Report on Form 8-K,
                  filed April 21, 2008).

14.1              Code of Ethics

16.1              Letter of Moore & Associates Chartered to the Securities and
                  Exchange Commission pursuant to the requirements of Item
                  304(a)(3) of Regulation S-B. (incorporated herein by reference
                  to Exhibit 16.1 to the Company's Current Report on Form 8-K,
                  filed November 16, 2007).

21                Subsidiaries of the Registrant

23.1              Consent of Chisholm Bierwolf, Nilson & Morrill, LLC

31.1              Certification of Chief Executive Officer required by Rule
                  13a-14(a) under the Exchange Act.

31.2              Certification of Chief Financial Officer required by Rule
                  13a-14(a) under the Exchange Act.

32.1              Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of
                  Sarbanes-Oxley Act of 2002.

32.2              Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of
                  Sarbanes-Oxley Act of 2002.


                                      -71-
<PAGE>

      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, on May 18, 2009.

JADE ART GROUP INC.
(Registrant)

Signatures  Titles


/s/ Hua-Cai Song
--------------------------------------------------
Hua-Cai Song  Chief Executive Officer and Director


/s/ Chen-Qing Luo
--------------------------------------------------
Chen-Qing Luo  Chief Financial Officer


/s/ Richard Khaleel
--------------------------------------------------
Richard Khaleel  Director


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