SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

|X|     Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
        Act of 1934 for the fiscal year ended July 31, 2007

|_|     Transition Report under Section 13 of 15(d) of the Securities Exchange
        Act of 1934

            For the transition period from ___________ to __________

                       Commission file number: 333-137134

                             Vella Productions Inc.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

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

999 3rd Avenue, Suite 3800, Seattle, WA                      98104
----------------------------------------                  ----------
(Address of principal executive offices)                  (Zip code)

         Issuer's telephone number, including area code: (206) 224-3725

       Securities registered under Section 12(b) of the Exchange Act: None

       Securities registered under Section 12(g) of the Exchange Act: None

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. |_|

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this form 10-KSB.  |X| (Not applicable)

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

      The issuer's Net Loss for its most recent fiscal year was $43,444.

      As of November 9, 2007, the aggregate market value of the issuer's common
equity held by non-affiliates was $127,025,000, based on the closing price of
$2.50 per share for its common stock based upon the last trade on the OTC
Bulletin Board on November 5, 2007. As of November 9, 2007, 74,980,000 shares of
the issuer's common stock were outstanding.

                    DOCUMENTS INCORPORATED BY REFERENCE: None

   Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<PAGE>

                                     PART I

Cautionary Notice Regarding Forward Looking Statements

      Vella Productions Inc. (referred to herein as "we" or the "Company")
desires to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. This report contains a number of
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 annual 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 particular, the
words "believe," "expect," "intend," " anticipate," "estimate," "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. These
forward-looking statements are subject to certain risks and uncertainties,
including those discussed below. Our actual results, performance or achievements
could differ materially from historical results as well as those expressed in,
anticipated or implied by these forward-looking statements. We do not undertake
any obligation to revise these forward-looking statements to reflect any future
events or circumstances.

      Readers should not place undue reliance on these 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 (including those described below) and apply
only as of the date of this report. 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, but are not limited to, those discussed in "--Risk
Factors" below as well as those discussed elsewhere in this report, and the
risks discussed in our press releases and other communications to shareholders
issued by us from time to time, which attempt to advise interested parties of
the risks and factors that may affect our business. We undertake no obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.

Item 1.  Description of Business.

Business Development

      Vella Productions, Inc. (referred to herein as "we" or the "Company") was
incorporated in the State of Nevada on September 30, 2005.

      Prior to the Merger Transaction described below, our business operations
were limited to an exclusive distribution and marketing agreement with Spike
Tea, Inc. with respect to its development of a proprietary line of six blends of
tea and caffeine-free hot drinks for distribution to retail and foodservice
sectors. We were a start-up stage corporation with limited operations and no
revenues from our business operations. For the period ended July 31, 2007 we
generated no revenue.

      On October 2, 2007, we consummated a merger pursuant to that agreement and
plan of merger dated October 1, 2007 among us, our wholly-owned subsidiary, VLLA
Merger Sub, Inc., and each of Guoxi Holding Limited ("GHL") and its stockholders
(the "Merger Transaction"). Under the merger agreement, in exchange for
surrendering their shares in GHL, the GHL stockholders received pro ratably an
aggregate of 68,900,000 newly-issued shares of our common stock and an aggregate
sum of $14,334,500, in the form of promissory notes payable on or before the
first year anniversary of the merger transaction. GHL is a holding company and
owns 100% of Jiangxi XiDa (formerly called Jiangxi Xi Cheong Lacquer, Inc.), its
Chinese operating company.


                                       2
<PAGE>

      The Merger Transaction was disclosed by us in our Current Report on Form
8-K previously filed with the Securities and Exchange Commission (the
"Commission") on October 3, 2007, which disclosure included the historical
financial statements of Jiangxi XiDa for its past two fiscal years ended
December 31, 2006 and 2005, the six months ended June 30, 2007, and pro forma
financial information giving effect to the merger, as if completed as of January
1, 2007.

      As a result of the Merger Transaction, GHL, as the surviving entity,
became a wholly-owned subsidiary of our company, which, in turn, made us the
indirect owner of GHL's operating company subsidiary, Jiangxi XiDa. Acting
through this operating subsidiary, our efforts will focus on the wood carving
business.

      On November 8, 2007, we filed Amended and Restated Articles of
Incorporation with the Nevada Secretary of State changing our name from Vella
Productions Inc. to Jade Art Group Inc. to reflect our new business operations
following the Merger Transaction.

Our Business Operations

      Guoxi Holding Limited ("GHL") is a holding company founded on July 28,
2006 under the laws of the British Virgin Islands. GHL owns all of the issued
and outstanding stock and ownership of Jiangxi XiDa, which began in 1973 as a
small family-operated hand-made wood carving business and currently provides
specialized products and services to consumers in a diverse set of industries in
countries throughout the world. The core business of Jiangxi XiDa is the wood
carving business and Jiangxi XiDa manufactures wood products, including both
traditional hand-carved and machine-carved pieces. Specializing in mantels,
panels, furniture, ornamental bands, religious decorations and architectural
accents, Jiangxi XiDa has been nationally recognized for its beautifully crafted
products. To further develop its wood carving business and compete in the
Japanese market, Jiangxi XiDa began cooperating with wood carving companies
based in Japan with the intent to develop a world-class comprehensive wood
carving production line.

      Jiangxi XiDa is most well-known for its manufacture of small, intricately
designed Buddhist Shrines. In general, shrines house a particular relic or cult
image, which is the object of worship or veneration. Most commonly, shrines are
constructed out of wood and can even be inlaid with precious metals. Our
Company's Buddhist Shrines are desktop sized works of art that contain a
miniature Buddha figure as its focal point. These Buddha Shrines can be found in
temples, homes and offices throughout China and many other East-Asian countries.

      Jiangxi XiDa's main competitors are: (1) Dongyang San Sheng Wood Carving
Furniture Co., Ltd, (2) Dongyang Qin Feng Wood Carving Furniture Co., Ltd, (3)
Shanghai Jin Chang Wood Carving Furniture Co., Ltd, (4) Shanghai San Chun Song
Carving Co., Ltd, and (5) Dongyang Xin Long Wang Da Carving Co., Ltd. Jiangxi
XiDa's main suppliers are Anfu Fei Xiang Art Craft Company Limited, Wenzhou Rui
An Gold Leaf Art Craft Company Limited, Zixi Guang Mao Art Craft and Carving
Company Limited, Dean Rui Xiang Wood Carving Company Limited, and Pingxiang Wang
Da Carving Company Limited. Jiangxi XiDa's main customers are Wenzhou Yong Cheng
Art Craft Company Limited, Dongguan Da Wei Art Crafts Company Limited, Fujian
Xia Men Ji Fu Art Crafts Trading Company Limited, Shanghai Wei An Art Crafts
Import and Export Company Limited, and Japan Shari Company Limited.

Employees

      Hui Ping Cheng is a director and the Chief Executive Officer, President
and Chief Financial Officer of our Company. There are currently about 520
full-time employees, on a consolidated basis, at our Company, that are
responsible for the entire manufacturing process.


                                       3
<PAGE>

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

Market Competition Risk

      In the wood carving industry, we face different market dynamics and
competition from other countries. Our international expansion plans subject us
to risks inherent in doing business internationally. Our long-term business
strategy relies on the expansion of our international sales outside China by
targeting markets, such as Japan. Risks affecting our intended international
expansion include challenges caused by distance, language and cultural
differences, conflicting and changing laws and regulations, foreign laws,
international import and export legislation, trading and investment policies,
foreign currency fluctuations, the burdens of complying with a wide variety of
laws and regulations, protectionist business practices that favor local
businesses in some countries, foreign tax consequences, higher costs associated
with doing business internationally, restrictions on the export or import of
technology, difficulties in staffing and managing international operations,
trade and tariff restrictions, and variations in tariffs, quotas, taxes and
other market barriers.

      These risks could harm our international expansion efforts, which could in
turn materially and adversely affect our business, operating results and
financial condition. We may not be as successful as our competitors in
generating revenues in international markets due to the lack of recognition of
our products or other factors. Developing product recognition overseas is
expensive and time-consuming and our international expansion efforts may be more
costly and less profitable than we expect. If we are not successful in our
proposed target markets, our anticipated sales could decline, our expected
margins could be negatively impacted and we could lose market share, any of
which could materially harm our business, results of operations and
profitability.

Patents and Proprietary Technology Risk

      We intend to protect our innovations with patents and other applicable
intellectual property protection, and to vigorously defend these patents,
trademarks and know-how against infringement and unauthorized use. Although we
believe that our products and technology do not infringe upon the proprietary
rights of others, there can be no assurance that third parties will not assert
infringement claims against us in the future. There can also be no assurance
that any patent now owned by us will afford protection against competitors that
develop similar technology.

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 user and 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. Furthermore, our management will need to maintain and
expand our relationships with other websites, Internet companies and other third
parties. 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


                                       4
<PAGE>

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.

Risks Related to Doing Business in China

      Adverse changes in economic and political policies of government of the
People's Republic of China could have a material adverse effect on the overall
economic growth of China, 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.

      All of our existing operations are outside the United States and are
located in China, which 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.

      China's economy differs from the economies of most developed countries in
many respects, including with respect to the amount of government involvement,
level of development, growth rate, control of foreign exchange and allocation of
resources. While the People's Republic of China 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
People's Republic of China has implemented various measures to encourage
economic development and guide the allocation of resources. Some of these
measures benefit the overall People's Republic of China 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 People's Republic of China 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.

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, the majority 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 reported operating results.
Fluctuations in the value of the US dollar relative to other currencies impact
our revenue, cost of revenues and operating margins and results in foreign
currency translation gains and losses. 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 Peoples 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


                                       5
<PAGE>

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 Peoples Republic of China 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 Peoples Republic of China 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 Peoples Republic of China accounting
standards and that the books of account of Foreign Invested Enterprises are
maintained in accordance with Chinese accounting laws. Article 14 of the Peoples
Republic of China 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. Generally, the Articles of Association
provide that all business disputes pertaining to Foreign Invested Enterprises
are to be resolved by the Arbitration Institute of the Stockholm Chamber of
Commerce in Stockholm, Sweden, applying Chinese substantive law. Any award
rendered by this arbitration tribunal is, by the express terms of the respective
Articles of Association, enforceable in accordance with the "United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(1958)." 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.

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;


                                       6
<PAGE>

      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 severe 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.

      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

Risks Related to the Company

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 new 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
certain corporate governance practices. Our management and other personnel will
need to devote a substantial amount of time to these new 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, commencing in 2007, we must perform
system and process evaluations and testing of our internal controls over
financial reporting to allow management and our independent registered public


                                       7
<PAGE>

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.

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.

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
Market on the NASD Electronic Bulletin Board or in the "pink sheets" maintained
by the National Quotation Bureau, Inc., which are generally considered to be
less efficient markets than markets such as NASDAQ 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 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.


                                       8
<PAGE>

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. 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.

Item 2.  Description of Property.

      The assets of our Company and our subsidiaries on a consolidated,
post-merger basis include cash and cash equivalents, accounts receivable from
customers, notes receivables, inventories, trade deposits, and prepaid expenses.
The headquarters of our operating subsidiary, GHL, are located in China at # 35
Baita Zhong Road, Yujiang County, Jiangxi Province, P.R. China, 335200. As a
result of the Merger Transaction, we intend to relocate our corporate office to
the above address.

Item 3.  Legal Proceedings.

      There are no material litigation proceedings currently pending.

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

      No matters were submitted to the vote or consent of the holders of our
outstanding shares of our common stock during the fourth quarter ended July 31,
2007.

                                     PART II

Item 5.  Market for Common Equity, Related Stockholder Matters and Small
         Business Issuer Purchases of Equity Securities.

      Market Information.

      Our common stock, $.001 par value, is traded on the OTC Bulletin Board
under the symbol VLLA. As of November 9, 2007, the market price for our common
stock was $2.50 per share. This quotation is based upon inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent an actual
transaction. There is currently minimal trading volume. There were no trades of
our securities on the OTC Bulletin Board prior to October 2007.

      Holders of Securities.

      As of November 9, 2007, there were approximately 51 holders of record of
our common stock.

      Our common stock is covered by a Commission rule that imposes additional
sales practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors, which are
generally institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser


                                       9
<PAGE>

and transaction prior to the sale. Consequently, the rule may affect the ability
of broker-dealers to sell our securities and also may affect the ability of
purchasers of our common stock to sell their shares in the secondary market. It
may also cause fewer broker-dealers to be willing to make a market in our common
stock, and it may affect the level of news coverage we receive.

      No equity securities of our Company were purchased by us or any
"affiliated purchaser" of ours during fiscal years ended July 31, 2006 and July
31, 2007.

      Dividends.

      We have not declared or paid any cash dividends on our common stock since
our inception, and our board of directors currently intends to retain all
earnings for use in the business for the foreseeable future. Any future payment
of dividends will depend upon our results of operations, financial condition,
cash requirements and other factors deemed relevant by our board of directors.
There are currently no restrictions that limit our ability to declare cash
dividends on its common stock and we do not believe that there are any that are
likely to do so in the future.

      Securities Authorized for Issuance Under Equity Compensation Plans.

      We granted no options during our fiscal year ended July 31, 2007. As of
July 31, 2007, we had no equity compensation arrangements or plans either
approved or not approved by our stockholders.

Item 6.  Management's Discussion and Analysis or Plan of Operations.

Results of Operations

The fiscal year ended July 31, 2007 compared to the period from September 30,
2005 (inception) to July 31, 2006

      We did not earn any revenues during the twelve-month period ending July
31, 2007. During the period ended July 31, 2007, we incurred operating expenses
in the amount of $70,057, compared to operating expenses of $14,468 incurred
during the period from September 30, 2005 (inception) to July 31, 2006. These
operating expenses were comprised of accounting and audit fees of $9,950 (2006:
$3,000), general and administration costs of $ 60,107 (2006: $11,004). The
increase in operating expenses during the twelve months ended July 31, 2007,
compared to the period from September 30, 2005 (inception) to July 31, 2006, was
due to the increase in professional fees, and general and administrative costs.

      As at July 31, 2007, the Company had cash of $265 prepaid expenses of
$244, and liabilities totaling $3,321 for a working capital deficiency of $2,812
compared to the working capital deficiency of $9,368 as at July 31, 2006.

Plan of Operations

      As a result of the closing of the Merger Transaction in October 2007, we
became a holding company and, accordingly, have no significant business
operations or assets other than our interests in our three operating
subsidiaries of our consolidated accounting predecessor company. Our operating
subsidiaries' short to mid-term strategic plans are to focus on market expansion
in the Chinese domestic market. The long-term strategic goal for our operating
subsidiaries is to focus on market expansion in the international market.


                                       10
<PAGE>

Liquidity; Capital Resources

      During the twelve months ended July 31, 2007, our then President, Olga
Lenova, provided loans to our Company in the amounts of (i) $15,000 and (ii)
$1,600. These loans were unsecured, accrued interest at 6.5% per annum and were
payable on demand. During the period from September 30, 2005 (inception) to July
31, 2006, Ms. Lenova provided a $35,000 loan to our Company. The $35,000 loan
payable was unsecured, accrued interest at 6.5% per annum, and provided for
$20,000 of principal to be paid on July 24, 2007 and $15,000 of principal to be
paid on July 28, 2007, with $2,529 of accrued interest payable over the term of
the loan. During the year ended July 31, 2007, we paid $4,500 of the loan
principal and $727 of accrued interest.

      On November 02, 2006, our initial Registration Statement on Form SB-2
became effective. To date we have issued 2,580,000 shares of common stock under
this registration statement for aggregate net cash proceeds of $51,600 to our
working capital.

      We have not generated any revenue since inception and are dependent upon
obtaining financing to pursue marketing and distribution activities. For these
reasons, our auditors believe that there is substantial doubt that we will be
able to continue as a going concern.

      We may issue additional shares of capital stock to raise additional cash
for working capital in the next twelve months. If we issue additional shares of
capital stock, our stockholders will experience dilution in their respective
percentage ownership in our Company. We have not decided on the amount of the
cash needed for working capital at this point. Working capital will be used for
expanding domestic market by establishing more production lines and purchasing
new equipments.

Off-Balance Sheet Arrangements

      We have never entered into any off-balance sheet financing arrangements
and have never established any special purpose entities. We have not guaranteed
any debt or commitments of other entities or entered into any options on
non-financial assets. We have no off balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures, or capital resources that is material to any
investor in our securities.

Item 7.  Financial Statements.

      The following financial information required by this item is set forth
elsewhere in this Annual Report, beginning on page F-1:

                                                                        Page No.

      Report of Independent Registered Public Accounting Firm.......... F-2

      Balance Sheets at July 31, 2007 and 2006......................... F-3


                                       11
<PAGE>

      Statements of Operations for year ended July 31, 2007
      and for the periods from September 30, 2005 (Inception)
      to July 31, 2006 and July 31, 2007............................... F-4

      Statements of Cash Flows for year ended July 31, 2007
      and for the periods from September 30, 2005 (Inception)
      to July 31, 2006 and July 31, 2007............................... F-5

      Statements of Changes in Stockholders' Equity for
      the period from September 30, 2005 (Inception)
      through July 31, 2007............................................ F-6

      Notes to Financial Statements.................................... F-7

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

      Not Applicable.

Item 8A. 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
and Exchange Act of 1934, as amended (the "Exchange Act") is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Commission, 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 13a-15(e). 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 July 31, 2007, the disclosure controls
and procedures of our 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.

      There were no changes in internal controls over financial reporting that
occurred during the fiscal quarter ended July 31, 2007, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.


                                       12
<PAGE>

Item 8B. Other Information.

      On October 2, 2007, we consummated a merger pursuant to that agreement and
plan of merger dated October 1, 2007 among us, our wholly-owned subsidiary, VLLA
Merger Sub, Inc., and each of GHL and its stockholders. Under the Merger
Agreement, in exchange for surrendering their shares in GHL, the GHL
stockholders received pro ratably an aggregate of 68,900,000 newly-issued shares
of our common stock and an aggregate sum of $14,334,500, in the form of
promissory notes payable on or before the first year anniversary of the merger
transaction. Following its merger with VLLA Merger Sub, Inc, GHL as the
surviving entity became a wholly-owned subsidiary of ours and, in turn, we
became the indirect owner of the operating company subsidiary of GHL, Jiangxi
XiDa.

      We disclosed the above merger transaction in our Current Report on Form
8-K previously filed with the Commission on October 3, 2007, which disclosure
included the historical financial statements of Jiangxi XiDa, for its past two
fiscal years ended December 31, 2006 and 2005, the six months ended June 30,
2007, and pro forma financial information reflecting the merger, as if completed
as of January 1, 2007.

      On November 8, 2007, we filed with the State of Nevada Amended and
Restated Articles of Incorporation to provide for an increase in authorized
shares of common stock from 75,000,000 to 500,000,000 and to change our
corporate name to "Jade Art Group Inc." and our fiscal year end from July 31st
to December 31st. We disclosed the foregoing changes in our Current Reports on
Form 8-K and Form 8-K/A filed with the Commission on November 7, 2007 and
November 9, 2007, respectively.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

      The following table sets forth information at November 9, 2007 with
respect to our current directors, executive officers and significant employees:

           Name                      Age          Position
           ----                      ---          --------

           Hui Ping Cheng            43           Chief Executive Officer,
                                                  President, Chief Financial
                                                  Officer and sole Director

           Hua-Cai Song              44           President and sole Director of
                                                  Guoxi Holding Limited

      The business experience of each or our directors, named executive officers
and significant employees is set forth below:

Hui Ping Cheng, Chief Executive Officer, President, Chief Financial Officer and
Director

      Ms. Cheng became our Chief Executive Officer, President and Chief
Financial Officer on August 22, 2007. She has also served as our sole director
since August 22, 2007. From September 1998 until April 2007, Ms. Cheng was
employed as a senior accountant and accounting department director by Shenzhen
Yi Zhi Pharmaceutical Company Limited, where she managed and oversaw the
company's accounting department. From April 2007 until now, she has been
employed as the director and President of Max Time Enterprise Limited.


                                       13
<PAGE>

Hua-Cai Song, President and Director of subsidiary, Guoxi Holding Limited.

      Hua-Cai Song has over 20 years of experience in international trade and
the wood carving industry, including the production, manufacture and marketing
of wood carving products. Since January 1980, Hua-Cai Song was deputy manager of
Guoxi Holding Limited ("GHL"), in charge of development, sales and marketing of
those wood carving products manufactured by its operating subsidiary, Jiangxi
XiDa. GHL was acquired by our Company under that merger transaction consummated
on October 2, 2007 (the "Merger Transaction"), which Merger Transaction was
previously reported by our Company on its Current Report 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.

Section 16(a) Beneficial Ownership Reporting Compliance

      Our common stock is not currently registered under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), and accordingly our directors,
officers and holders of 10% or more of our common stock are not required to file
statements of beneficial ownership with regards to their ownership of our equity
securities under Section 16 of the Exchange Act. The reports and certain other
information under the Exchange Act filed by us with the Commission during our
fiscal years ended July 31, 2006 and 2007 were filed pursuant to the rules under
Section 15(d) of the Exchange Act.

Code of Ethics

      We have not adopted a Code of Ethics with respect to our officers because
we have not been an operating company. However, with the completion of the
Merger Transaction in October 2007, we intend to adopt a Code of Ethics in the
reasonably foreseeable future.

Committees

      We do not currently have either an Audit Committee, Nominating Committee
or Compensation Committee. Our board of directors believes that our having no
committees during our 2007 fiscal year was appropriate by reason of (i) the
nominal operations and nominal assets associated with our prior status as a
"shell company" and (ii) the lack of any requirements for such committees under
the regulations of the OTC Bulletin Board on which our common stock is currently
traded. However, with the completion of the Merger Transaction in October 2007,
it is our intention to create an Audit Committee, together with such other
committees as our board deems advisable, in the reasonably foreseeable future.

Change in Control Arrangements

      There are currently no arrangements that would result in a change in
control of our Company.


                                       14
<PAGE>

Item 10. Executive Compensation.

      The following table shows the compensation of our executive officers for
the fiscal years ended July 31, 2007 and July 31, 2006:

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                       Long-Term Compensation
                                                                       ----------------------
                                         Annual Compensation                   Awards
                                    ---------------------------------------------------------
            Name and                                                    Securities Underlying         All Other
       Principal Position                Year           Salary ($)           Options (#)             Compensation
-----------------------------------------------------------------------------------------------------------------
<S>                                 <C>                 <C>                     <C>                      <C>
Olga Lenova,                           09-30-05         $1,000 (2)              None                     None
                                    (inception) to
  President, Chief  Executive          07-31-07
  Officer and  Director (1)

Svetlana Kovaleva,                     09-30-05         None                    None                     None
                                    (inception) to
  Secretary, Chief  Financial          07-31-07
  Officer,  Treasurer and
  Director (3)
</TABLE>

----------
(1)   Resigned as an officer and director of the Company on August 22, 2007
(2)   Represent aggregate management fees paid
(3)   Resigned as an officer and director of the Company on August 22, 2007

Option Grants in the Last Fiscal Year.

      As shown in the below table, during fiscal year ended July 31, 2007, we
have not granted stock options to our named executive officers, as follows:

                    Option Grants in Last Fiscal Year (2006)

<TABLE>
<CAPTION>
                                                                        % of Total
                                                      No. of             Options
                                                    Securities          Granted to
                                                    Underlying          Employees
                                                      Options           in Fiscal         Exercise         Expiration
Name                               Year             Granted (1)            Year            Price              Date
-----------------              -----------          -----------         -----------       --------         ----------
<S>                            <C>                     <C>                 <C>              <C>               <C>
Olga Lenova                      09-30-05              None                None             None              None
                                (inception)
                                    to
                                 07-31-06

Svetlana Kovaleva                09-30-05              None                None             None              None
                                (inception)
                                    to
                                 07-31-06
</TABLE>


                                       15
<PAGE>

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values

      During our fiscal year ended July 31, 2007, none of our named executive
officers or directors exercised any options to purchase shares of Common Stock.
The following table sets forth, for each of our named executive officers and
directors, the number and value of vested and unvested options held as of July
31, 2007 and the value of any in-the-money stock options, vested and unvested,
as of such date.

<TABLE>
<CAPTION>
                                      No. of Securities                 Value of Unexercised In-The-Money Options
Name                              Underlying Options Granted                       at July 31, 2007 (1)
-----------------             ------------------------------            -----------------------------------------

                              Exercisable          Unexercisable          Exercisable             Unexercisable
                              -----------          -------------          -----------             -------------

<S>                               <C>                  <C>                   <C>                      <C>
Olga Lenova                       None                 None                  None                     None


Svetlana Kovaleva                 None                 None                  None                     None
</TABLE>

Director Compensation.

      Directors of our Company are not compensated in cash for their services
but are reimbursed for out-of-pocket expenses incurred in furtherance of our
business.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters.

      As of November 9, 2007, we had 74,980,000 shares of common stock
outstanding. The following table sets forth certain information regarding the
beneficial ownership of our common stock as of that date by (i) each person who,
to our knowledge, beneficially owns more than 5% of our common stock; (ii) each
of our current directors and executive officers; and (iii) all of our current
directors and executive officers as a group:

<TABLE>
<CAPTION>
        Name and Address              Amount and Nature of            Percent of
    of Beneficial Owner (1)         Beneficial Ownership (2)     Outstanding Shares (3)
--------------------------------    ------------------------     ----------------------
<S>                                        <C>                          <C>
Hua-Cai Song                               20,670,000                   27.6 %

Fu-Lan Chen                                 9,094,800                   12.1 %

Mei-Ling Chen                               5,512,000                    7.4 %

Max Time Enterprise Limited (4)             3,500,000                    4.7 %

Shenzhen Hua Yin Guaranty &
Investment Co., Ltd                         4,340,700                    5.8 %

All Officers & Directors as
a Group (2 persons) (4)                    24,170,000                   32.2 %
</TABLE>

----------
      (*) Less than 1%


                                       16
<PAGE>

      (1) Unless otherwise indicated, the address of each beneficial owner
reported above is c/o Vella Productions Inc., 999 3rd Avenue, Suite 3800
Seattle, WA 98104.

      (2) A person is deemed to be the beneficial owner of securities that can
be acquired within 60 days from November 9, 2007. Each beneficial owner's
percentage is determined by assuming that options that are held by such person
(but not any other person), and which are exercisable within 60 days from
November 9, 2007, have been exercised.

      (3) Based on 74,980,000 shares of our common stock outstanding.

      (4) Hui Ping Cheng is the sole owner, director and officer of Max Time
Enterprise Limited and, by reason of her control position at Max Time Enterprise
Limited, may be deemed to be an indirect beneficial owner of those shares of our
common stock held by Max Time Enterprise Limited. Ms. Cheng has served as our
Chief Executive Officer, President, Chief Financial Officer and a director since
August 22, 2007.

Item 12. Certain Relationships and Related Transactions, and Director
         Independence.

Relationships and Related Transactions.

      Olga Lenova, President of our Company prior to August 22, 2007, provided
management services to us valued at $500 per month. During the year ended July
31, 2007, management services of $6,000 were charged to operations.

      For the year ended July 31, 2007, we were charged $2,400 (2006 - $Nil) by
a company controlled by Olga Lenova, our then President, for professional fees.
As at July 31, 2007, the balance of $2,400 was due to that company.

      During the period ended July 31, 2006, the then President of our Company,
Olga Lenova, provided a $35,000 loan to the Company. The $35,000 loan payable
was unsecured, accrued interest at 6.5% per annum and provided for $20,000 of
principal to be paid on July 24, 2007 and $15,000 of principal to be paid on
July 28, 2007, with $2,529 of accrued interest payable during the term of the
loan. During the year ended July 31, 2007, we paid $4,500 of the loan principal
and $727 of accrued interest.

      During the year ended July 31, 2007, Ms. Lenova also provided loans to our
Company of (i) $15,000 and (ii) $1,600. These loans were unsecured, accrued
interest at 6.5% per annum and were payable on demand.

      During the period ended July 31, 2006, we executed a Distributor and
Marketing Agreement with a private company controlled by our then President,
Olga Lenova. As at July 31, 2007, we had paid $28,000 according to the
Agreement. At July 31, 2007, by mutual agreement between us and Ms. Lenova, our
then President, and companies controlled by her, the Distribution and Marketing
Agreement was terminated and all outstanding amounts due to each party were
settled in full.

      On August 22, 2007, Max Time Enterprise Limited purchased from Ms. Lenova,
the former president of our Company, 3,500,000 shares of our Company's
outstanding shares of common stock for $150,000. Giving effect to the purchase
of such shares, Hui Ping Cheng, as sole owner, director and president of Max
Time Enterprise Limited, became an indirect owner of the 3,500,000 shares of our
common stock held by Max Time Enterprise Limited. Ms. Cheng was appointed as
Chief Executive Officer, President, Chief Financial Officer of our Company on
August 22, 2007. She also has served as a director of our Company since August
22, 2007.


                                       17
<PAGE>

      Except for the collective transactions described above, we have not
entered into any other transactions with our officers, directors, persons
nominated for these positions, beneficial owners of 5% or more of our common
stock, or family members of these persons, wherein the amount involved in the
transaction or a series of similar transactions exceeded $60,000.

Director Independence.

      The OTC Bulletin Board, on which our common stock is currently traded,
does not maintain director independence standards.

Item 13. Exhibits.

      Documents filed as part of this Annual Report:

      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).

      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.


                                       18
<PAGE>

Item 14. Principal Accountant Fees and Services.

      For fiscal years ended July 31, 2007 and 2006, the aggregate fees billed
by Moore & Associates, Chartered, our principal independent accounting firm, for
professional services were as follows:

                                                Fiscal Year Ended
                                                -----------------
                                      July 31, 2007           July 31, 2006
                                      -------------           -------------
            Audit Fees (1)                $7,500                  $4,500
            Audit-Related Fees (2)            --                      --
            Tax Fees (3)                      --                      --
            All Other Fees                    --                      --

----------

(1)   Fees for audit services include fees associated with the annual audit and
      the review of the Company's quarterly reports on Form 10-QSB. Also
      includes fees associated with Securities and Exchange Commission
      registration statements, comfort letters and consents.

(2)   Audit-Related services consist primarily of accounting consultations.

(3)   Tax services consist primarily of the preparation of Company federal
      income tax returns.

      As of July 31, 2007, we did not have a formal documented pre-approval
policy for the fees of our principal accounting firm.


                                       19
<PAGE>

                                   SIGNATURES

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

                                    VELLA PRODUCTION INC.


Date: November 9, 2007              By:  /s/ Hui Ping Cheng
                                         ---------------------------------------
                                         Hui Ping Cheng, Chief Executive Officer

      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature                                                       Date
---------                                                       ----


/s/ Hui Ping Cheng                                              November 9, 2007
------------------------------------------------------
Hui Ping Cheng,
Chief Executive Officer (principal executive officer),
Chief Financial Officer (principal financial and
accounting officer) and Director


                                       20
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                        Page No.

      Report of Independent Registered Public Accounting Firm.......... F-2

      Balance Sheets at July 31, 2007 and 2006......................... F-3

      Statements of Operations for year ended July 31, 2007 and for the
      periods from September 30, 2005 (Inception)
      to July 31, 2006 and July 31, 2007............................... F-4

      Statements of Cash Flows for year ended July 31, 2007 and for the
      periods from September 30, 2005 (Inception)
      to July 31, 2006 and July 31, 2007............................... F-5

      Statements of Changes in Stockholders' Equity for
      the period from September 30, 2005 (Inception)
      through July 31, 2007............................................ F-6

      Notes to Financial Statements.................................... F-7


                                      F-1
<PAGE>

MOORE & ASSOCIATES, CHARTERED
  ACCOUNTANTS AND ADVISORS
      PCAOB REGISTERED

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Vella Productions Inc.
(A Development Stage Company)

We have audited the accompanying balance sheets of Vella Productions Inc. (A
Development Stage Company) as of July 31, 2007 and 2006, and the related
statements of operations, stockholders' equity and cash flows for July 31, 2007
and July 31, 2006, and from inception September 30, 2005 through July 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 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vella Productions Inc. (A
Development Stage Company) as of July 31, 2007 and 2006, and the related
statements of operations, stockholders' equity and cash flows for July 31, 2007
and July 31, 2006, and from inception September 30, 2005 through July 31, 2007,
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has a working capital deficiency of $2,812,
and has accumulated deficit of $57,912 since inception which raises substantial
doubt about its ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.


/s/ Moore & Associates Chartered

Moore & Associates Chartered
Las Vegas, Nevada
October 24, 2007

               2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146
                       (702) 253-7499 Fax (702) 253-7501


                                      F-2
<PAGE>

                             VELLA PRODUCTIONS INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS
                             July 31, 2007 and 2006
                             (Stated in US Dollars)

                                                           2007         2006
                                     ASSETS

Current
   Cash and cash equivalents                             $    265     $ 28,206
   Prepaid expenses                                           244           --
                                                         --------     --------
                                                              509       28,206
Distributor rights - Note 3                                    --        3,000
                                                         --------     --------
                                                         $    509     $ 31,206
                                                         ========     ========

                                   LIABILITIES

Current
   Accounts payable and accrued liabilities              $  3,321     $  3,000
   Due to related party - Note 5                               --       37,574
                                                         --------     --------
                                                            3,321       40,574
                                                         --------     --------

                            STOCKHOLDERS' DEFICIENCY

Capital stock - Note 4
   75,000,000 shares authorized, $0.001 par value
   6,080,000 shares issued and outstanding
     (July 31, 2006: 3,500,000)                             6,080        3,500
Additional paid in capital                                 49,020           --
Share subscription - Note 4                                    --        1,600
Deficit accumulated during the development stage          (57,912)     (14,468)
                                                         --------     --------
                                                           (2,812)      (9,368)
                                                         --------     --------
                                                         $    509     $ 31,206
                                                         ========     ========

Nature and Continuance of Operations - Note 1

    The accompanying notes are an integral part of these financial statements


                                      F-3
<PAGE>

                             VELLA PRODUCTIONS INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
                             (Stated in US Dollars)

<TABLE>
<CAPTION>
                                                                   September 30,     September 30,
                                                     Year              2005              2005
                                                    Ended           (inception)       (inception)
                                                   July 31,         to July 31,       to July 31,
                                                     2007              2006              2007
                                                 -------------     -------------     -------------
<S>                                              <C>               <C>               <C>
Expenses
   Accounting and audit fees                     $       9,950     $       3,000     $      12,950
   General and Administrative                           60,107            11,004            71,111
   Organization costs                                       --               464               464
                                                 -------------     -------------     -------------
Net loss before other item                             (70,057)          (14,468)          (84,525)

Other item
   Gain on write off of related party amounts           26,613                --            26,613
                                                 -------------     -------------     -------------
Net loss for the period                          $     (43,444)    $     (14,468)    $     (57,912)
                                                 =============     =============     =============

Basic loss per share                             $       (0.01)    $       (0.11)
                                                 =============     =============

Weighted average number of shares outstanding        5,241,096           138,158
                                                 =============     =============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-4
<PAGE>

                             VELLA PRODUCTIONS INC.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
                             (Stated in US Dollars)

<TABLE>
<CAPTION>
                                                                        September 30,     September 30,
                                                          Year              2005              2005
                                                         Ended           (inception)       (inception)
                                                        July 31,         to July 31,       to July 31,
                                                          2007              2006              2007
                                                      -------------     -------------     -------------
<S>                                                   <C>               <C>               <C>
Operating Activities
   Net loss for the period                            $     (43,444)    $     (14,468)    $     (57,912)

   Change in non-cash working capital items
     Prepaid expenses                                          (244)               --              (244)
     Accounts payable and accrued liabilities                 1,921             3,000             4,921
     Gain on write off of related party amounts             (26,613)               --           (26,613)
                                                      -------------     -------------     -------------
                                                            (68,380)          (11,468)          (79,848)
                                                      -------------     -------------     -------------

Investing Activity
   Distributor rights                                       (25,000)               --           (28,000)
                                                      -------------     -------------     -------------

Financing Activities
   Increase (decrease) in due to related party               15,439            37,574            53,013
   Proceeds from issuance of common stock                    51,600             3,500            55,100
   Common stock subscription                                 (1,600)            1,600                --
                                                      -------------     -------------     -------------
                                                             65,439            42,674           108,113
                                                      -------------     -------------     -------------

Increase in cash during the period                          (27,941)           31,206               265

Cash, beginning of the period                                28,206                --                --
                                                      -------------     -------------     -------------
Cash, end of the period                               $         265     $      31,206     $         265
                                                      =============     =============     =============

Supplementary disclosure of cash flow information:
  Cash paid for:
       Interest                                       $          --     $          --     $          --
                                                      =============     =============     =============
       Income Taxes                                   $          --     $          --     $          --
                                                      =============     =============     =============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-5
<PAGE>

                             VELLA PRODUCTIONS INC.
                          (A Development Stage Company)
                     STATEMENTS OF STOCKHOLDERS' EQUITY for
           the period September 30, 2005 (Inception) to July 31, 2007
                             (Stated in US Dollars)

<TABLE>
<CAPTION>
                                                                                                          Deficit
                                                                                                        Accumulated
                                                  Common Shares                           Common         During the
                                                  -------------           Paid in         Shares        Development
                                              Number      Par Value       Capital      Subscription        Stage          Total
                                             ---------   ------------   ------------   ------------    ------------    ------------
<S>                                          <C>         <C>            <C>            <C>             <C>             <C>

Balance, September 30, 2005 (Inception)             --   $         --   $         --   $         --    $         --    $         --
Issued for cash:
Common stock July, 2006 - at $0.001          3,500,000          3,500             --             --              --           3,500
Common stock subscription                           --             --             --          1,600              --           1,600
Net loss for the period                             --             --             --             --         (14,468)        (14,468)
                                             ---------   ------------   ------------   ------------    ------------    ------------
Balance, July 31, 2006                       3,500,000          3,500             --          1,600         (14,468)         (9,368)

Issued for cash:
Common stock December, 2006 - at $0.02        2,580,00          2,580         49,020         (1,600)             --          50,000
Net loss for the year                               --             --             --             --         (43,444)        (43,444)
                                             ---------   ------------   ------------   ------------    ------------    ------------
Balance, July 31, 2007                       6,080,000   $      6,080   $         --   $         --    $    (57,912)   $     (2,812)
                                             =========   ============   ============   ============    ============    ============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-6
<PAGE>

                             VELLA PRODUCTIONS INC.
                          (A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2007
                             (Stated in US Dollars)

Note 1        Nature and Continuance of Operations

              The Company was incorporated in the State of Nevada, United States
              of America on September 30, 2005 and its fiscal year end is July
              31. The Company has obtained a license to market and distribute
              six tea blends, developed by a private company, in the United
              States of America and Canada.

              These financial statements have been prepared on a going concern
              basis. The Company has a working capital deficiency of $2,812, and
              has accumulated deficit of $57,912 since inception. Its ability to
              continue as a going concern is dependent upon the ability of the
              Company to generate profitable operations in the future and/or to
              obtain the necessary financing to meet its obligations and repay
              its liabilities arising from normal business operations when they
              come due. The outcome of these matters cannot be predicted with
              any certainty at this time. These factors raise substantial doubt
              that the company will be able to continue as a going concern.
              Management plans to continue to provide for its capital needs by
              the issuance of common stock and related party advances. These
              financial statements do not include any adjustments to the amounts
              and classification of assets and liabilities that may be necessary
              should the Company be unable to continue as a going concern.

Note 2        Summary of Significant Accounting Policies

              The financial statements of the Company have been prepared in
              accordance with generally accepted accounting principles in the
              United States of America. Because a precise determination of many
              assets and liabilities is dependent upon future events, the
              preparation of financial statements for a period necessarily
              involves the use of estimates which have been made using careful
              judgement. Actual results may vary from these estimates.

              The financial statements have, in management's opinion, been
              properly prepared within reasonable limits of materiality and
              within the framework of the significant accounting policies
              summarized below:

              Development Stage Company

              The Company complies with Financial Accounting Standard Board
              Statement ("FAS") No. 7 and The Securities and Exchange Commission
              Act Guide 7 for its characterization of the Company as development
              stage.


                                      F-7
<PAGE>

Vella Productions Inc.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 2007
(Stated in US Dollars) - Page 2


Note 2        Summary of Significant Accounting Policies - (cont'd)

              Revenue Recognition

              We recognize revenue when all of the following criteria have been
              met: persuasive evidence for an arrangement exists; delivery has
              occurred; the commission is fixed or determinable; and collection
              is reasonably assured. The commission representing 7.5% of the
              private company's gross sales is recognized as income over the
              term of the contract with this private company. The amount of the
              commission is determined based on the quarterly sales reports of
              the private company. The private company recognizes the sale of
              its product during the reporting period when the product was
              shipped to the customer (if the terms are "FOB shipping point), or
              the product was delivered to the customer's delivery site (if the
              terms of the sale are "FOB destination") prior to the period end.

              Impairment of Long-lived Assets

              Capital assets are reviewed for impairment in accordance with FAS
              No. 144, "Accounting for the Impairment or Disposal of Long-lived
              Assets", which was adopted effective January 1, 2002. Under FAS
              No. 144, these assets are tested for recoverability whenever
              events or changes in circumstances indicate that their carrying
              amounts may not be recoverable. An impairment charge is recognized
              for the amount, if any, which the carrying value of the asset
              exceeds the fair value.

              Foreign Currency Translation

              The financial statements are presented in United States dollars.
              In accordance with Statement of Financial Accounting Standards No.
              52, "Foreign Currency Translation", since the functional currency
              of the Company is U.S. dollars, the foreign currency financial
              statements of the Company's subsidiaries are re-measured into U.S.
              dollars. Monetary assets and liabilities are re-measured using the
              foreign exchange rate that prevailed at the balance sheet date.
              Revenue and expenses are translated at weighted average rates of
              exchange during the year and stockholders' equity accounts and
              furniture and equipment are translated by using historical
              exchange rates. Any re-measurement gain or loss incurred is
              reported in the income statement.

              Net Loss per Share

              Basic loss per share includes no dilution and is computed by
              dividing loss available to common stockholders by the weighted
              average number of common shares outstanding for the period.
              Dilutive losses per share reflects the potential dilution of
              securities that could share in the losses of the Company. Because
              the Company does not have any potentially dilutive securities, the
              accompanying presentation is only of basic loss per share.

              Stock-based Compensation

              The Company has not adopted a stock option plan and has not
              granted any stock options. Accordingly no stock-based compensation
              has been recorded to date.


                                      F-8
<PAGE>

Vella Productions Inc.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 2007
(Stated in US Dollars) - Page 3


Note 2        Summary of Significant Accounting Policies - (cont'd)

              Income Taxes

              The Company uses the asset and liability method of accounting for
              income taxes in accordance with FAS No. 109 "Accounting for Income
              Taxes". Under this method, deferred tax assets and liabilities are
              recognized for the future tax consequences attributable to
              temporary differences between the financial statements carrying
              amounts of existing assets and liabilities and loss carryforwards
              and their respective tax bases. Deferred tax assets and
              liabilities are measured using enacted tax rates expected to apply
              to taxable income in the years in which those temporary
              differences are expected to be recovered or settled.

              Fair Value of Financial Instruments

              The carrying value of the Company's financial instruments
              consisting of cash, accounts payable and accrued liabilities,
              agreement payable and due to related party approximate their
              carrying value due to the short-term maturity of such instruments.
              Unless otherwise noted, it is management's opinion that the
              Company is not exposed to significant interest, currency or credit
              risks arising from these financial instruments.

              Recent Accounting Pronouncements

              In February 2006, the FASB issued SFAS No. 155, "Accounting for
              Certain Hybrid Financial Instruments-an amendment of FASB
              Statements No. 133 and 140", to simplify and make more consistent
              the accounting for certain financial instruments. SFAS No. 155
              amends SFAS No. 133, "Accounting for Derivative Instruments and
              Hedging Activities", to permit fair value remeasurement for any
              hybrid financial instrument with an embedded derivative that
              otherwise would require bifurcation, provided that the whole
              instrument is accounted for on a fair value basis. SFAS No. 155
              amends SFAS No. 140, "Accounting for the Impairment or Disposal of
              Long-Lived Assets", to allow a qualifying special-purpose entity
              to hold a derivative financial instrument that pertains to a
              beneficial interest other than another derivative financial
              instrument. SFAS No. 155 applies to all financial instruments
              acquired or issued after the beginning of an entity's first fiscal
              year that begins after September 15, 2006, with earlier
              application allowed. This standard is not expected to have a
              significant effect on the Company's future reported financial
              position or results of operations.

              In March 2006, the FASB issued SFAS No. 156, "Accounting for
              Servicing of Financial Assets, an amendment of FASB Statement No.
              140, Accounting for Transfers and Servicing of Financial Assets
              and Extinguishments of Liabilities". This statement requires all
              separately recognized servicing assets and servicing liabilities
              be initially measured at fair value, if practicable, and permits
              for subsequent measurement using either fair value measurement
              with changes in fair value reflected in earnings or the
              amortization and impairment requirements of Statement No. 140. The
              subsequent measurement of separately recognized servicing assets
              and servicing liabilities at fair value eliminates the necessity
              for entities that manage the risks inherent in servicing assets
              and servicing liabilities


                                      F-9
<PAGE>

Vella Productions Inc.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 2007
(Stated in US Dollars) - Page 4


Note 2        Summary of Significant Accounting Policies - (cont'd)

              Recent Accounting Pronouncements - (cont'd)

              with derivatives to qualify for hedge accounting treatment and
              eliminates the characterization of declines in fair value as
              impairments or direct write-downs. SFAS No. 156 is effective for
              an entity's first fiscal year beginning after September 15, 2006.
              Management is currently evaluating the impact, which the adoption
              of this standard will have on the Company's financial statements.

              In June 2006, the FASB issued FASB Interpretation Number 48,
              "Accounting for Uncertainty in Income Taxes - an interpretation of
              FASB Statement No. 109." This Interpretation clarifies the
              accounting for uncertainty in income taxes recognized in an
              enterprise's financial statements in accordance with FASB
              Statement No. 109, "Accounting for Income Taxes." This
              Interpretation is effective for fiscal years beginning after
              December 15, 2006. The company is currently assessing the effect
              of this Interpretation on its financial statements.

              In September 2006, the FASB issued SFAS No. 157, "Fair Value
              Measures". This Statement defines fair value, establishes a
              framework for measuring fair value in generally accepted
              accounting principles (GAAP), expands disclosures about fair value
              measurements, and applies under other accounting pronouncements
              that require or permit fair value measurements. SFAS No. 157 does
              not require any new fair value measurements. However, the FASB
              anticipates that for some entities, the application of SFAS No.
              157 will change current practice. SFAS No. 157 is effective for
              financial statements issued for fiscal years beginning after
              November 15, 2007, which for the Company would be the fiscal year
              beginning February 1, 2008. The Company is currently evaluating
              the impact of SFAS No. 157 but does not expect that it will have a
              material impact on its financial statements.

              In September 2006, the FASB issued SFAS No. 158, "Employers'
              Accounting for Defined Benefit Pension and Other Postretirement
              Plans." This Statement requires an employer to recognize the over
              funded or under funded status of a defined benefit post retirement
              plan (other than a multiemployer plan) as an asset or liability in
              its statement of financial position, and to recognize changes in
              that funded status in the year in which the changes occur through
              comprehensive income. SFAS No. 158 is effective for fiscal years
              ending after December 15, 2006, which for the Company would be
              February 1, 2007. The Company does not expect that the
              implementation of SFAS No. 158 will have any material impact on
              its financial position and results of operations.

              In September 2006, the SEC issued Staff Accounting Bulletin
              ("SAB") No. 108, "Considering the Effects of Prior Year
              Misstatements when Quantifying Misstatements in Current Year
              Financial Statements." SAB No. 108 addresses how the effects of
              prior year uncorrected misstatements should be considered when
              quantifying misstatements in current year financial statements.
              SAB No. 108 requires companies to quantify misstatements using a
              balance sheet and income statement approach and to evaluate
              whether either approach results in quantifying an error that is
              material in light of relevant quantitative and qualitative
              factors. SAB No. 108 is effective for periods ending after
              November 15, 2006 which for the


                                      F-10
<PAGE>

Vella Productions Inc.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 2007
(Stated in US Dollars) - Page 5


Note 2        Summary of Significant Accounting Policies - (cont'd)

              Recent Accounting Pronouncements - (cont'd)

              Company would be February 1, 2007. The Company is currently
              evaluating the impact of adopting SAB No. 108 but does not expect
              that it will have a material effect on its financial statements.

              In February 2007, the FASB issued SFAS No. 159, "The Fair Value
              Option for Financial Assets and Financial Liabilities". This
              Statement permits entities to choose to measure many financial
              assets and financial liabilities at fair value. Unrealized gains
              and losses on items for which the fair value option has been
              elected are reported in earnings. SFAS No. 159 is effective for
              fiscal years beginning after November 15, 2007. The Company is
              currently assessing the impact of SFAS No. 159 on its financial
              position and results of operations.

Note 3        Distributor rights

              Pursuant to a Distributor and Marketing Agreement (the
              "Agreement") dated July 10, 2006, the Company acquired from a
              private company rights for distribution of the proprietary line of
              six tea blends (the "Products") for distribution in the United
              States of America and Canada for the following consideration:

              (i) Cash payments:

              - $3,000 upon signing of the Agreement;

              - $25,000 on or before November 30, 2006; and

              - $25,000 on or before February 28, 2007.

              (ii) Marketing Expenditures:
                   The Company must incur minimum marketing expenses of $250,000
                   over the initial five year term of the Agreement.

              The Company will be paid commission on a quarterly basis at the
              rate of 7.5% of gross sales resulting from the sale of the
              Products by the private company.

              As at July 31, 2007, the Company paid $28,000 upon signing the
              Agreement and incurred $15,109 in marketing expenditures.

              The Company did not make all required cash payments and was
              provided with notice of default by the private company to
              terminate the agreement. As a result, the Company wrote off
              distributor rights of $28,000 (See Note 5).


                                      F-11
<PAGE>

Vella Productions Inc.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 2007
(Stated in US Dollars) - Page 6


Note 4        Capital Stock

              The total number of common shares authorized that may be issued by
              the Company is 75,000,000 shares with a par value of one tenth of
              one cent ($0.001) per share and no other class of shares is
              authorized.

              During the period from September 30, 2006 (inception) to July 31,
              2006, the Company issued 3,500,000 shares of common stock to its
              director for total proceeds of $3,500 and received $1,600 in share
              subscription funds.

              During the year ended July 31, 2007, The Company issued 2,580,000
              shares of common stock for cash proceeds of $51,600.

              To July 31, 2007, the Company has not granted any stock options
              and has not recorded any stock-based compensation.

Note 5        Related Party Transactions

              a)  The President of the Company provides management services to
                  the Company. The services are valued at $500 per month. During
                  the year ended July 31, 2007, management services of $6,000
                  (April 30, 2006 - $Nil) were charged to operations.

              b)  For the year ended July 31, 2007, the Company was charged
                  $2,400 (2006 - $Nil) by a company controlled by the President
                  of the Company for professional fees. As at July 31, 2007, the
                  balance of $2,400 (July 31, 2006 - $Nil) was due to this
                  company. The amount was non-interest bearing unsecured and due
                  on demand.

              c)  During the period ended July 31, 2006 the President of the
                  Company provided a $35,000 loan to the Company. The $35,000
                  loan payable was unsecured, bore interest at 6.5% per annum,
                  and consisted of $20,000 of principal due on July 24, 2007,
                  and $15,000 of principal due on July 28, 2007, and $2,529 of
                  accrued interest payable. During the year ended July 31, 2007,
                  the Company paid $4,500 of the loan principal and $727 of
                  accrued interest.

                  During the year ended July 31, 2007, the President of the
                  Company provided a $15,000 loan to the Company. The loan was
                  unsecured, bore interest at 6.5% per annum and was payable on
                  demand.

              d)  During the period ended July 31, 2006, the Company signed the
                  Distributor and Marketing agreement with a private company
                  controlled by a President of the Company. As at July 31, 2007,
                  the Company paid $28,000 according to the Agreement.

              At July 31, 2007, by mutual agreement between the Company, its
              President and companies controlled by the President of the
              Company, all amounts due to each party were settled resulting in
              gain of $26,613 recorded by the Company.


                                      F-12
<PAGE>

Vella Productions Inc.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 2007
(Stated in US Dollars) - Page 7


Note 6        Income Taxes

              The significant components of the Company's deferred tax assets
              are as follows:

<TABLE>
<CAPTION>
                                                                      2007        2006
                                                                    -------     -------
<S>                                                                 <C>         <C>
              Deferred Tax Assets
                Non-capital loss carryforward                       $ 8,680     $ 2,170
                Less: valuation allowance for deferred tax asset     (8,680)     (2,170)
                                                                    -------     -------
                                                                    $    --     $    --
                                                                    =======     =======
</TABLE>

              There were no temporary differences between the Company's tax and
              financial bases that result in deferred tax assets, except for the
              Company's net operating loss carryforwards amounting to
              approximately $57,912 at July 31, 2007 which may be available to
              reduce future year's taxable income.

              These carryforwards will expire, if not utilized, commencing in
              2026. Management believes that the realization of the benefits
              from these deferred tax assets appears uncertain due to the
              Company's limited operating history and continuing losses.
              Accordingly a full, deferred tax asset valuation allowance has
              been provided and no deferred tax asset benefit has been recorded.

Note 7        Subsequent Events

              On October 1, 2007, Vella Productions Inc. (the "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 shall 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.


                                      F-13