U. S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C.  20549





FORM 10-K /A
 Amendment No. 1





x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2010








o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ___________ to _____________




Commission File Number: 333-167198





CHINA TELETECH LIMITED


(Name of small business issuer as specified in its charter)





British Columbia
27-1011540(State or other jurisdiction ofincorporation or organization)
(I.R.S. EmployerIdentification No.)Room A, 20/F, International Trade Residential and Commercial Building

Nanhu Road, Shenzhen, China

________________________________________________________________________

(Address of principal executive offices)





(86) 755-82204422


(Registrant’s telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act: None





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


Common Stock, $0 par value per share


___________________





Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:  Yes   ̈    No x





Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes   ̈    No x





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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    ̈





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K.  Yes o    No    ̈





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act.





Large accelerated filer  o

Accelerated filer    oNon-accelerated filer    o (Do not check if smaller reporting company)

Smaller reporting company    x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):  Yes o No x





As of the last business day of the registrant’s most recently completed second fiscal quarter, there was no active public trading market for our common stock.





As of April 13, 2011, the registrant had one share of its common stock issued and outstanding.





Documents Incorporated by Reference: None.









Explanatory Note
  China Teletech Limited (the “Company”) is filing this Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2010 to amend the following items:
  Part II Item 7
Management’s Discussion and Analysis of Financial Condition and Results of OperationsPart II Item 8
Financial Statements and Supplementary Data
  Specifically the Company has amended the financial statements and supplementary date in the Form 10-K to properly present only the audited historical financial statements of the registrant, China Teletech Limited (f/k/a Stream Horizon Studios, Inc.).
  For the convenience of the reader, the Company is re-filing its Form 10-K originally filed on April 15, 2011 (the “Original Filing”) in its entirety in this Form 10-K/A. This Form 10-K/A continues to speak as of the date of the Original Filing and other than with respect to items described above does not reflect events occurring after the filing of the Original Filing. Accordingly, in conjunction with reading this amendment to the Original Filing, you should also read all other filings we have made with the Securities and Exchange Commission since December 31, 2010.







TABLE OF CONTENTS





PAGEPART IITEM 1.

Business.

3ITEM 1A.

Risk Factors.

6ITEM 2.

Properties.

14ITEM 3.

Legal Proceedings.

14ITEM 4.

(Removed and Reserved).

14PART IIITEM 5.

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

14ITEM 6.

Selected Financial Data.

14ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

15ITEM 8.

Financial Statements and Supplementary Data.

18ITEM 9.

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

18ITEM 9A.

Controls and Procedures.

18PART IIIITEM 10.

Directors, Executive Officers and Corporate Governance.

19ITEM 11.

Executive Compensation.

20ITEM 12.

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

21ITEM 13.

Certain Relationships and Related Transactions.

22ITEM 14.

Principal Accounting Fees and Services.

23PART IVITEM 15.

Exhibits, Financial Statement Schedules.

23SIGNATURES

24




2




FORWARD LOOKING STATEMENTS





This annual report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:





●
the uncertainty of profitability based upon our history of losses;●
risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as going concern;


●
risks related to our international operations and currency exchange fluctuations; and●
other risks and uncertainties related to our business plan and business strategy.





This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.





References in this annual report to “we”, “us”, “our”, the “Company” refer to China Teletech Limited (f/k/a Stream Horizons Studio, Inc.), a British Columbia company, unless otherwise indicated.





References to China or the PRC refer to the People’s Republic of China.





Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common stock” refer to the common shares in our capital stock.





PART I





ITEM 1.    BUSINESS





Company Overview





Operating through two subsidiaries, Shenzhen Rongxin Investment Co., Ltd. (“Shenzhen Rongxin”) and Guangzhou Yueshen Taiyang Network and Technology Co., Ltd. (“Guangzhou Yueshen”), both of which incorporated in the People’s Republic of China (“PRC”), the Company primarily engages in the trading and distribution of rechargeable phone cards, prepaid subway tickets and mineral water in the PRC. The Company controls Shenzhen Rongxin and Guangzhou Yueshen as well as their operations through a series of contractual arrangements (as described below in this report).





Specifically, Guangzhou Yueshen principally engages in the trading and distribution of rechargeable phone cards, prepaid subway tickets, cellular phones and cellular phone accessories in Guangzhou city in China.  It sells the products to wholesalers, retailers, and end users. Shenzhen Rongxin’s primary business is the wholesale and distribution of mineral water as well as trading of wine. Shenzhen Rongxin’s is the exclusive supplier of Tibet Glacial 5100 spring water in the Guangdong Province of China.





Organization





China Teletech Limited (formerly known as Stream Horizons Studio, Inc.) was incorporated under the laws of the Province of British Columbia, Canada on October 1, 2001 (“we”, “us”, “our”, “China Teletech”, or the “Company”) under the name Infotec Business Strategies, Inc. The Company is a wholly owned subsidiary of CN Dragon Corporation (formerly known as Wavelit), a Nevada company (“CN Dragon”). From its inception, the Company was engaged in the production of video for broadcast over the internet, both live streaming video and on-demand pre-recorded video.  The full service studio offered full video editing, both post-production and live-editing, “green-screen” video production, digital still photography services, as well as the capability to broadcast and edit together live video feeds from any location with broadband internet services (virtual studio). The Company had historically been responsible for the broadcast of various live events and creation of corporate videos for the clients of its parent company, CN Dragon.





Although we continued to investigate the profitability of pursuing our prior production of internet video for broadcast business, management believed and still believes that there may be more value for our shareholders if we were able to (i) attract a more substantial operating company and engage in a merger or business combination of some kind, or (ii) acquire assets or shares of an entity actively engaged in business which generates revenues. We have investigated several possible merger candidates to determine whether or not they would add value to the Company for the benefit of our shareholders. Following such investigation, we entered into negotiations with Sierra Vista Group Limited, a British Virgin Islands Company, incorporated on January 30, 2008 under the British Virgin Islands Business Companies Act, 2004 as further described below. It shall be noted that Sierra Vista Group Limited changed its company name to China Teletech Limited (“CTL”) on June 2, 2009.




3





On or about February 12, 2009, in connection with a possible transaction with CTL, CN Dragon’s Board of Directors approved of a Spin-Off of China Teletech Limited (formerly known as Stream Horizons Studio, Inc.), its wholly owned subsidiary (the “Spin-Off”). The purpose of the Spin-Off was to provide an independent company in which to engage in a business transaction with CTL. The proposed Spin Off was disclosed in CN Dragon’s Preliminary Form 14C filed with the United States Securities and Exchange Commission (the “SEC”) on February 12, 2009 and subsequently amended on March 16, 2009. Pursuant to the terms of the Spin-Off, CN Dragon has agreed to distribute 8,750,000 shares to be issued in the Spin-Off as a stock dividend (the “Distribution”) to its shareholders of record as of February 12, 2009 (the “Record Date”).





Following the filing of the Preliminary Form 14C, on or about May 20, 2009 the Company entered into a share exchange agreement (the “Exchange Agreement”) with CTL. Pursuant to the Exchange Agreement, the Company agreed to exchange 241,250,000 shares of its common stock for 10 shares of CTL representing 100% of CTL’s issued and outstanding shares, thus making CTL a wholly owned subsidiary of the Company. However, pursuant to the terms of the Exchange Agreement, the transaction will not close until the Company is able to properly consummate the Spin-Off, obtain SEC approval and effectiveness of a registration statement (“Registration Statement”) and file the Definitive Form 14C with the SEC (the “Closing Transaction”).





In connection with the Spin-Off and as explained above, CN Dragon will distribute 8,750,000 shares to be issued in the Spin-Off as a Distribution to its shareholders of record as of the Record Date proportionally. This Distribution will constitute our initial public offering. The Distribution is expected to be effected as soon as practicable after the date the Registration Statement is declared effective and the effectiveness of the Closing Transaction.





Following the effectiveness of the Registration Statement and the Closing Transaction, the Company plans to cease its video for broadcast operations and direct its business focus to CTL’s business operations. Currently, CTL maintains two operating subsidiaries in the People’s Republic of China (“PRC”); namely, (a) Shenzhen Rongxin Investment Co., Ltd. (“Shenzhen Rongxin”) and (b) Guangzhou Yueshen Taiyang Network and Technology Co., Ltd. (“Guangzhou Yueshen”).




Set forth below is an organizational chart depicting the corporate structure of China Teletech Limited before the spin-off:









Set forth below is an organizational chart depicting the corporate structure of China Teletech Limited following the spin-off:









This Report and related information, including the financial statements and business operations, takes into account and references the effectiveness of the Closing Transaction, specifically the Exchange Agreement, as described herein.





The Company’s current headquarters are located at CN Dragon’s corporate headquarters at 7216 West Enterprise Dr., Las Vegas, Nevada, 89417. The Company’s current telephone number is 702-951-5682. Following the Closing Transaction, the Company plans to move its corporate headquarters to CTL’s headquarters located at Room A, 20/F, International Trade Residential and Commercial Building, Nanhu Road, Shenzhen, PRC 518002, which is also the registered office of CTL.  CTL’s telephone number is (86) 755-82204422.  CTL’s subsidiaries, Shenzhen Rongxin is located at Room A, 20/F, International Trade Residential and Commercial Building, Nanhu Road, Shenzhen, PRC 518002, and Guangzhou Yueshen is located at 1/F, No. 139, Yingyuan Road, Yuexiu District, Guangzhou, PRC.





Business Strategy





The Company plans to expand the trading and distribution of rechargeable phone cards, prepaid subway tickets, cellular phones and cellular phone accessories in Guangzhou and Shenzhen cities in China, while maintaining its existing position in the trading of mineral water and wine. The Company intends to introduce new software and value-added services through an expanded network of regional stores and strategic partners covering the Guangdong Province and via a virtual store.





Guangzhou Yueshen plans to duplicate its successful mobile phone related operation in Shenzhen city by utilizing the existing distribution connections Shenzhen Rongxin maintains in such areas through its network of regional stores and strategic partnership in connection with its mineral water and wine business. While it plans to increase service and retail stores for the mobile phone related operation across Guangzhou and Shenzhen, Guangzhou Yueshen intends to build further alliances with all available distributors, wholesalers and other retail outlets such as neighborhood convenience stores across Guangdong Province. Guangzhou Yueshen also plans to develop and acquire mobile phone applications and software to expand its product offerings.




4





The company was looking to expand its mobile phone related services in the Shenzhen city, PRC and collaborated with Shenzhen Rongxin.  Shenzhen Rongxin, a distributor and wholesaler of mineral water in Shenzhen city, intended to diversify its business and develop the mobile phone related service business in the Shenzhen city, PRC together with the know-how and experience of Guangzhou Yueshen.  The principals from both companies formed CTL, and CTL acquired Shenzhen Rongxin and Guangzhou Yueshen as wholly owned subsidiaries in 2008.  The Company, following the effectiveness of the Closing Transactions, intends to develop the trading and distribution of mobile phone related services in Shenzhen city and expand the existing operations in Guangzhou city.
 
 Shenzhen Rongxin will continue its successful distribution of mineral water and wine in Guangdong Province.  It is currently the exclusive supplier of Tibet Glacial spring water to the Guangdong Province of China.
 
 Competition
 
 China mobile phone user base increased to 747 million in January 2010 according to statistics published by China’s Ministry of Industry and Information Technology.  The mobile phone related services industry is competitive and highly fragmented with no standout industry leaders.  Rechargeable phone cards are usually sold though convenience stores, mobile phone service stores and other retail outlets.  Customer demand for rechargeable phone cards is steady with no particular brand loyalty.  Guangzhou Yueshen’s competitive advantage is to offer better customer service, shopping convenience in prime location, and strategic collaboration with mobile phone distributors, wholesalers and other retail outlets. In addition, as described above, Guangzhou Yueshen will be able to strategically utilize Shenzhen Rongxin’s existing distribution networks to move its rechargeable phone cards, prepaid subway tickets, cellular phones and cellular phone accessory business into these new geographical areas. (Source – China mobile service subscribers: China’s Ministry of Industry and Information Technology http://tmt.interfaxchina.com/news/2579, http://www.miit.gov.cn/)




Distribution Methods of Products and Services





Guangzhou Yueshen has an established distribution network with mobile phone distributors, wholesalers and retail outlets in Guangzhou city.  Products are traded on site with little distribution and shipping costs.  We project revenue increase from future expansion by adding additional retail outlets, wholesalers and distributors in the Guangdong Province.  There is no assurance of the revenue increase from future expansion or that expansion will occur at all.





Shenzhen Rongxin also has an established distribution network in Guangdong Province for the resale of mineral water product from a single vendor.  In the case for wine trading, a simple distribution is set up for a single major customer.





The Company’s new website, www.chinateletech.com, is currently under development to provide corporate information.  The Company plans to develop a virtual store online will be executed after the new mobile phone related service operation in Shenzhen city has been established.





In addition, the Company plans to add more services to its current product lines, specifically the value-added services which include the provision of personalized information to users’ mobile phones, 3G contents and other software applications.  An example of such value-added services is the provision of travel service related information and reservation of travel products (hotel, transportation and other ticketing) via the mobile phone Internet platform.





Suppliers





Shenzhen Rongxin is subject to supply shortage risk because its purchases of mineral water for resale are sourced from a single vendor, Tibet Glacial Mineral Water Co., Ltd. (“Tibet Glacial”). On January 1, 2009, Shenzhen Rongxin entered into purchase agreement whereby Tibet Glacial would provide spring water at fixed price until December 31, 2012 and in return, Shenzhen Rongxin needed to consume no less than 140,000 trunks of bottle water per year.





Guangzhou Yueshen has a more diverse group of suppliers for the mobile phone related services and does not plan to rely upon any one major supplier for such products. We believe that there are a number of readily available sources for such products, contributing to our ability to obtain competitive pricing.





Dependence on Major Customers





Guangzhou Yueshen has a diverse customer base for the mobile phone related services that focuses on individual retail customers. As such, we do not expect to be dependent on any major customers and do not expect that this will change in the near future.





Patents, Trademarks, Licenses





We do not have any designs which are copyrighted, trademarked or patented.





Environmental and Regulatory Issues





The expense of complying with environmental regulations is of minimal consequence.





Research and Development





We foresee minimal future research and development costs related to the development of mobile phone applications and software, as the development cost in China is relatively low.  Many applications are readily available and can be acquired at low prices.  We foresee high demands for such applications but for relatively short periods of time.  New applications are needed every now and then to keep merchandise fresh and fashionable.





Effect of existing or probable governmental regulations on the business, and economic and political risks





The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies North America and Western Europe. These include risks associated with, among others, the economic, political, legal environment, and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, restriction on international remittances, and rates and methods of taxation, among other things.





Employees





The Company has 18 full-time employees. We intend to hire full time employees and additional independent contract labor on an as needed basis when our website is complete.





5





ITEM 1A.    RISK FACTORS





You should carefully consider the risks described below as well as other information provided to you in this document, including information in the section of this document entitled “Forward Looking Statements.” The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties not presently known to the Company or that the Company currently believes are immaterial may also impair the Company’s business operations. If any of the following risks actually occur, the Company’s business, financial condition or results of operations could be materially adversely affected, the value of the Company common stock could decline, and you may lose all or part of your investment.





RISKS RELATED TO OUR BUSINESS





Following the Closing Transaction, management will collectively hold approximately 96.5% of the outstanding shares and exercise control of the Company.





Following the Closing Transaction, the two officers/directors, Dong Liu and Yuan Zhao, collectively hold 96.5% of the outstanding shares and exercise control of the company. Accordingly, our other shareholders will have little or no control of the company.





We are a development stage company and have little to no operating history upon which to evaluate our business.





We have a limited operating history and may not succeed.  Our plans and businesses are “proposed” and “intended” but we may not be able to successfully implement them.  Our primary business purpose is the expansion of our mobile phone value added services and applications. We expect that unanticipated expenses, problems, and technical difficulties will occur and that they will result in material delays in the operation of our business.  We may not obtain sufficient capital or achieve a significant level of operations and, even if we do, we may not be able to conduct such operations on a profitable basis.





You should consider our prospects in light of the risks, uncertainties and difficulties frequently encountered by companies that, like us, are in their early stage of development. We cannot guarantee that we will succeed in achieving our business goals, and our failure to do so would have a material adverse effect on our business, prospects, financial condition, operating results and our ability to continue as a going concern. We expect that we will require additional capital in order to execute our current business plan. As a development stage business, we may in the future experience under capitalization, shortages, setbacks and many of the problems, delays and expenses encountered by any early stage business. As a result of these factors, other factors described herein and unforeseen factors, we may not be able to successfully implement our business model.





We depend on a number of suppliers and any failure by any of them to supply us with products may impair our inventory and adversely affect our ability to meet customer demands, which could result in a decrease in net sales.





We typically do not maintain long-term purchase contracts with suppliers, but instead operate principally on a purchase order basis. Our current suppliers may not continue to sell products to us on current terms or at all, and we may not be able to establish relationships with new suppliers to ensure delivery of products in a timely manner or on terms acceptable to us. We may not be able to acquire desired merchandise in sufficient quantities on terms acceptable to us in the future. Our business could also be adversely affected if there were delays in product shipments to us due to freight difficulties, financial difficulties with our major suppliers, delays due to the difficulties of our suppliers involving strikes or other difficulties at their principal transport providers or otherwise. We are also dependent on suppliers for assuring the quality of merchandise supplied to us. Our inability to acquire suitable merchandise in the future or the loss of one or more of our suppliers and our failure to replace them may harm our relationship with our customers and our ability to attract new customers, resulting in a decrease in net sales.





Shenzhen Rongxin, one of our wholly owned subsidiaries, may suffer from supply shortage since its purchases of mineral water are sourced from a single vendor.





The primary business of Shenzhen Rongxin is the wholesale and distribution of mineral water as well as the trading of wine. All the mineral waters it purchases for resale are sourced from a single vendor, Tibet Glacial Mineral Water Co., Ltd. (“Tibet Glacial”). Although Shenzhen Rongxin has entered into a purchase agreement with Tibet Glacial pursuant to which Tibet Glacial guarantees the supply of mineral water at a fixed price until December 31, 2012, any unforeseeable events, such as a force majeure, may result in substantial reduction or termination of the mineral water supply, which will severely disrupt the normal operations of our subsidiary.





Maintaining good terms with distributors, wholesalers and retailers, and responding to customers may prove difficult.





Our success depends in part on our ability to (i) effectively maintain good working relationships with distributors, wholesalers and retailers, and (ii) respond to changing customer tastes in mobile phone applications, and to translate market trends into appropriate, saleable product offerings far in advance.  It is especially important in China to maintain good relationships with business partners since a significant portion of sales is highly dependent on the trading with distributors, wholesalers and retailers.  If we are unable to successfully predict or respond to changing styles or trends and misjudge the market for our products or any new product lines, our sales will be lower and we may be faced with a substantial amount of unsold inventory or missed opportunities.  In response, we may be forced to rely on additional markdowns or promotional sales to dispose of excess, slow-moving inventory, which may have a material adverse effect on our business, financial condition and results of operations.





6





We face risks associated with purchasing products from foreign companies





The Company’s purchases are based solely in PRC.  Foreign products, such as foreign brand mobile phones, are purchased through authorized dealers in PRC.  Dealing with imported products, we may be subject to the risks generally associated with doing business abroad, such as foreign governmental regulations, economic disruptions, delays in shipments, freight cost increases and changes in political or economic conditions in countries from which we purchase products. In the event that our authorized dealers have trouble with foreign supplies the Company would switch to other available brands with similar qualities.





The loss of the services of our senior management could impair our ability to execute our business strategy and as a result, reduce our sales and profitability.





Mr. Wen-wu Chen, General Manager, is a key person managing the marketing and sales efforts of the Company since 2008.  Mr. Chen has developed an extensive sales network in the China telecommunications industry.





Mr. Sibei Li, Sales Manager, is a key person in the management and recruitment of sales person for the Company.  Mr. Li was previously the sales manager for several companies in the telecommunications, electronics and real estate industries.





We depend on the continued services of our senior management. The loss of such key personnel could have a material adverse effect on our ability to execute our business strategy and on our financial condition and results of operations. We do not maintain key-person insurance for our senior management. We may have difficulty replacing our senior management who leave and, therefore, the loss of the services of any of these individuals could harm our business.





There are several members in senior management with extensive management experience in the telecommunications industry.  The Company acknowledges that it may lose some of these valued members but the effect on the Company would be minimal.  Guangzhou Rongxin is well connected with the telecommunications industry in PRC and would be able to find capable replacements if needed.  The Company will also implement performance based incentive mechanisms to reduce the loss of senior management.





Requirements associated with being a public company require significant company resources and management attention.





As a public company subject to the reporting requirements of the Securities Exchange Act of 1934 and the other rules and regulations of the SEC, we have been working with independent legal, accounting and financial advisors to adjust our financial and management control systems in a way to manage our growth and our obligations as a public company.  These areas include corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems.  We have made, and will continue to make, changes in these and other areas, including our internal controls over financial reporting.  However, we cannot assure you that these and other measures we may take will be sufficient to allow us to satisfy our obligations as a public company on a timely basis.





In addition, compliance with reporting and other requirements applicable to public companies such as Sarbanes Oxley Act will create additional costs for us, require the time and attention of our management, as well as the employment of additional personnel and outside consultants. We cannot predict or estimate the amount of such additional costs we may incur, the timing of such costs or the degree of impact it would have on our business.




Our planned growth together with our added obligations of being a public company may strain our business infrastructure, which could adversely affect our operations and financial condition.





As we grow, we will face the risk that our future resources and systems, including management resources, accounting and finance personnel and operating systems, may be inadequate to support our growth. We may also face new challenges, including an increase in information to be processed by our management information systems and diversion of management attention and resources away from existing operations and towards growth in new markets. Our current growth strategy will require us to increase our management and other resources over the next few years. In particular, heightened new standards with respect to internal accounting and other controls, as well as other resource-intensive requirements of being a public company, may, and have further strained our business infrastructure. If we are unable to manage our planned growth and maintain effective controls, systems and procedures, we may be unable to efficiently operate and manage our business and have and may continue to experience information lapses affecting our public reporting which could adversely effect our operations and financial condition.





We need to attract qualified employees.





Our future success depends in large part upon our ability to attract, train, retain and motivate employees. Qualified individuals of the requisite caliber and number needed to fill positions are in short supply in some areas. Our industry is characterized by high levels of employee attrition. Although we believe we will be able to offer competitive salaries and benefits, we may have to increase spending in order to retain personnel.





The success of our growth plan will be dependent on our ability to recruit and/or promote enough qualified personnel to support our future growth. The time and effort required to train and supervise a large number of new managers and associates may divert our existing resources and adversely affect our operating and financial performance.




7





We may pursue strategic acquisitions, which could have an adverse impact on our business.





We may from time to time consider acquiring complementary companies or businesses. To do so, we would need to identify suitable acquisition candidates, negotiate acceptable acquisition terms and obtain appropriate financing. Any acquisition that we pursue, whether or not successfully completed, may involve risks, including:





-
the diversion of our capital and our management's attention from other business issues and opportunities;-
difficulties in successfully integrating companies or stores that we acquire, including personnel, financial systems and controls, distribution, operations and general store operating procedures;-
material adverse effects on our operating results, particularly in the fiscal quarters immediately following the acquisition as it is integrated into our operations;-
material adverse effects on our operating results due to the closure of stores or distribution centers;





-
potentially dilutive issuances of our equity securities; and-
the incurrence of debt and contingent liabilities and impairment charges related to goodwill and other intangible assets, any of which could harm our business and financial condition.





Our success is highly dependent on our ability to provide timely delivery to our customers, and any disruption in our delivery capabilities or our related planning and control processes may adversely affect our operating results.





An important part of our success is due to our ability to deliver products quickly to our customers. Our ability to maintain this success depends on the identification and implementation of improvements to our planning processes, distribution infrastructure and supply chain. We also need to ensure that our distribution infrastructure and supply chain keep pace with our anticipated growth. The cost of these enhanced processes could be significant and any failure to maintain, grow or improve them could adversely affect our operating results.





We may have insufficient funds to implement our expansion strategy.





Our expansion strategy will require additional capital for, among other purposes, relocating stores, renovating existing stores, entering new collaboration terms with distributors, wholesalers and other retailers, and entering new markets, including researching existing and new real estate and consumer markets, lease costs, inventory, property and equipment and other costs associated with renovated and relocated store and market entry expenses and growth.  If cash generated internally is insufficient to fund capital requirements, or if funds are not available, we will require additional debt or equity financing.  Adequate financing may not be available or, if available, may not be available on terms satisfactory to us. If we fail to obtain sufficient additional capital in the future, we could be forced to curtail our expansion, renovation and relocation strategies by reducing or delaying capital expenditures relating to renovated and relocated stores and new market entry, selling assets or restructuring or refinancing our indebtedness. As a result, there can be no assurance that we will be able to fund our current plans for the expansion, renovation and relocation of existing stores or entry into new markets.





The Company plans to expand its two existing retail locations mainly by investing in additional hardware and software necessary to enable the Company to conduct sales of prepaid phone cards over the Internet to both wholesalers and end users. Thorough testing of the functionality and once implemented, it is anticipated that the Company’s customers in not just Guangzhou but in a few more provinces of China would be able to purchase prepaid phone cards over the Internet 24 hours a day, 7 days a week.





If we are unable to maintain the profitability of our existing operations and to generate profit for the new operations, we may not be able to adequately implement our growth strategy, which may adversely affect our overall operating results.





Our planned growth depends, in part, on our ability to maintain the profitability of our existing operations and to open new operations in Shenzhen and other locations in Guangdong Province.  There can be no assurance, however, that we will be able to reach favorable terms with distributors, wholesalers and other retailers, identify and obtain favorable store sites, arrange favorable leases for stores, obtain governmental and other third-party consents, permits and licenses needed to expand or operate stores, construct or refurbish stores, or hire, train and integrate qualified sales associates in those stores.  If we are unable to profitably manage new operations and maintain the profitability of our existing operations, we may not be able to adequately implement our growth strategy, which may adversely affect our overall operating results.





We may not have sufficient funds to operate our business and may not be able to obtain additional financing.





Assuming any disruption in current sales, we may require additional funds to continue our business.  We may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force us to delay our plans for growth and implementation of our strategy which could seriously harm our business, financial condition, and results of operations.  As we need additional funds, we may seek to obtain them primarily through stock or debt financings.  Those additional financings could result in dilution to our stockholders.




8




Failure to fund continued capital expenditures could adversely affect results.





If our revenues do not continue, we may have a limited ability to expend the capital necessary to maintain business operations at expected levels, resulting in insufficient revenues over time. If our cash flow from anticipated operations is not sufficient to satisfy our capital expenditure requirements, there can be no assurance that additional debt or equity financing or other sources of capital will be available to meet these requirements.





Costs of legal matters and regulation could exceed estimates.





We may become parties to a number of legal and administrative proceedings involving matters pending in various courts or agencies.  These include proceedings associated with facilities which may be owned, operated or used by us and include claims for personal injuries and property damages.  Our current business model may involve management of regulated materials and are subject to various environmental laws and regulations. It is not possible for us to estimate reliably the amount and timing of all future expenditures related to environmental and legal matters and other contingencies.





Any projections used in this Report may not be accurate.





Any and all projections and estimates contained in this Report or otherwise prepared by us are based on information and assumptions which management believes to be accurate; however, they are mere projections and no assurance can be given that actual performance will match or approximate the projections.





Our estimates may prove to be inaccurate and future net cash flows are uncertain.





Our estimates of both future sales and the timing of development expenditures are uncertain and may prove to be inaccurate.  We also make certain assumptions regarding net cash flows and operating and development costs that may prove incorrect when judged against our actual experience.  Any significant variance from these assumptions could greatly affect our estimates of future net cash flows and our ability to borrow under our credit facility.





A downturn in the economy may affect consumer purchases of discretionary items and could harm our operating results.





In general, our sales represent discretionary spending by our customers. Discretionary spending on our products is affected by many factors, including, among others:





-
general business conditions;-
interest rates;-
inflation;-
consumer debt levels;





-
the availability of consumer credit;-
the number of new and second home purchases;-
taxation;-
energy prices;





-
unemployment trends;-
terrorist attacks and acts of war; and-
other matters that influence consumer confidence and spending.





Purchases of discretionary items, including the products we intend to sell, could decline during periods when disposable income is lower or during periods of actual or perceived unfavorable economic conditions. If this occurs, our operating results could suffer.





Existing and increased competition in the mobile phone value added service and application business may reduce our net revenues, profits and market share.





The mobile phone value added service and application business is highly competitive. Our retail segment competes against a wide variety of small, independent specialty stores as well as mobile phone equipment stores, national specialty chains and convenience store outlets.  In addition, some of our suppliers offer products directly to consumers.  Many of our competitors are considerably larger and have substantially greater financial, marketing and other resources than we have.  We cannot assure you that we will continue to be able to compete successfully against existing or future competitors.  Our expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could have a material adverse effect on our business, financial condition and results of operations.




9





RISKS RELATING TO THE SPIN-OFF





We may be unable to achieve some or all of the benefits that we expect to achieve from our separation from CN Dragon.





We may not be able to achieve the full strategic and financial benefits that we expect will result from our separation from CN Dragon or such benefits may be delayed or may not occur at all. For example, analysts and investors may not regard our corporate structure as clearer and simpler than the current CN Dragon corporate structure or place a greater value on our Company as a stand-alone company than on our businesses being a part of CN Dragon. As a result, in the future the aggregate market price of CN Dragon’s common stock and our common stock as separate companies may be less than the market price per share of CN Dragon’s common stock had the separation and distribution not occurred.





We are being separated from CN Dragon, our parent company, and, therefore, we have a limited operating history as a separate company, and no history as a separate reporting company until the Registration Statement filing.





The historical and financial information included in this information statement does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate publicly-traded company during the periods presented or those that we will achieve in the future primarily as a result of the following factors:





-
Our past business has in part been operated by CN Dragon as part of its broader corporate organization, rather than as a separate, publicly-traded company; and-
Other significant changes may occur in our cost structure, management, financing and business operations as a result of our operating as a company separate from CN Dragon.





The Distribution of our shares may result in tax liability.





You may be required to pay income tax on the value of your shares of common stock received in connection with the Spin-Off Distribution. This Distribution may be taxable to you as a dividend and/or as a capital gain, depending upon the extent of your basis in CN Dragon stock which you hold. You are advised to consult your own tax advisor as to the specific tax consequences of the Distribution.  Shareholders are also encouraged to read “Federal Income Tax Consequences of the Distribution” and “Federal Income Tax Consequences to Shareholders” below, which contain important tax disclosures relating to the Distribution.





The Distribution may cause the trading price of CN Dragon’s common stock to decline.





Following the Distribution CN Dragon expects that its common stock will continue to be quoted and traded on the Over the Counter Bulletin Board under the symbol “DRGN.” A trading market may not continue for the shares of CN Dragon’s common stock or even develop for our shares. As a result of the Distribution, the trading price of CN Dragon’s common stock may be substantially lower following the Distribution than the trading price of CN Dragon’s common stock immediately prior to the Distribution.





Further, the combined trading prices of CN Dragon’s common stock and our common stock after the Distribution may be less than the trading price of CN Dragon’s common stock immediately prior to the Distribution.





The lack of a broker or dealer to create or maintain a market in our stock could adversely impact the price and liquidity of our securities.





We have no agreement with any broker or dealer to act as a market maker for our securities and as a result, we may not be successful in obtaining any market makers. Thus, no broker or dealer will have an incentive to make a market for our stock. The lack of a market maker for our securities could adversely influence the market for and price of our securities, as well as your ability to dispose of, or to obtain accurate information about, and/or quotations as to the price of, our securities.





RISKS RELATED TO OUR STOCK





We require substantial capital requirements to finance our operations.





We have substantial anticipated capital requirements and we may require additional capital for future operations.  We plan to finance anticipated ongoing expenses and capital requirements with funds generated from the following sources:





-
cash provided by operating activities;-
available cash and cash investments; and-
capital raised through debt and equity offerings.




10





The funds provided by these sources, if attainable, may not be sufficient to meet our anticipated cash requirements and the uncertainties and risks associated with future performance and revenues will ultimately determine our liquidity and our ability to meet anticipated capital requirements.  If declining prices cause our anticipated revenues to decrease, we may be limited in our ability to replace our inventory.  As a result, our production and revenues would decrease over time and may not be sufficient to satisfy our projected capital expenditures.  We may not be able to obtain additional financing in such a circumstance.





As a public company, our stock price could be extremely volatile and, as a result, you may not be able to resell your shares at or above the price you paid for them.





Following the Registration Statement, an active public market for our common stock may not develop or be sustained. Further, the market price of our common stock may decline below the price paid for investor’s shares.





Among the factors that could affect our stock price are:





-
industry trends and the business success of our vendors;-
actual or anticipated fluctuations in our quarterly financial and operating results, including our comparable store sales;-
our failure to meet the expectations of the investment community and changes in investment community recommendations or estimates of our future operating results;-
strategic moves by our competitors, such as product announcements or acquisitions;





-
regulatory developments;-
litigation;-
general market conditions;-
other domestic and international macroeconomic factors unrelated to our performance; and





-
additions or departures of key personnel.





The stock market has from time to time experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These kinds of broad market fluctuations may adversely affect the market price of our common stock. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been instituted. If a securities class action suit is filed against us, we would incur substantial legal fees and our management's attention and resources would be diverted from operating our business in order to respond to the litigation.





Shares not registered in the Registration Statement will continue to be subject to the resale restrictions imposed by Rule 144.





We will issue a total of 250,000,000 shares pursuant to the proposed share exchange transaction. As a result, Dong Liu and Yuan Zhao will become our affiliates. Their shares cannot be sold until six months after the share exchange transaction and are subject to Rule 144’s resale limitations, including, but not limited to, the following:





-
volume limitation;-
aggregation;-
broker transaction, and-
Form 144 filing requirements.





The volume limitations provide that a person (or persons who must aggregate their sales) cannot, within any three-month period, sell more than the greater of one percent of the then outstanding shares, or the average weekly reported trading volume during the four calendar weeks preceding each such sale.





We may need to raise additional money before we achieve profitability; if we fail to raise additional money, it could be difficult to continue our business.





In the event our revenues decrease, we may not have sufficient financial resources from revenues to meet our operating expenses and capital requirements.   We may seek additional funding through public or private financing or through collaborative arrangements with strategic partners.





You should be aware that in the future:





-
we may not obtain additional financial resources when necessary or on terms favorable to us, if  at all;-
any available additional financing may not be adequate; and-
we may be required to sell shares of our common stock at extremely discounted prices in order for us to obtain additional financing.




11





If we cannot raise additional funds when needed, or on acceptable terms, we may not be able to continue to operate.





Issuing preferred stock with rights senior to those of our common stock could adversely affect holders of common stock.





Our charter documents give our board of directors the authority to issue series of preferred stock without a vote or action by our stockholders and such shares have been issued.  The board also has the authority to determine the terms of preferred stock, including price, preferences and voting rights.  The rights granted to holders of preferred stock may adversely affect the rights of holders of our common stock.  For example, a series of preferred stock may be granted the right to receive a liquidation preference – a pre-set distribution in the event of a liquidation – that would reduce the amount available for distribution to holders of common stock.  In addition, the issuance of preferred stock could make it more difficult for a third party to acquire a majority of our outstanding voting stock.  As a result, common stockholders could be prevented from participating in transactions that would offer an optimal price for their shares.





We do not anticipate paying dividends on our capital stock in the foreseeable future.





We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain our future earnings, if any, to fund the development and growth of our business. In addition, the terms of the any future debt or credit facility may preclude us from paying any dividends. As such, our shareholders may not receive any profit on their investment other than from the eventual sale of their shares, if any.





RISKS RELATED TO DOING BUSINESS IN CHINA





Changes in China's political or economic situation could harm us and our operating results.





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





-
Level of government involvement in the economy;-
Control of foreign exchange;-
Methods of allocating resources;-
Balance of payments position;





-
International trade restrictions; and-
International conflict.





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





Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us.





The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to you and us. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. In addition, all of our executive officers and all of our directors are residents of China and not of the United States, and substantially all the assets of these persons are located outside the United States. As a result, it could be difficult for investors to affect service of process in the United States or to enforce a judgment obtained in the United States against our Chinese operations and subsidiaries.





You may have difficulty enforcing judgments against us.





We are a British Columbia company and most of our assets are located outside of the United States. Most of our current operations will be conducted in the PRC. In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts.




12





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





The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the Company operates in the telecommunication industry which is closely monitored by the central and local governments. The central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms, to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, to increase tax rates and to restrict the business activities of the telecommunications industry, could have a significant effect on economic conditions in China or particular regions thereof, adversely affect the profitability of the Company, and could require us to restructure our business.





Future inflation in China may inhibit our ability to conduct business in China.





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





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





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





Fluctuations in exchange rates could adversely affect our business and the value of our securities.





The value of our common stock will be indirectly affected by the foreign exchange rate between U.S. dollars and RMB and between those currencies and other currencies in which our sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.





Since July 2005, the RMB has no longer been pegged to the U.S. dollar. Although the People's Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.





The PRC law may require us to appropriate a portion of our net income to our statutory reserve in an amount up to a maximum of 50% of our registered capital in the PRC, which may substantially reduce our cash flow available and affect our results of operations and liquidity.





The principal laws and regulations in the PRC governing distribution of dividends by FIEs include:





(i)
The Sino-foreign Equity Joint Venture Law(1979), as amended, and the Regulations for the Implementation of the Sino-foreign Equity Joint Venture Law (1983), as amended;





(ii)
The Sino-foreign Cooperative Enterprise Law (1988), as amended, and the Detailed Rules for the Implementation of the Sino-foreign Cooperative Enterprise Law (1995), as amended;





(iii)
The Foreign Investment Enterprise Law (1986), as amended, and the Regulations of Implementation of the Foreign Investment Enterprise Law(1990), as amended.




13





Under these regulations, FIEs in the PRC may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, foreign-invested enterprises in the PRC are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds unless such reserve funds have reached 50% of their respective registered capital. These reserves are not distributable as cash dividends. The board of directors of a FIE has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation. Such deposition of funds into a statutory reserve account may substantially reduce funds available to us for other operation, investment or distribution purposes.





ITEM 2.    PROPERTIES





At present, we do not own any property.  Two offices in Shenzhen and Guangzhou will be located in leased facilities. We have local access to all commercial freight systems. The office facility in Shenzhen contains both the administrative/sales offices and retail floor sections. The monthly lease is $2,610 per month. The office facility in Guangzhou contains both the administrative/sales offices and retail floor sections.  The monthly lease is $2,180 per month.





ITEM 3.    LEGAL PROCEEDINGS





We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.





ITEM 4.    (REMOVED AND RESERVED)





PART II





ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES





Market information





No established public trading market exists for our common stock. We have no shares of common stock subject to outstanding options or warrants to purchase, or securities convertible into, our common stock.





Holders





As of April 13, 2010, in accordance with our transfer agent records, we had one shareholder of record holding one share of our common stock.  Following the Spin-off transaction discussed above, we will have approximately 337 holders of record of our common stock.





Dividends





To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.





Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.





Securities authorized for issuance under equity compensation plans





We presently do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest of the Company and our stockholders to do so.





ITEM 6.    SELECTED FINANCIAL DATA





We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.




14





ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION





The discussion of the financial condition of the company and its results of operations is presented on the basis of the completed Spin-off transaction.





The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes included in this Report.  This Report contains “forward-looking statements.” The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.





Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements.  Factors that could cause actual results to differ from expectations include, but are not limited to, those set forth under the section “Risk Factors” set forth in this Report.





The forward-looking events discussed in this Report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us.  For these statements, we claim the protection of the “bespeaks caution” doctrine.  All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.





Critical Accounting Policies





(A)
Method of Accounting





The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.





(B)
Use of Estimates





In the preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years.  These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, and the estimation on useful lives of property, plant and equipment.  Actual results could differ from those estimates.





(C)
Cash and Cash Equivalent





Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.





(D)
Comprehensive Income





In accordance with SFAS No. 130, “Reporting Comprehensive Income”,comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.  Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements.





(E)
Financial Instruments





The carrying amounts of the Company's other receivable and related parties payable approximate fair value due to the relatively short period to maturity for these instruments.





(F)
Recognition of Revenue





Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability is reasonably assured.





15


(G)
Income Tax





The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. In accordance with SFAS No. 109 “Accounting for Income Taxes”,the Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not that such items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.





(H)
Recent Accounting Pronouncements





In June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets (FASB ASC 860 Transfers and Servicing) and FASB Statement No. 167 (FASB ASC 810 Consolidation), a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC 810 Consolidation).
 
 Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FASB ASC 860 Transfers and Servicing), and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. Statement No. 166 (FASB ASC 860 Transfers and Servicing) must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date.  The Company has evaluated and determined that there was no material impact on the Company’s consolidated financial position or results of the operations.
 
 Statement 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC 810 Consolidation), and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. Statement No. 167 (FASB ASC 810 Consolidation) shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter.  Earlier application is prohibited. The Company has evaluated and determined that there was no material impact on the Company’s consolidated financial position or results of the operations.
 
 On June 30, 2009, FASB issued FASB Statement No. 168, Accounting Standards CodificationTM ( FASB ASC 105 Generally Accepted Accounting Principles) a replacement of FASB Statement No. 162  the Hierarchy of Generally Accepted Accounting Principles. On the effective date of this standard, FASB Accounting Standards CodificationTM (ASC) became the source of authoritative U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the Securities and Exchange Commission (SEC). This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  If an accounting change results from the application of this guidance, an entity should disclose the nature and reason for the change in accounting principle in their financial statements.  This new standard flattens the GAAP hierarchy to two levels: one that is authoritative (in FASB ASC) and one that is non-authoritative (not in FASB ASC). Exceptions include all rules and interpretive releases of the SEC under the authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants, and certain grandfathered guidance having an effective date before March 15, 1992. Statement No. 168 is the final standard that will be issued by FASB in that form.  There will no longer be, for example, accounting standards in the form of statements, staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA Accounting Statements of Position.  The Company has adopted the new accounting standard and determined that there was no material impact on the Company’s consolidated financial position or results of the operations.
 
 In April 2010, the FASB issued an Accounting Standard Update (“ASU”) No.2010-13,”Compensation-Stock Compensation” (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades,” which address the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. ASU 2010-13 is effective for interim and annual periods beginning on or after December 15, 2010 and is not expected to have a material impact on the Company’s consolidated financial position or results of the operations.
 
 Management of the Company does not anticipate that the adoption of the above standards will have a material impact on these financial statements .


16


Results of Operations





For the year ended December 31, 2010, the Company had revenue of $0 and gross profit of $0.  The operating expense was $0 and the other income was $757,095 and a net income of $757,095.  The other income represented the net result of an agreement of the forgiveness of the amount owning by the Company to its holding company (For details, please refer to Related Parties Transactions below).   The re was no sale and gross profit ratio and net profit ratio w ere not applicable.





Liquidity and Capital Resources





At December 31, 2010, we had cash of $0.


We expect to incur mainly professional fees for the next 12 months.   These costs are generally associated with administrative, attorney and auditing fees.   The source of fund is mainly from major shareholders.
 
 Related Parties Transactions
 
 During the year ended December 31, 2009, the Company agreed to waive the right to collect the outstanding receivable from Galaxy Networks, Inc. in the amount of $56,812, whereas Wavelit, Inc. agreed to forgive the amount owing by the Company for $813,917, resulting in other income of $757,095.  Wavelit, Inc. is the Company’s parent, whereas Galaxy Networks, Inc. is a wholly owned subsidiary of Wavelit, Inc.





17


Going Concern





As reflected in the accompanying financial statements, the Company ceased its operations in 2007, has a net loss of $237,662 from inception, and no stockholders' equity.  This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.





Future Goals





In the next 12 months, our goal is to dispose the company and we are looking for and assessing the potential buyers.





Off-balance Sheet Arrangements





We maintain no significant off-balance sheet arrangements





ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





We currently do not utilize sensitive instruments subject market risk in our operations.





ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The financial statements begin on page F-1.





ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





None.





ITEM 9A.    CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.





Management's Annual Report on Internal Control Over Financial Reporting.





The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.




18





Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010.  The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2010, the Company’s internal control over financial reporting was effective for the purposes for which it is intended.





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





Changes in Internal Control over Financial Reporting





No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





PART III





ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The following table sets forth the name, age, and position of our executive officers and directors. Executive officers are elected annually by our Board of Directors.  Each executive officer holds his office until he resigns, is removed by the Board, or his successor is elected and qualified.  Directors are elected annually by our shareholders at the annual meeting.  Each director holds his office until his successor is elected and qualified or his earlier resignation or removal.





NAME
AGE
SINCE
POSITIONDong Liu
38
2009
President, Chief Executive Officer and Chairman of the Board of DirectorsYuan Zhao
28
2009
Chief Financial Officer, Secretary and DirectorHenry Guori Li (1)
69
2007
Promoter, Former President, Chief Executive Officer, Chief Financial Officer, Secretary and Sole Director





(1) Henry Guori Li served as our sole officer and director from 2007 to May 2009. On May 20, 2009, the Company entered into a share exchange agreement (the “Exchange Agreement”) with CTL. Pursuant to the terms of the Exchange Agreement, Mr. Henry Guori Li resigned as the sole director and officer of the Company, and Mr. Dong Liu and Mr. Yuan Zhao were appointed as the directors and officers of the Company, as described herein. He was also a promoter of the Company as defined under Rule 405 of the Securities Act of 1933, as amended.





Set forth below is a brief description of the background and business experience of our executive officers and directors during the past five (5) years.





Dong Liu, Age 38, President, Chief Executive Officer and Chairman of the Board of Directors





Mr. Liu is the President, Chief Executive Officer and Chairman of the Board of Directors of the Company.  He is also the Chairman of Shenzhen Rongxin Investment Company Limited, a company that invests in communications equipment, computer and network technology development.  He had previously worked for China’s state-owned enterprise, Jinxin Industy Development Company Limited, in Hainan Province and Shenzhen for 11 years and participated in the government’s involvement in business development with several industries.





Yuan Zhao, Age 28, Chief Financial Officer, Secretary and Director





Mr. Zhao is the Chief Financial Officer, Secretary and a director of the Company.  In 2007, he was a business consultant for a Singapore investment company, Huantong Singapore Co. Ltd., which involves in the trading services of telecommunications equipment.  He studied business administration at the Asia Pacific Management Institute in Singapore from 2005 to 2007. Previously he had 4 years’ experience in the hotel management industry in Canada.





Henry Guori Li, Age 69, Promoter, Former President, Chief Executive Officer, Chief Financial Officer, Secretary and Sole Director




19





Mr. Li was the promoter of the Company. From 2007 to May 2009, he served as our sole director and officer. Mr. Li’s education includes an undergraduate degree in Philosophy from St. Lawrence, Beacon,  New York, a graduate degree in Theology from Immaculate Heart of Mary, Geneva, New York and a post graduate degree from Iona College, New Rochelle, New York.  Following the completion of his formal education, Mr. Li served in the United States Navy, retiring as a Lieutenant Commander.  After the end of Operation Desert Storm in the Persian Gulf War, Mr. Li ended his military career with the meritorious service medal having served the Navy, Marine Corps and Coast Guard both at home and abroad.  Mr. Li has extensive experience as an administrator and consultant in the fields of education, business and many charitable organizations and has been offering consulting services in these fields since 1995.





Neither Mr. Liu, Mr. Zhao nor Mr. Li has been involved in any of the following legal proceeding within the past 10 years that would materially affect their integrity or his ability to act on behalf of our company:





1.
any bankruptcy petition filed by or against any business of which the above was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;





2.
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses) ;





3.
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or





4.
being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.





Family Relationships





There are no family relationships exist between the directors and executive officers of the Company.





Auditors; Financial Expert





We do not have an audit committee financial expert.  We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive.  Furthermore, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.





Compliance With Section 16(A) Of The Exchange Act.





Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and are required to furnish copies to the Company. To the best of the Company’s knowledge, any reports required to be filed were timely filed in fiscal year ended December 31, 2010.





Code of Ethics





The Company has not adopted a Code of Ethics applicable to its Chief our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions as of the date hereof.





ITEM 11.
EXECUTIVE COMPENSATION





Executive Compensation





Our executive officers have not received any compensation since the date of our incorporation, and we did not accrue any compensation. At this time, we do not have any further executive compensation plan for Messrs. Liu and Zhao following the Closing Transaction except for the items mentioned herein. Messrs. Liu and Zhao have not received any compensation relating to their involvement with Shenzhen Rongxin and Guangzhou Rongxin for 2010 as well.





Employment Agreements





Currently, we do not have any employment agreements.  However, following the Closing Transaction, we plan to enter into an employment agreement with Mr. Liu as President and Director at a compensation rate of $2,841 per month.





Following the Closing Transaction, we plan to enter into an employment agreement with Mr. Zhao as Chief Financial Officer, Secretary and Director at a compensation rate of $2,600 per month.





20





At this time, we do not have any further executive compensation or incentive plans for Messrs. Liu and Zhao following the spin-off and share exchange transaction save for the abovementioned.





Equity Compensation, Pension or Retirement Plans





No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees. At this time, we do not have any further executive compensation plan for Messrs. Liu and Zhao following the Closing Transaction except for the items mentioned herein.





Audit Committee





Presently, our Board of Directors is performing the duties that would normally be performed by an audit committee. We intend to form a separate audit committee, and plan to seek potential independent directors. In connection with our search, we plan to appoint an individual qualified as an audit committee financial expert.





Options/SARS Grants During Last Fiscal Year





None.





Directors’ Compensation





We currently do not compensate our director.  In the future, we may compensate our current director or any additional directors for reasonable out-of-pocket expenses in attending board of directors meetings and for promoting our business.  From time to time we may request certain members of the board of directors to perform services on our behalf.  In such cases, we will compensate the directors for their services at rates no more favorable than could be obtained from unaffiliated parties.





ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The following table sets forth certain information regarding the beneficial ownership of the issued and outstanding shares of our common stock as of the date hereof, but prior to the Closing Transaction and Distribution, by the following persons:





1.
Each person who is known to be the beneficial owner five percent (5%) or more of our issued and outstanding shares of common stock;2.
Each of our Directors and executive Officers; and3.
All of our Directors and Officers as a group





Name And Address

Number Of Shares Beneficially Owned


Percentage OwnedCN Dragon Corporation (1)


1



100
%Henry Guori Li (1)(2)


0



0
%Total


1



100
%





(1)
The address is 7216 West Enterprise Drive, Las Vegas, Nevada, 89417.(2)
Mr. Li is also CN Dragon’s Chief Executive Officer and sole director.





The following table sets forth certain information regarding the proposed beneficial ownership of the issued and outstanding shares of our common stock following the effectiveness of the Registration Statement and Closing Transaction, but before the Distribution by the following persons:





1.
Each person who is known to be the beneficial owner five percent (5%) or more of our issued and outstanding shares of common stock;2.
Each of our Directors and executive Officers; and3.
All of our Directors and Officers as a group





21


Name And Address

Number Of Shares Beneficially Owned


Percentage OwnedDong Liu(1)


120,625,000



48.25
%Yuan Zhao(2)


120,625,000



48.25
%CN Dragon Corporation(3)


8,750,000



3.5
%Total


250,000,000



100
%





(1)
The address is Room A, 20/F, International Trade Residential and Commercial Building, Nanhu Road, Shenzhen China 518002.(2)
The address is Room 904, Block C, ShengYueJu, FengYuan Road, Guangzhou China, 510130.(3)
These shares represent the shares to be issued to CN Dragon and subsequently issued to CN Dragon’s shareholder’s in the Distribution. The address is Room A, 20/F, International Trade Residential and Commercial Building, Nanhu Road, Shenzhen China 518002.





The following table sets forth certain information regarding the proposed beneficial ownership of the issued and outstanding shares of our common stock following the Closing Transaction and Distribution by the following persons:





1.
Each person who is known to be the beneficial owner five percent (5%) or more of our issued and outstanding shares of common stock;2.
Each of our Directors and executive Officers; and3.
All of our Directors and Officers as a group





Name And Address

Number Of Shares Beneficially Owned


Percentage OwnedDong Liu(1)


120,625,000



48.25
%Yuan Zhao(2)


120,625,000



48.25
%Total


241,250,000



96.5
%





(1)
The address is Room A, 20/F, International Trade Residential and Commercial Building, Nanhu Road, Shenzhen China 518002.(2)
The address is Room 904, Block C, ShengYueJu, FengYuan Road, Guangzhou China, 510130.





Beneficial ownership is determined in accordance with the rules and regulations of the SEC.  The number of shares and the percentage beneficially owned by each individual listed above include shares that are subject to options held by that individual that are immediately exercisable or exercisable within 60 days from the date hereof and the number of shares and the percentage beneficially owned by all officers and directors as a group includes shares subject to options held by all officers and directors as a group that are immediately exercisable or exercisable within 60 days from the date of this registration statement





ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


During the year ended December 31, 2009, the Company agreed to waive the right to collect the outstanding receivable from Galaxy Networks, Inc. in the amount of $56,812, whereas Wavelit, Inc. agreed to forgive the amount owing by the Company for $813,917, resulting in other income of $757,095.  Wavelit, Inc. is the Company’s parent, whereas Galaxy Networks, Inc. is a wholly owned subsidiary of Wavelit, Inc.




22





ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES





Appointment of Auditors





Our Board of Directors selected Samuel H. Wong & Co., LLP as our auditors for the year ended December 31, 2010.





Audit Fees





Samuel H. Wong & Co., LLP billed us $54,000 in audit fees during the year ended December 31, 2010 and $29,000 in audit fees during the year ended December 31, 2009.





Audit-Related Fees





We did not pay any fees to Samuel H. Wong & Co., LLP for assurance and related services that are not reported under Audit Fees above, during our fiscal years ending December 31, 2010 and December 31, 2009.





Tax and All Other Fees





We did not pay any fees to Samuel H. Wong & Co., LLP for tax compliance, tax advice, tax planning or other work during our fiscal years ending December 31, 2010 and December 31, 2009.





Pre-Approval Policies and Procedures





We have implemented pre-approval policies and procedures related to the provision of audit and non-audit services.  Under these procedures, our board of directors pre-approves all services to be provided by Samuel H. Wong & Co., LLP, and the estimated fees related to these services.





With respect to the audit of our financial statements as of December 31, 2010, and for the year then ended, none of the hours expended on Samuel H. Wong & Co., LLP’s engagement to audit those financial statements were attributed to work by persons other than Samuel H. Wong & Co., LLP’s full-time, permanent employees.





PART IV





ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES





ExhibitNumber

Description3.1

Articles of Incorporation filed with the British Columbia Ministry of Finance on October 1, 2001 *3.2

Certificate of Name Change filed with the British Columbia Ministry of Finance on November 17, 2005 *3.3

Certificate of Restoration filed with the British Columbia Ministry of Finance on August 28, 2009 *3.4

By-Laws of China Teletech Limited *4.1

Notice of Alteration filed with the British Columbia Ministry of Finance on October 7, 2009 *10.1

Stock Purchase and Share Exchange Agreement dated May 20, 2009 *10.2

Share Transfer Agreement by and among Dong Liu, Yuanzhao and China Teletech Limited (formerly known as Sierra Vista Group Limited) *10.3

Share Transfer Agreement by and between Shanghai Classic Group Limited and China Teletech Limited (formerly known as Stream Horizon Studios, Inc.) *10.4

Guangzhou Yueshen-Call Option Agreement between Shanghai Classic Group Limited and China Teletech Limited *10.5

Guangzhou Yueshen-Share Pledge Agreement between Shanghai Classic Group Limited and China Teletech Limited *10.6

Guangzhou Yueshen-Deed of Undertaking between Shanghai Classic Group Limited and China Teletech Limited *10.7

Guangzhou Yueshen-Loan Agreement between Shanghai Classic Group Limited and China Teletech Limited *10.8

Shenzhen Rongxin-Call Option Agreement between Yuan Zhao and China Teletech Limited *10.9

Shenzhen Rongxin-Call Option Agreement between Dong Liu and China Teletech Limited *





10.10

Shenzhen Rongxin-Share Pledge Agreement between Yuan Zhao and China Teletech Limited *10.11

Shenzhen Rongxin-Share Pledge Agreement between Dong Liu and China Teletech Limited *10.12

Shenzhen Rongxin-Deed of Undertaking between Yuan Zhao and China Teletech Limited *10.13

Shenzhen Rongxin-Deed of Undertaking between Dong Liu and China Teletech Limited *10.14

Shenzhen Rongxin-Loan Agreement between Yuan Zhao and China Teletech Limited *10.15

Shenzhen Rongxin-Loan Agreement between Dong Liu and China Teletech Limited *





21.1

List of Subsidiaries *31.1

Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

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





* Previously filed


23


SIGNATURES





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





CHINA TELETECH LIMITED





Date: October 13 , 2011
By:
/s/ Dong LiuDong LiuPresident, Chief Executive Officer and Chairman(Principal Executive Officer)





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





October 13 , 2011
By:
/s/ Dong LiuDong LiuPresident, Chief Executive Officer and Chairman(Principal Executive Officer)October 13 , 2011
By:
/s/ Yuan ZhaoYuan ZhaoChief Financial Officer, Secretary and Director(Principal Accounting Officer)




24




China Teletech Limited (fka Stream Horizon Studios, Inc.)
 
 Financial Statements
 
 December 31, 2010 and 2009
 
 (Stated in US Dollars)




China Teletech Limited (fka Stream Horizon Studios, Inc.)




Contents
PagesReport of Independent Registered Public Accounting Firm
1Balance Sheets
2Statements of Operations
3Statements of Changes in Stockholders’ Equity
4Statements of Cash Flows
5 – 6Notes to Financial Statements
7 - 10










REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To:
The Board of Directors and StockholdersChina Teletech Limited (fka Stream Horizon Studios, Inc.)





Report of Independent Registered Public Accounting Firm





We have audited the accompanying balance sheets of China Teletech Limited (fka Stream Horizon Studios, Inc.) as of December 31, 2010 and 2009, and the related statements of operations, changes in stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of China Teletech Limited (fka Stream Horizon Studios, Inc.)as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.




San Mateo, California

Samuel H. Wong & Co., LLPFebruary 21, 2011

Certified Public Accountants




1




China Teletech Limited (fka Stream Horizon Studios, Inc.)


Balance Sheets
 As of December 31, 2010 and 2009
 (Stated in US Dollars)
 
 ASSETS


Notes


12/31/2010


12/31/2009Current AssetsOther Receivable





$
-


$
-Total Current Assets






-



-Non-Current Assets






-



-TOTAL ASSETS





$
-


$
-LIABILITIESCurrent and non-current liabilities





$
-


$
-TOTAL LIABILITIES





$
-


$
-STOCKHOLDERS' EQUITYPreferred Stock ($0.000 par value, 10,000,000 shares authorized, 0 share issued and outstanding at December 31, 2010 and 2009)

Common Stock ($0.000 par value, 250,000,000 shares authorized, 1 share issued and outstanding at December 31, 2010 and 2009)





$
-


$
-Additional Paid in Capital






89,111



89,111Retained Earnings






(237,662
)


(237,662
)Accumulated Other Comprehensive Income






148,551



148,551TOTAL STOCKHOLDERS' EQUITY






-



-TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY





$
-


$
-
 
 See Notes to Financial Statements and Accountant’s Report
  2


China Teletech Limited (fka Stream Horizon Studios, Inc.)


Consolidated Statements of Operations
 For the years ended December 31, 2010 and 2009
 (Stated in US Dollars)
 
 Notes


12/31/2010


12/31/2009RevenueSales




$
-


$
-Cost of Sales





-



-Gross Profit





-



-Other Income (Expenses)Other Income


3



-



757,095Other Expenses






-



-Total Other Income/(Expense)






-



757,095Earnings before Tax






-



757,095Income Tax






-



-Net Income





$
-


$
757,095
 Earnings per share-Basic

$
0


$
757,095-Diluted

$
0


$
757,095Weighted average shares outstanding-Basic


1



1-Diluted


1



1
 
 See Notes to Financial Statements and Accountant’s Report




3




China Teletech Limited (fka Stream Horizon Studios, Inc.)
 Consolidated Statements of Changes in Stockholders’ Equity
 As of December 31, 2010 and 2009
 (Stated in US Dollars)
 
 Number





Additional





Otherof


Common


Paid in


Retained


ComprehensiveShares


Stock


Capital


Earnings


Income


TotalBalance at January 1, 2009


1


$
-


$
89,111


$
(929,770
)

$
148,551


$
(757,095
)Net Income


-



-



-



757,095



-



757,095Appropriations of Retained Earnings


-



-



-



-



-



-Distribution of Dividends


-



-



-



-



-



-Foreign Currency Translation Adjustment


-



-



-



-



-



-Balance at December 31, 2009


1


$
-


$
89,111


$
(237,662
)

$
148,551


$
-Balance at January 1, 2010


1


$
-


$
89,111


$
(237,662
)

$
148,551


$
-Net Income


-



-



-



-



-



-Appropriations of Retained Earnings


-



-



-



-



-



-Distribution of Dividends


-



-



-



-



-



-Foreign Currency Translation Adjustment


-



-



-



-



-



-Balance at December 31, 2010


1


$
-


$
89,111


$
(237,662
)

$
148,551


$
-
  Comprehensive Income12/31/2009


12/31/2010


Accumulated TotalNet Income

$
757,095


$
-


$
757,095Foreign Currency Translation Adjustment


-



-



-$
757,095


$
-


$
757,095
 
 See Notes to Financial Statements and Accountant’s Report


4




China Teletech Limited (fka Stream Horizon Studios, Inc.)


Consolidated Statements of Cash Flows
 For the years ended December 31, 2010 and 2009
 (Stated in US Dollars)
 
 12/31/2010


12/31/2009Cash Flows from Operating ActivitiesCash Sourced/(Used) in Operating Activities

$
-


$
-Cash Flows from Investing ActivitiesCash Used/(Sourced) in Investing Activities


-



-Cash Flows from Financing ActivitiesCash Used/(Sourced) in Investing Activities


-



-Net Increase/(Decrease) in Cash & Cash Equivalents for the Year


-



-Cash & Cash Equivalents at Beginning of Year


-



-Cash & Cash Equivalents at End of Year

$
-


$
-
 
 See Notes to Financial Statements and Accountant’s Report




5




China Teletech Limited (fka Stream Horizon Studios, Inc.)


Reconciliation of Net Income to Cash Sourced/(Used) in Operations
 For the years ended December 31, 2010 and 2009
 (Stated in US Dollars)
 
 12/31/2010


12/31/2009Net Income

$
-


$
757,095Adjustments to Reconcile Net Income toNet Cash Provided by Cash Activities:Decrease/(Increase) in Other Receivable


-



1,403Increase/(Decrease) in Related Parties Payable


-



(758,498
)Total of all adjustments


-



(757,095
)$
-


$
-




6





China Teletech Limited (fka Stream Horizon Studios, Inc.)
 Notes to Consolidated Financial Statements
 As of and for the years ended December 31, 2010 and 2009
  1.
The Company and Principal Business Activities
 China Teletech Limited, formerly known as Stream Horizon Studios, Inc. (the “Company”), was incorporated under the laws of the Province of British Columbia, Canada on October 1, 2001 under the name Infotec Business Strategies, Inc. The Company is a subsidiary of Wavelit, Inc. , a Nevada corporation.
 
 Wavelit, Inc. was an emerging development company. It provided complete, end-to-end solutions for streaming media and broadcasting over the Internet, from filming and editing, to media hosting and transmission, to broadcasting through our Internet TV channel at www.ebahn.tv. It conducted its principal business operations through its wholly-owned subsidiary Galaxy Networks Inc. (“Galaxy”), a British Columbia, Canada company which designs, develops, manages and markets products and services that pro-vide end-to-end solutions for streaming or broadcasting digital media over the Internet and through the Company, its wholly-owned studio and film editing operation. The Compnay provided the following services until 2007 when its operations ceased:
 
 - Video editing and encoding services;
 
 - Studio rental;
 
 - Casting, directing, and video / audio production services; and
 
 - Remote site video services.
 
 The Company will be spun off from its parent to the shareholders of Wavelit, Inc where the shareholders of Wavelit, inc. will receive an aggregate of 8,750,000 common shares.  The Company is in the process of submitting a Form S-1 to register the securities that it issue in this transaction. Concurrently, the Company is applying to have its common shares independently quoted on the Over the Counter Bulletin Board Market in the United States of America.
 
 Upon declaration of effectiveness by the US Securities and Exchange Commission of the Form S-1, the Company will enter into reverse merger transaction via a share exchange agreement with China Teletech Limited (“CTL”), formerly known as Sierra Vista Group Limited, a company incorporated in the British Virgin Islands. Under the terms of the share exchange agreement, the Company will issue an aggregate of 241,250,000 shares of common stock to the shareholders of CTL for 100% of the outstanding stock of CTL.
 
 As the share exchange transaction between the Company and CTL has not been completed as at December 31, 2010, no recapitalization has occurred.




7







2.
Summary of Significant Accounting Policies





(A)
Method of Accounting





The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.




(B)
Use of Estimates





In the preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years.  These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, and the estimation on useful lives of property, plant and equipment.  Actual results could differ from those estimates.




(C)
Cash and Cash Equivalent


Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.




(D)
Comprehensive Income




In accordance with SFAS No. 130, “Reporting Comprehensive Income”,comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.  Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements.





(E)
Financial Instruments




The carrying amounts of the Company's other receivable and related parties payable approximate fair value due to the relatively short period to maturity for these instruments.




(F)
Recognition of RevenueRevenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectibility is reasonably assured




8




(G)
Income Tax




The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. In accordance with SFAS No. 109 “Accounting for Income Taxes”,the Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not that such items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.




(H)
Recent Accounting Pronouncements




In June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets (FASB ASC 860 Transfers and Servicing) and FASB Statement No. 167 (FASB ASC 810 Consolidation), a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC 810 Consolidation).
  Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FASB ASC 860 Transfers and Servicing), and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. Statement No. 166 (FASB ASC 860 Transfers and Servicing) must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date.  The Company has evaluated and determined that there was no material impact on the Company’s consolidated financial position or results of the operations.
  Statement 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC 810 Consolidation), and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. Statement No. 167 (FASB ASC 810 Consolidation) shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter.  Earlier application is prohibited. The Company has evaluated and determined that there was no material impact on the Company’s consolidated financial position or results of the operations.


On June 30, 2009, FASB issued FASB Statement No. 168, Accounting Standards CodificationTM ( FASB ASC 105 Generally Accepted Accounting Principles) a replacement of FASB Statement No. 162  the Hierarchy of Generally Accepted Accounting Principles. On the effective date of this standard, FASB Accounting Standards CodificationTM (ASC) became the source of authoritative U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the Securities and Exchange Commission (SEC). This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  If an accounting change results from the application of this guidance, an entity should disclose the nature and reason for the change in accounting principle in their financial statements.  This new standard flattens the GAAP hierarchy to two levels: one that is authoritative (in FASB ASC) and one that is non-authoritative (not in FASB ASC). Exceptions include all rules and interpretive releases of the SEC under the authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants, and certain grandfathered guidance having an effective date before March 15, 1992. Statement No. 168 is the final standard that will be issued by FASB in that form.  There will no longer be, for example, accounting standards in the form of statements, staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA Accounting Statements of Position.  The Company has adopted the new accounting standard and determined that there was no material impact on the Company’s consolidated financial position or results of the operations.
  In April 2010, the FASB issued an Accounting Standard Update (“ASU”) No.2010-13,”Compensation-Stock Compensation” (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades,” which address the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. ASU 2010-13 is effective for interim and annual periods beginning on or after December 15, 2010 and is not expected to have a material impact on the Company’s consolidated financial position or results of the operations.
  Management of the Company does not anticipate that the adoption of the above standards will have a material impact on these financial statements.




9




3.
Related Parties Transactions




During the year ended December 31, 2009, the Company agreed to waive the right to collect the outstanding receivable from Galaxy Networks, Inc. in the amount of $56,812, whereas Wavelit, Inc. agreed to forgive the amount owing by the Company for $813,907, resulting in other income of $757,095.  Wavelit, Inc. is the Company’s parent, whereas Galaxy Networks, Inc. is a wholly owned subsidiary of Wavelit, Inc.




4.
Going Concern




As reflected in the accompanying financial statements, the Company ceased its operations in 2007, has a net loss of $237,662 from inception, and no stockholders' equity.  This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
  10