----

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| þ                         | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------------------------------|-----------------------------------------------------------------------------------------|
|                           |                                                                                    |
| For the quarterly period ended | June 30, 2012                                                                           |   |

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|
| For the transition period from  | ____________________________________ to ________________________________________ |   |
|--------------------------------------|----------------------------------------------------------------------------------|--------|
|                                 |                                                                             |   |
| Commission File Number:              | 000-53155                                                                        |   |

| VLOV INC.                                              |
|--------------------------------------------------------|
| (Exact name of registrant as specified in its charter) |

| Nevada                                                                                                                                                   |   | 20-8658254                                     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|
| (State or other jurisdiction ofincorporation or organization)                                                                   |   | (I.R.S. Employer Identification No.) |
|                                                                                                                                                     |   |                                           |
| 11/F, No. 157 Taidong RoadXiamen Guanyin Shan International Business CenterSiming District, Xiamen City, Fujian ProvincePeople’s Republic of China |   |    361008                       |
|  (Address of principal executive offices)                                                                                                           |   | (Zip Code)                                     |

| +86-592-2345999                                            |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

| N/A                                                                                |
|------------------------------------------------------------------------------------|
| (Former name, former address and former fiscal year, if changed since last report) |

| Large Accelerated Filer  | o |                                          | Accelerated Filer          | o      |
|-------------------------------|---|-----------------------------------------------|---------------------------------|--------|
| Non-accelerated filer    | o | (Do not check if a smaller reporting company) | Smaller reporting company  | þ |

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|                                          |                                                                                                                                       |   | Page    |
|-----------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|
| PART I                                        | FINANCIAL INFORMATION                                                                                                                      |   |    |
| Item 1.                                       | Financial statements (unaudited)                                                                                                           |   | 4       |
|                                          | Condensed consolidated balance sheets as of June 30, 2012 (unaudited) and December 31, 2011                                                |   | 4       |
|                                          | Condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2012 and 2011 (unaudited) |   | 5       |
|                                          | Condensed consolidated statements of stockholders’ equity for the six months ended June 30, 2012 (unaudited)                         |   | 6       |
|                                          | Condensed consolidated statements of cash flows for the six months ended June 30, 2012 and 2011 (unaudited)                                |   |  7 |
|                                          | Notes to the unaudited condensed consolidated financial statements                                                                         |   |  8 |
| Item 2.                                       | Management's discussion and analysis of financial condition and results of operations                                                      |   | 26      |
| Item 3.                                       | Quantitative and qualitative disclosures about market risk                                                                                 |   | 33      |
| Item 4.                                       | Controls and Procedures                                                                                                                    |   | 33      |
| PART II                                       | OTHER INFORMATION                                                                                                                          |   |    |
| Item 1.                                       | Legal proceedings                                                                                                                          |   | 33      |
| Item 1A.        | Risk factors                                                                                                                               |   | 33      |
| Item 2.                                       | Unregistered sales of equity securities and use of proceeds                                                                                |   | 34      |
| Item 3.                                       | Defaults upon senior securities                                                                                                            |   | 34      |
| Item 4.                                       | Reserved                                                                                                                                   |   | 34      |
| Item 5.                                       | Other information                                                                                                                          |   | 34      |
| Item 6.                                       | Exhibits                                                                                                                                   |   | 34      |
| Signatures                                    |                                                                                                                                       |   | 36      |

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|                                                                                                                                                                                                                             |   | June 30,2012 |   |   | December 31,2011 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|-----------------------|--------|
|                                                                                                                                                                                                                             |   | (unaudited)  |   |   |                  |   |
| ASSETS                                                                                                                                                                                                                           |
| Current assets:                                                                                                                                                                                                                  |   |         |   |   |                  |   |
| Cash and cash equivalents                                                                                                                                                                                                        |   | $            | 28,221 |   |                  | $      | 14,725 |   |
| Accounts and other receivables                                                                                                                                                                                                   |   |         | 25,524 |   |                  |   | 36,233 |   |
| Trade deposits                                                                                                                                                                                                                   |   |         | 5,969  |   |                  |   | 3,482 |   |
| Inventories                                                                                                                                                                                                                      |   |         | 7,183  |   |                  |   | 1,880 |   |
| Prepaid expenses                                                                                                                                                                                                                 |   |         | 68     |   |                  |   | 85 |   |
| Total current assets                                                                                                                                                                                                             |   |         | 66,965 |   |                  |   | 56,405 |   |
| Property, plant and equipment, net                                                                                                                                                                                               |   |         | 1,503  |   |                  |   | 2,197 |   |
| Goodwill                                                                                                                                                                                                                         |   |         | 5,256  |   |                  |   | 5,219 |   |
| TOTAL ASSETS                                                                                                                                                                                                                     |   | $            | 73,724 |   |                  | $      | 63,821 |   |
|                                                                                                                                                                                                                             |   |         |   |   |                  |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                       |
|                                                                                                                                                                                                                             |
| Current liabilities:                                                                                                                                                                                                             |   |         |   |   |                  |   |   |   |
| Accounts payable                                                                                                                                                                                                                 |   | $            | 11,395 |   |                  | $      | 7,173 |   |
| Accrued expenses and other payables                                                                                                                                                                                              |   |         | 1,550  |   |                  |   | 1,967 |   |
| Amount due to a director/officers                                                                                                                                                                                                |   |         | 451    |   |                  |   | 1,216 |   |
| Derivative liability - common stock warrants                                                                                                                                                                                     |   |         | 106    |   |                  |   | 673 |   |
| Income and other taxes payable                                                                                                                                                                                                   |   |         | 2,354  |   |                  |   | 3,002 |   |
| Total current liabilities                                                                                                                                                                                                        |   |         | 15,856 |   |                  |   | 14,031 |   |
|                                                                                                                                                                                                                             |   |         |   |   |                  |   |   |   |
| Stockholders’ equity:                                                                                                                                                                                                      |   |         |   |   |                  |   |   |   |
| Common stock, $0.00001 par value, 40,000,000 shares authorized, 7,645,991 and 7,586,741 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively                                                    |   |         | 1      |   |                  |   | 1 |   |
| Preferred stock, $0.00001 par value, 100,000,000 shares authorized, 548,345 and 632,853 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively (liquidation preference $1,568,267 and $1,809,960) |   |         | 780    |   |                  |   | 900 |   |
| Additional paid-in capital                                                                                                                                                                                                       |   |         | 10,177 |   |                  |   | 9,718 |   |
| Statutory reserve                                                                                                                                                                                                                |   |         | 913    |   |                  |   | 913 |   |
| Retained earnings                                                                                                                                                                                                                |   |         | 42,448 |   |                  |   | 35,087 |   |
| Accumulated other comprehensive income                                                                                                                                                                                           |   |         | 3,549  |   |                  |   | 3,171 |   |
| Total stockholders' equity                                                                                                                                                                                                       |   |         | 57,868 |   |                  |   | 49,790 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                  |   | $            | 73,724 |   |                  | $      | 63,821 |   |

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|                                                                                     |   | Three Months Ended June 30, |      |   | Six Months Ended June 30, |   |
|------------------------------------------------------------------------------------------|--------|-------------------------------------------------|-----------|--------|-----------------------------------------------|--------|
|                                                                                     |   | 2012                                            |      |   | 2011                                          |   |   | 2012 |   |   | 2011 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |
| Net sales                                                                                |   | $                                               | 25,268    |   |                                          | $      | 20,588 |   |   | $ | 40,441 |   |   | $ | 41,761 |   |
| Cost of sales                                                                            |   |                                            | 13,803    |   |                                          |   | 11,332 |   |   |   | 21,193 |   |   |   | 23,189 |   |
| Gross profit                                                                             |   |                                            | 11,465    |   |                                          |   | 9,256 |   |   |   | 19,248 |   |   |   | 18,572 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                      |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Selling expenses                                                                         |   |                                            | 3,554     |   |                                          |   | 3,897 |   |   |   | 5,989 |   |   |   | 6,100 |   |
| General and administrative expenses                                                      |   |                                            | 1,481     |   |                                          |   | 992 |   |   |   | 2,477 |   |   |   | 2,331 |   |
|                                                                                     |   |                                            | 5,035     |   |                                          |   | 4,889 |   |   |   | 8,466 |   |   |   | 8,431 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                                                                   |   |                                            | 6,430     |   |                                          |   | 4,367 |   |   |   | 10,782 |   |   |   | 10,141 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expenses):                                                                 |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Change in fair value of derivative liability                                             |   |                                            | 249       |   |                                          |   | 357 |   |   |   | 567 |   |   |   | 579 |   |
| Interest income                                                                          |   |                                            | 27        |   |                                          |   | 22 |   |   |   | 43 |   |   |   | 57 |   |
| Interest expense                                                                         |   |                                            | -         |   |                                          |   | - |   |   |   |  - |   |   |   | (8 | ) |
|                                                                                     |   |                                            | 276       |   |                                          |   | 379 |   |   |   | 610 |   |   |   | 628 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Income before provision for income taxes                                                 |   |                                            | 6,706     |   |                                          |   | 4,746 |   |   |   | 11,392 |   |   |   | 10,769 |   |
| Provision for income taxes                                                               |   |                                            | 1,841     |   |                                          |   | 984 |   |   |   | 4,031 |   |   |   | 2,536 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                               |   |                                            | 4,865     |   |                                          |   | 3,762 |   |   |   | 7,361 |   |   |   | 8,233 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income:                                                              |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                  |   |                                            | 23        |   |                                          |   | 623 |   |   |   | 378 |   |   |   | 827 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                                                     |   | $                                               | 4,888     |   |                                          | $      | 4,385 |   |   | $ | 7,739 |   |   | $ | 9,060 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Allocation of net income for calculating basic earnings per share:                       |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to common shareholders                                           |   |                                            | 4,729     |   |                                          |   | 3,589 |   |   |   | 7,156 |   |   |   | 7,854 |   |
| Net income attributable to preferred shareholders                                        |   |                                            | 136       |   |                                          |   | 173 |   |   |   | 205 |   |   |   | 379 |   |
| Net income                                                                               |   | $                                               | 4,865     |   |                                          | $      | 3,762 |   |   | $ | 7,361 |   |   | $ | 8,233 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per share- common                                                    |   | $                                               | 0.62      |   |                                          | $      | 0.48 |   |   | $ | 0.94 |   |   | $ | 1.06 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings per share                                                               |   | $                                               | 0.62      |   |                                          | $      | 0.48 |   |   | $ | 0.94 |   |   | $ | 1.06 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares and participating preferred shares outstanding: |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                    |   |                                            | 7,631,914 |   |                                          |   | 7,436,633 |   |   |   | 7,610,082 |   |   |   | 7,424,282 |   |
|                                                                                     |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                                                                  |   |                                            | 7,856,661 |   |                                          |   | 7,800,995 |   |   |   | 7,848,272 |   |   |   | 7,798,934 |   |

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|                                                                                                                                                                           |   | Common stock |         |   | Preferred stock |    |   | Additionalpaid-in |   |   | Statutory |   |   | Accumulatedother comprehensive |   |   | Retained |    |   | Total  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------------|--------|----------------------|---------|--------|-------------------|--------|--------|-----------|--------|--------|-------------------------------------|--------|--------|----------|---------|--------|--------|--------|
|                                                                                                                                                                      |   | Shares            |         |   | Amount               |    |   | Shares            |   |   | Amount    |   |   | capital                             |   |   | reserve  |    |   | income |   |   | earnings |   |   | equity |   |
|                               |   |              |         |   |                 |    |   |              |   |   |      |   |   |                                |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Balance at January 1, 2012                                                                                                                                                |   |              | 7,586,741    |   |                 | $  | 1      |              |   |   | 632,853   |   |   | $                                   | 900    |   |     | $  | 9,718  |   |   | $ | 913 |   |   | $ | 3,171 |   |   | $ | 35,087 |   |   | $ | 49,790 |   |
|                                                                                                                                                                           |   |              |         |   |                 |    |   |              |   |   |      |   |   |                                |   |   |     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                                                     |   |              |         |   |                 |    |   |              |   |   |      |   |   |                                |   |   |     |    |   |   |   |   |   |   |   |   |   |   |   |   | 7,361 |   |   |   | 7,361 |   |
| Issuance of shares to officers/directors                                                                                                                                       |   |              |  25,446 |   |                 |    |   |              |   |   |      |   |   |                                |   |   |     |    | 112    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 112 |   |
| Issuance of shares to a consultant                                                                                                                                             |   |              |         |   |                 |    |   |              |   |   |      |   |   |                                |   |   |     |    | 227    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 227 |   |
| Foreign currency translation adjustment                                                                                                                                        |   |              |         |   |                 |    |   |              |   |   |      |   |   |                                |   |   |     |    |   |   |   |   |   |   |   |   | 378 |   |   |   |   |   |   |   | 378 |   |
| Conversion of Preferred Stock to Common Stock                                                                                                                                  |   |              | 33,804       |   |                 |    |   |              |   |   | (84,508   | )      |   |                                | (120   | )      |     |    | 120    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
|                                                                                           |   |              |         |   |                 |    |   |              |   |   |      |   |   |                                |   |   |     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2012                                                                                                                                                       |   |              | 7,645,991    |   |                 | $       | 1      |              |   |   | 548,345   |   |   | $                                   | 780    |   |     | $       | 10,177 |   |   | $ | 913 |   |   | $ | 3,549 |   |   | $ | 42,448 |   |   | $ | 57,868 |   |

----

|                                                                              | Six Months Ended June 30, |   |
|-----------------------------------------------------------------------------------|---------------------------|--------|
|                                                                              | 2012                      |   |   | 2011 |   |
|                                                                              |                      |   |   |   |   |   |
| Cash flows from operating activities:                                             |                      |   |   |   |   |   |
| Net income                                                                        |                      | $      | 7,361 |   |   | $ | 8,233 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |                      |   |   |   |   |   |   |   |
| Depreciation and amortization                                                     |                      |   | 646 |   |   |   | 24 |   |
| Stock compensation expense                                                        |                      |   | 340 |   |   |   | 61 |   |
| Loss on disposal of property, plant and equipment                                 |                      |   | 100 |   |   |   | 15 |   |
| Change in fair value of derivative liability                                      |                      |   | (567 | )  |   |   | (579 | )  |
| (Increase) decrease in assets:                                                    |                      |   |   |   |   |   |   |   |
| Accounts and other receivables                                                    |                      |   | 10,963 |   |   |   | 4,876 |   |
| Trade deposits                                                                    |                      |   | (2,463 | )  |   |   | 507 |   |
| Inventories                                                                       |                      |   | (5,290 | )  |   |   | (5,240 | )  |
| Prepaid expenses                                                                  |                      |   | 17 |   |   |   | 180 |   |
| Increase (decrease) in liabilities:                                               |                      |   |   |   |   |   |   |   |
| Accounts payable                                                                  |                      |   | 4,172 |   |   |   | (1,166 | ) |
| Accrued expenses and other payables                                               |                      |   | (412 | )  |   |   | 5 |   |
| Income and other taxes payable                                                    |                      |   | (670 | ) |   |   | (1,144 | ) |
|                                                                              |                      |   |   |   |   |   |   |   |
| Net cash provided by operating activities                                         |                      | $      | 14,197 |   |   | $ | 5,772 |   |
|                                                                              |                      |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                             |                      |   |   |   |   |   |   |   |
| Purchases of property, plant and equipment                                        |                      |   | (37 | ) |   |   | (46 | ) |
| Acquisition of a business                                                         |                      |   | - |   |   |   | (6,684 | ) |
| Proceeds from the sale of property, plant and equipment                           |                      |   | - |   |   |   | 1,179 |   |
| Time deposits                                                                     |                      |   | - |   |   |   | 3,020 |   |
| Net cash used in investing activities                                             |                      | $      | (37 | )  |   | $ | (2,531 | )  |
|                                                                              |                      |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                             |                      |   |   |   |   |   |   |   |
| Amount due to/from a director                                                     |                      |   | (767 | ) |   |   | 736 |   |
| Payment of short-term debt                                                        |                      |   | - |   |   |   | (612 | ) |
| Net cash provided by / (used in) financing activities                             |                      |   | (767 | ) |   |   | 124 |   |
| Effect of exchange rate changes                                                   |                      |   | 103 |   |   |   | 296 |   |
| Net increase in cash and cash equivalents                                         |                      |   | 13,496 |   |   |   | 3,661 |   |
| Cash and cash equivalents, beginning of period                                    |                      |   | 14,725 |   |   |   | 12,013 |   |
| Cash and cash equivalents, end of period                                          |                      | $      | 28,221 |   |   | $ | 15,674 |   |
|                                                                              |                      |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                 |                      |   |   |   |   |   |   |   |
| Interest paid                                                                     |                      | $      | - |   |   | $ | 8 |   |
| Income taxes paid                                                                 |                      | $      | 3,567 |   |   | $ | 3,333 |   |

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| Name             |   | Background |                                                                                                                                                                    | Ownership |   |
|------------------|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|--------|
| PXPF             |   | ●    | A British Virgin Islands limited liability company                                                                                                                      |      |   | 100% |   |
|             |   | ●    | Incorporated on April 30, 2008                                                                                                                                          |      |   |   |   |
|             |   |       |                                                                                                                                                                    |      |   |   |   |
| HK Dong Rong     |   | ●    | A Hong Kong limited liability company                                                                                                                                   |      |   | 100% |   |
|             |   | ●    | Incorporated on January 5, 2005 originally under the name “Korea Jinduren International Dress Limited”                                                      |      |   |   |   |
|             |   | ●    | Acquired by PXPF from the majority shareholders of PXPF on September 22, 2008                                                                                           |      |   |   |   |
|             |   |       |                                                                                                                                                                    |      |   |   |   |
| China Dong Rong  |   | ●    | A PRC limited liability company and deemed a wholly foreign owned enterprise (“WFOE”)                                                                       |      |   | 100%  |   |
|             |   | ●    | Incorporated on November 19, 2009                                                                                                                                       |      |   |   |   |
|             |   | ●    | Registered capital of $8 million fully funded                                                                                                                           |      |   |   |   |
|             |   |       |                                                                                                                                                                    |      |   |   |   |
| Yinglin Jinduren |   | ●    | A PRC limited liability company                                                                                                                                         |      |   | VIE by |   |
|             |   | ●    | Incorporated on January 19, 2002                                                                                                                                        |      |   | contractual |   |
|             |   | ●    | Registered capital of RMB10,000,000 ($1,237,000) fully paid by the majority shareholders of PXPF, Qingqing Wu and Zhifan Wu.                                            |      |   | arrangements (1) |   |
|             |   | ●    | 65.91% of equity interests held by Qingqing Wu, the Company’s Chief Executive Officer and Chairman of the Board of Directors, and 34.09% by his brother Zhifan Wu |      |   |   |   |

|   | (1) | On December 28, 2005, HK Dong Rong (then known as Korea Jinduren International Dress Limited) entered into certain exclusive agreements with Yinglin Jinduren and its equity owners.  Pursuant to these agreements, HK Dong Rong provides exclusive consulting services to Yinglin Jinduren in return for a consulting services fee which is equal to Yinglin Jinduren’s net profits.  Prior to the Share Exchange, however, certain dividends were declared and paid from Yinglin Jinduren’s net income to the equity owners of Yinglin Jinduren.  In addition, Yinglin Jinduren’s equity owners have pledged their equity interests in Yinglin Jinduren to HK Dong Rong, irrevocably granted HK Dong Rong an exclusive option to purchase all or part of the equity interests in Yinglin Jinduren and agreed to entrust all the rights to exercise their voting power to the person(s) appointed by HK Dong Rong. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   | Through these contractual arrangements, HK Dong Rong has the ability to control Yinglin Jinduren’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring shareholder approval.  As part of these contractual arrangements, HK Dong Rong and Yinglin Jinduren entered into an operating agreement which, amongst other matters, precludes Yinglin Jinduren from borrowing money, selling or acquiring assets, including intellectual property rights, providing guarantees to third parties or assigning any business agreements, without the prior written consent of HK Dong Rong.  HK Dong Rong also agreed that, if any guarantee for Yinglin Jinduren’s performance of any contract or loan was required, HK Dong Rong would provide such guarantee to Yinglin Jinduren. As a result of these contractual arrangements, HK Dong Rong is entitled to receive the expected residual returns of Yinglin Jinduren.  Additionally, although Yinglin Jinduren has been profitable, in the event that Yinglin Jinduren were to incur losses, HK Dong Rong would be obligated to absorb a majority of the risk of loss from Yinglin Jinduren’s activities as a result of its inability to receive payment for its accumulated consulting fees that are equal to Yinglin Jinduren’s net income. The Company believes that the equity investors in Yinglin Jinduren do not have the characteristics of a controlling financial interest, and that the Company is the primary beneficiary of the operations and residual returns of Yinglin Jinduren and, in the event of losses, would be required to absorb a majority of such losses.  Accordingly, the Company consolidates Yinglin Jinduren’s results, assets and liabilities in the accompanying financial statements.  Due to the contractual arrangements, the net income and interest allocable to the non-controlling interest is zero. The Company’s consolidated assets do not include any collateral for Yinglin Jinduren’s obligations.  The creditors of Yinglin Jinduren do not have recourse to the general credit of the Company. Once Yinglin Jinduren's annual filing for 2011 is filed with, and receives no comment from, the State Administration for Industry and Commerce, the Company intends to exit from the contractual arrangements with, and to dissolve, Yinglin Jinduren.  Until then, however, the Company will operate its business through China Dong Rong (as it currently does) while continuing to control Yinglin Jinduren through the contractual arrangements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  Motor vehicles   |         | 5 years                                                                                                  |
|------------------------|--------------|----------------------------------------------------------------------------------------------------------|
| Office equipment       |         | 3 to 5 years                                                                                             |
| Leasehold improvements |    | 1 to 4 years (amortized over the shorter of their economic lives or the remaining lease terms) |

----

----

----

|           |   | June 30,    |   |   | December 31, |   |
|----------------|--------|-------------|--------|--------|-------------------|--------|
|           |   | 2012        |   |   | 2011              |   |
|           |   | (unaudited) |   |   |              |   |
| Finished goods |   | $           | 7,183  |   |              | $      | 1,880 |   |
|           |   |        |   |   |              |   |   |   |
|           |   | $           | 7,183  |   |              | $      | 1,880 |   |

|           |   | June 30,    |   |   | December 31, |   |
|----------------|--------|-------------|--------|--------|-------------------|--------|
|           |   | 2012        |   |   | 2011              |   |
|           |   | (unaudited) |   |   |              |   |
| Trade deposits |   | $           | 5,969  |   |              | $      | 3,482 |   |
|           |   |        |   |   |              |   |   |   |
|           |   | $           | 5,969  |   |              | $      | 3,482 |   |

----

| Total purchase price:                                                     |   | $      | 6,684  |   |
|---------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                      |   |   |   |   |
| Allocation of the purchase price to assets and liabilities at fair value: |   |   |   |   |
| Inventories                                                               |   |   | 151    |   |
| Prepaid rent                                                              |   |   | 98     |   |
| Leasehold improvements                                                    |   |   | 469    |   |
| Property, plant and equipment                                             |   |   | 17     |   |
| Net assets acquired at fair value                                         |   |   | 735    |   |
|                                                                      |   |   |   |   |
| Pre-existing distribution agreement                                       |   |   | 919    |   |
| Goodwill                                                                  |   |   | 5,030  |   |
| Total intangible assets acquired                                          |   | $      | 5,949  |   |

|                                |   | June 30,2012 |   |    | December 31,2011 |    |
|-------------------------------------|--------|--------------|--------|---------|-----------------------|---------|
|                                |   | (unaudited)  |   |    |                  |    |   |
| Leasehold improvements              |   | $       | 2,604  |    |                  | $  | 2,826 |   |
| Motor vehicles                      |   |         | 56     |    |                  |    | 56 |   |
| Office equipment                    |   |         | 67     |    |                  |    | 66 |   |
|                                |   |         |   |    |                  |    |   |   |
| Total property, plant and equipment |   |         | 2,727  |    |                  |    | 2,948 |   |
| Less: accumulated depreciation      |   |         | (1,224 | )  |                  |    | (751 | )  |
|                                |   |         |   |    |                  |    |   |   |
| Property, plant and equipment, net  |   | $            | 1,503  |    |                  | $       | 2,197 |   |

|                        |   | June 30,2012 |   |   | December 31, 2011 |   |
|-----------------------------|--------|--------------|--------|--------|------------------------|--------|
|                        |   | (unaudited)  |   |   |                   |   |
| Beginning of period         |   | $            | 5,219  |   |                   | $      | - |   |
| Goodwill on stores acquired |   |         | -      |   |                   |   | 5,030 |   |
| Exchange realignment        |   |         | 37     |   |                   |   | 189 |   |
|                        |   |         |   |   |                   |   |   |   |
| End of period               |   | $            | 5,256  |   |                   | $      | 5,219 |   |

----

|                                |   | June 30,2012 |   |   | December 31, 2011 |   |
|-------------------------------------|--------|--------------|--------|--------|-----------------------------|--------|
|                                |   | (unaudited)  |   |   |                        |   |
| Accrued salaries and wages          |   | $            | 72     |   |                        | $      | 79 |   |
| Accrued liquidated damages (Note 9) |   |         | 987    |   |                        |   | 987 |   |
| Accrued expenses                    |   |         | 288    |   |                        |   | 699 |   |
| Advertising subsidies payable       |   |         | 203    |   |                        |   | 202 |   |
|                                |   | $            | 1,550  |   |                        | $      | 1,967 |   |

|                          |   | June 30,2012 |   |   | December 31, 2011 |   |
|-------------------------------|--------|--------------|--------|--------|-----------------------------|--------|
|                          |   | (unaudited)  |   |   |                        |   |
| Mr. Qingqing Wu (1) |   | $            | 369    |   |                        | $      | 1,144 |   |
| Mr. Bennet Tchaikovsky (2)    |   |         | -      |   |                        |   | 5 |   |
| Ms. Ying (Teresa) Zhang (3)   |   |         | 82     |   |                        |   | 67 |   |
|                          |   | $            | 451    |   |                        | $      | 1,216 |   |

| (1)   | The amount due to this director is unsecured, interest-free and repayable on demand. |
|-----------------|--------------------------------------------------------------------------------------|
| (2)   | Represents compensation and reimbursable expenses owed.                              |
| (3)   | Represents cash compensation owed.                                                   |

----

----

| Issue Date  |   | Expiration Date |   | # ofWarrants |    |   | Exercise Price PerShare |   |   | Value -December 31,2011 |   |   | Value -June 30,2012 |   |
|------------------|--------|----------------------|--------|-------------------|---------|--------|-----------------------------------|--------|--------|-----------------------------------|--------|--------|--------------------------|--------|
|             |   |                 |   |              |    |   |                              |   |   |                              |   |   | (unaudited)              |   |
| October 27, 2009 |   | October 27, 2012     |   |              | 289,221 |   |                              | $      | 8.575  |                              |   | $      | 271                      |   |   | $ | 40 |   |
|             |   |                 |   |              |    |   |                              |   |   |                              |   |   |                     |   |   |   |   |   |
| November 17 2009 |   | November 17, 2012    |   |              | 266,824 |   |                              |   | 8.575  |                              |   |   | 266                      |   |   |   | 43 |   |
|             |   |                 |   |              |    |   |                              |   |   |                              |   |   |                     |   |   |   |   |   |
| December 1, 2009 |   | December 1, 2012     |   |              | 130,707 |   |                              |   | 8.575  |                              |   |   | 136                      |   |   |   | 23 |   |
|             |   |                 |   |              |    |   |                              |   |   |                              |   |   |                     |   |   |   |   |   |
|             |   |                 |   |              | 686,751 |   |                              |   |   |                              |   | $      | 673                      |   |   | $ | 106 |   |

|                            |   | Warrants |   |
|---------------------------------|--------|----------|--------|
|                            |   |     |   |
| Balance – January 1, 2011 |   | $        | 1,312  |   |
| Issued                          |   |     | -      |   |
| Exercised                       |   |     | -      |   |
| Fair value adjustments          |   |     | (579   | )  |
| Balance- June 30, 2011          |   |     | 733    |   |
| Issued                          |   |     | -      |   |
| Exercised                       |   |     | -      |   |
| Fair value adjustments          |   |     | (60    | ) |
| Balance- December 31, 2011      |   |     | 673    |   |
| Issued                          |   |     | -      |   |
| Exercised                       |   |     | -      |   |
| Fair value adjustments          |   |     | (567   | ) |
| Balance June 30, 2012           |   | $        | 106    |   |

----

----

| Non-vested shares               |   | Shares |    |   | Weighted-Average Grant DateFair Value |   |
|---------------------------------|--------|--------|---------|--------|---------------------------------------|--------|
| Non-vested at January 1, 2011   |   |   | 3,542   |   |                                  | $      | 13.32 |   |
| Granted                         |   |   | 4,000   |   |                                  |   | 3.93 |   |
| Vested                          |   |   | (3,542  | )      |                                  | $      | 13.32 |   |
| Forfeited                       |   |   | -       |   |                                  |   | - |   |
| Non-vested at June 30, 2011     |   |   | 4,000   |   |                                  | $      | 3.93 |   |
| Granted                         |   |   | 38,711  |   |                                  | $      | 3.26 |   |
| Vested                          |   |   | (26,327 | )      |                                  | $      | 3.32 |   |
| Forfeited                       |   |   | -       |   |                                  |   | - |   |
| Non-vested at December 31, 2011 |   |   | 16,384  |   |                                  | $      | 3.31 |   |
| Granted                         |   |   | 96,446  |   |                                  |   | 3.56 |   |
| Vested                          |   |   | (97,979 | )      |                                  | $      | 3.47 |   |
| Forfeited                       |   |   | -       |   |                                  |   | - |   |
| Non-vested at June 30, 2012     |   |   | 14,851  |   |                                  | $      | 3.93 |   |

|                                                         |   | Three Months Ended June 30, |      |   | Six Months Ended June 30, |   |
|--------------------------------------------------------------|--------|-------------------------------------------------|-----------|--------|-----------------------------------------------|--------|
|                                                    |   | 2012                                            |      |   | 2011                                          |   |   | 2012 |   | 2011 |   |
| Income attributable to common shareholders of the Company    |   |                                            | 4,729     |   |                                          |   | 3,589 |   |   |   | 7,156 |   |   | 7,854 |   |
| Income attributable to preferred shareholders of the Company |   |                                            | 136       |   |                                          |   | 173 |   |   |   | 205 |   |   | 379 |   |
| Net income                                                   |   | $                                               | 4,865     |   |                                          | $      | 3,762 |   |   | $ | 7,361 |   | $ | 8,233 |   |
| Weighted average number of common shares outstanding         |   |                                            | 7,631,914 |   |                                          |   | 7,436,633 |   |   |   | 7,610,082 |   |   | 7,424,282 |   |

----

|                                            |   | Three Months Ended June 30, |      |   | Six Months Ended June 30, |   |
|------------------------------------------------------|--------|-------------------------------------------------|-----------|--------|-----------------------------------------------|--------|
|                                            |   | 2012                                            |      |   | 2011                                          |   |   | 2012 |   | 2011 |   |
| Net income                                           |   | $                                               | 4,865     |   |                                          | $      | 3,762 |   |   | $ | 7,361 |   | $ | 8,233 |   |
| Weighted average number of common shares outstanding |   |                                            | 7,631,914 |   |                                          |   | 7,436,633 |   |   |   | 7,610,082 |   |   | 7,424,281 |   |
|                                                 |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Adjustment for:                                 |   |                                            |      |   |                                          |   |   |   |   |   |   |   |   |   |   |
| Preferred stock                                      |   |                                            | 224,747   |   |                                          |   | 364,362 |   |   |   | 238,190 |   |   | 374,653 |   |
|                                                 |   |                                            | 7,856,661 |   |                                          |   | 7,800,995 |   |   |   | 7,848,272 |   |   | 7,798,934 |   |

|                          |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|------------------------------------|--------|-------------------------------------------------|--------|--------|-----------------------------------------------|--------|
|                               |   | 2012                                            |   |   | 2011                                          |   |   | 2012 |   | 2011 |   |
| PRC enterprise income tax- current |   | $                                               | 1,841  |   |                                          | $      | 984 |   |   | $ | 4,031 |   | $ | 2,536 |   |

----

|                                                                                  |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|---------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|--------|-----------------------------------------------|--------|
|                                                                             |   | 2012                                            |   |   | 2011                                          |   |   | 2012 |   |   | 2011 |   |
| Theoretical tax expense calculated at PRC statutory Enterprise income tax rate of 25% |   |                                            | 1,677  |   |                                          |   | 1,187 |   |   |   | 2,848 |   |   |   | 2,707 |   |
| Tax adjustment for prior year                                                         |   |                                            | -      |   |                                          |   | - |   |   |   | 1,056 |   |   |   | - |   |
| Tax effect of non-deductible expenses                                                 |   |                                            | 145    |   |                                          |   | (259 | ) |   |   | 189 |   |   |   | (171 | ) |
| Other                                                                                 |   |                                            | 19     |   |                                          |   | 56 |   |   |   | (62 | ) |   |   | - |   |
| Effective tax expense                                                                 |   | $                                               | 1,841  |   |                                          | $      | 984 |   |   | $ | 4,031 |   |   | $ | 2,356 |   |

|                                            |   | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |   |
|-------------------------------------------------|--------|--------------------------------------|------------|--------|------------------------------------|--------|
|                                            |   | 2012                                 |       |   | 2011                               |   |   | 2012 |   |   | 2011 |   |
| Net sales:                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |
| Distributors                                    |   |                                 | 24,310     |   |                               |   | 20,588 |   |   |   | 38,429 |   |   |   | 41,761 |   |
| Company stores                                  |   |                                 | 958        |   |                               |   | - |   |   |   | 2,012 |   |   |   | - |   |
|                                            |   |                                 | 25,268     |   |                               |   | 20,588 |   |   |   | 40,441 |   |   |   | 41,761 |   |
|                                            |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales:                                  |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Distributors                                    |   |                                 | 13,481     |   |                               |   | 11,332 |   |   |   | 20,493 |   |   |   | 23,189 |   |
| Company stores                                  |   |                                 | 322        |   |                               |   | - |   |   |   | 700 |   |   |   | - |   |
|                                            |   |                                 | 13,803     |   |                               |   | 11,332 |   |   |   | 21,193 |   |   |   | 23,189 |   |
|                                            |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Selling expenses:                               |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Distributors                                    |   |                                 | 2,418      |   |                               |   | 3,897 |   |   |   | 4,057 |   |   |   | 6,100 |   |
| Company stores                                  |   |                                 | 1,136      |   |                               |   | - |   |   |   | 1,932 |   |   |   | - |   |
|                                            |   |                                 | 3,554      |   |                               |   | 3,897 |   |   |   | 5,989 |   |   |   | 6,100 |   |
|                                            |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses:            |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Distributors                                    |   |                                 | 873        |   |                               |   | 581 |   |   |   | 1,425 |   |   |   | 1,208 |   |
| Company stores                                  |   |                                 | 34         |   |                               |   | - |   |   |   | 75 |   |   |   | - |   |
| Other                                           |   |                                 | 574        |   |                               |   | 411 |   |   |   | 977 |   |   |   | 1,123 |   |
|                                            |   |                                 | 1,481      |   |                               |   | 992 |   |   |   | 2,477 |   |   |   | 2,331 |   |
| Income (loss) before provision for income taxes |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Distributors                                    |   |                                 | 7,539      |   |                               |   | 4,778 |   |   |   | 12,454 |   |   |   | 11,264 |   |
| Company stores                                  |   |                                 |  (535 | )      |                               |   | - |   |   |   |  (695 | ) |   |   | - |   |
| Other (a)                                       |   |                                 | (298       | )      |                               |   | (32 | )  |   |   | (367 | ) |   |   | (495 | ) |
|                                            |   |                                 | 6,706      |   |                               |   | 4,746 |   |   |   | 11,392 |   |   |   | 10,769 |   |

| (a)   | The Company does not allocate its general and administrative expenses from its activities in the United States, or the fair value changes of its derivative liabilities, to its reportable segments, as they are managed at the corporate level.  |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                          | June 30,2012 |   | December 31, 2011 |   |
|---------------------------------------------------------------------------------------------------------------|--------------|--------|------------------------|--------|
|                                                                                                          | (unaudited)  |   |                   |   |
| Identifiable long lived assets at June 30, 2012 and December 31, 2011 (net of depreciation and amortization): |         |   |                   |   |
| Corporate                                                                                                     |         | $      | 52                     |   |   | $ | 54 |   |
| Distributors                                                                                                  |         |   | -                      |   |   |   | - |   |
| Company stores                                                                                                |         |   | 6,707                  |   |   |   | 7,362 |   |
|                                                                                                          |         | $      | 6,759                  |   |   | $ | 7,416 |   |

|                           |   | Futureminimumpayments -Corporate |    |   | Futureminimumpayments-Stores |    |   | Total Futureminimumpayments |   |
|--------------------------------|--------|---------------------------------------|---------|--------|------------------------------|---------|--------|----------------------------------|--------|
| Six Months Ending December 31, |   |                                  |    |   |                         |    |   |                             |   |   |   |   |
| 2012                           |   | $                                     | 82      |   |                         | $       | 184    |                             |   | $ | 266 |   |
| Year ending December 31,       |   |                                  |    |   |                         |    |   |                             |   |   |   |   |
| 2013                           |   |  $                               | 21      |   |                         | $  | 339    |                             |   | $  | 360 |   |
| 2014                           |   |                                  | -       |   |                         |    | 140    |                             |   |   | 140 |   |
| 2015                           |   |                                  |  - |   |                         |    | -      |                             |   |   | - |   |
|                           |   |                                  |    |   |                         |    |   |                             |   |   |   |   |
|                           |   | $                                     | 103     |   |                         | $       | 663    |                             |   | $ | 766 |   |

----

|          |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|---------------|--------|-------------------------------------------------|--------|--------|-----------------------------------------------|--------|
|          |   | 2012                                            |   |   | 2011                                          |   |   | 2012 |   |   | 2011 |   |
| Distributors  |   |                                            |   |   |                                          |   |   |   |   |   |   |   |
| Distributor A |   |                                            | 21.0   | %      |                                          |   | 20.2 | % |   |   | 21.0 | % |   |   | 19.7 | % |
| Distributor B |   |                                            | 14.7   | %      |                                          |   | 11.1 | % |   |   | 14.7 | % |   |   | 10.8 | % |
| Distributor C |   |                                            | 14.5   | %      |                                          |   | 11.5 | % |   |   | 14.4 | % |   |   | 11.2 | % |
| Distributor D |   |                                            | 16.2   | %      |                                          |   | * |   |   |   | 16.1 | % |   |   | * |   |

|          |   | June 30, |   |
|---------------|--------|---------------|--------|
|          |   | 2012          |   |   | 2011 |   |
| Distributors  |   |          |   |   |   |   |
| Distributor A |   |          | 11.4   | % |   |   | 12.3 | % |
| Distributor B |   |          | 20.7   | % |   |   | * |   |
| Distributor C |   |          | 27.1   | % |   |   | 26.8 | % |
| Distributor D |   |          | 11.3   | % |   |   | * |   |
| Distributor E |   |          | 18.1   | % |   |   | * |   |

|     |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|----------|--------|-------------------------------------------------|--------|--------|-----------------------------------------------|--------|
|     |   | 2012                                            |   |   | 2011                                          |   |   | 2012 |   |   | 2011 |   |
| Vendors  |   |                                            |   |   |                                          |   |   |   |   |   |   |   |
| Vendor A |   |                                            | 16.3   | %      |                                          |   | 14.9 | % |   |   | 15.9 | % |   |   | * |   |
| Vendor B |   |                                            | 19.1   | %      |                                          |   | 21.4 | % |   |   | 21.8 | % |   |   | 12.4 | % |
| Vendor C |   |                                            | *      |   |                                          |   | * |   |   |   | * |   |   |   | 12.2 | % |
| Vendor D |   |                                            | *      |   |                                          |   | 13.0 | % |   |   | * |   |   |   | * |   |
| Vendor E |   |                                            | 12.5   | %      |                                          |   | * |   |   |   | * |   |   |   | * |   |
| Vendor F |   |                                            | 26.7   | %      |                                          |   | * |   |   |   | 28.7 | % |   |   | * |   |
| Vendor G |   |                                            | 11.8   | %      |                                          |   | * |   |   |   | * |   |   |   | * |   |

----

|       |   | June 30, |   |
|------------|--------|---------------|--------|
|       |   | 2012          |   |   | 2011 |   |
|       |   | (unaudited)   |   |   | (unaudited) |   |
| Creditors  |   |          |   |   |   |   |
| Creditor A |   |          | 22.5   | %  |   |   | 13.1 | % |
| Creditor B |   |          | *      |   |   |   | 36.9 | % |
| Creditor C |   |          | *      |   |   |   | 10.0 | % |
| Creditor D |   |          | *      |   |   |   | 17.3 | % |
| Creditor E |   |          | *      |   |   |   | 15.4 | % |
| Creditor F |   |          | 16.7   | % |   |   | * |   |
| Creditor G |   |          | 28.5   | % |   |   | * |   |
| Creditor H |   |          | 10.1   | % |   |   | * |   |
| Creditor I |   |          | 17.4   | % |   |   | * |   |

----

----

----

|                             |   | June 30,2012 |   | December 31,2011 |   |
|----------------------------------|--------|--------------|--------|------------------|--------|
| From date of invoice to customer |   | (unaudited)  |   |             |   |
| 0-30 days                        |   |         | 6,147  |             |   | 15,968 |   |
| 31-60 days                       |   |         | 10,821 |             |   | 10,531 |   |
| 61-90 days                       |   |         | 6,095  |             |   | 8.421 |   |
| 91 – 120 days              |   |         | 2,461  |             |   | 1,313 |   |
| 121 – 150 days             |   |         | -      |             |   | - |   |
| Allowance for doubtful accounts  |   |         | -      |             |   | - |   |
| Total accounts receivable        |   | $            | 25,524 |             | $      | 36,233 |   |

----

|                |   | Three Month Ended June 30,                                                    |   |   | Six Month Ended June 30,                                                 |   |
|--------------------------|--------|----------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------|--------|
|                     |   | 2012                                                                                         |   |   | 2011                                                                                         |   |   | 2012 |   |   | 2011 |   |
|                     |   | Amount                                                                                       |   |   | % of totalnet sales                                                                          |   |   | Amount |   |   | % of totalnet sales |   |   | Amount |   |   | % of totalnet sales |   |   | Amount |   |   | % of totalnet sales |   |
|                     |   | (Amounts in thousands, in U.S. Dollars,except for percentages) |   |   | (Amounts in thousands, in U.S. Dollars,except for percentages) |   |
| Net sales                |   | $                                                                                            | 25,268 |   |                                                                                         |   | 100.0 | % |   | $ | 20,588 |   |   |   | 100.00 | % |   | $ | 40,441 |   |   |   | 100.0 | % |   | $ |    41,761 |   |   |   | 100.00 | % |
| Gross profit             |   |                                                                                         | 11,465 |   |                                                                                         |   | 45.4 | % |   |   | 9,256 |   |   |   | 44.96 | % |   |   | 19,248 |   |   |   | 47.6 | % |   |   | 18,572 |   |   |   | 44.47 | % |
| Operating expense        |   |                                                                                         | 5,035  |   |                                                                                         |   | 19.9 | % |   |   | 4,889 |   |   |   | 23.75 | % |   |   | 8,466 |   |   |   | 20.9 | % |   |   | 8,431 |   |   |   | 20.19 | % |
| Income from operations   |   |                                                                                         | 6,430  |   |                                                                                         |   | 25.4 | % |   |   | 4,367 |   |   |   | 21.21 | % |   |   | 10,782 |   |   |   | 26.7 | % |   |   | 10,141 |   |   |   | 24.48 | % |
| Other expenses /(income) |   |                                                                                         | (276   | )      |                                                                                         |   | (1.1 | )% |   |   | (379 | ) |   |   | (1.84 | )% |   |   | (610 | ) |   |   | (1.5 | )% |   |   | 628 |   |   |   | 1.50 | % |
| Income tax expenses      |   |                                                                                         | 1,841  |   |                                                                                         |   | 7.3 | % |   |   | 984 |   |   |   | 4.78 | % |   |   | 4,031 |   |   |   | 10.0 | % |   |   | 2,536 |   |   |   | 6.07 | % |
|                     |   |                                                                                         |   |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income               |   | $                                                                                            | 4,865  |   |                                                                                         |   | 19.2 | % |   | $ | 3,762 |   |   |   | 18.27 | % |   | $ | 7,361 |   |   |   | 18.2 | % |   | $ |    8,233 |   |   |   | 19.71 | % |

----

|                         |   | Three Month  Ended June 30,                  |   |   | Six Month  Ended June 30,                    |   |
|------------------------------|--------|------------------------------------------------------------------|--------|--------|------------------------------------------------------------------|--------|
|                         |   | 2012                                                             |   |   | 2011                                                             |   |   |   |   |   | 2012 |   |   | 2011 |   |   |   |   |
|                         |   |                                                             |   |   |                                                             |   |   |   |   |   |   |   |   | Growth |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Growth |   |
|                         |   |                                                             |   |   |                                                             |   |   |   |   |   |   |   |   | (Decline) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (Decline) |   |
|                         |   |                                                             |   |   |                                                             |   |   |   |   |   |   |   |   | in 2012 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | in 2012 |   |
|                         |   |                                                             |   |   |                                                             |   |   |   |   |   |   |   |   | compared |   |   |   |   |   |   |   |   |   |   |   |   |   |   | compared |   |
|                         |   |                                                             |   |   | % of net                                               |   |   |   |   |   | % of net |   |   | With |   |   |   |   |   | % of net |   |   |   |   |   | % of net |   |   | with |   |
|                         |   | Amount                                                           |   |   | sales                                                            |   |   | Amount |   |   | sales |   |   | 2011 |   |   | Amount |   |   | sales |   |   | Amount |   |   | sales |   |   | 2011 |   |
|                         |   | (Amounts in thousands, in U.S. Dollars, |   |   | (Amounts in thousands, in U.S. Dollars, |   |
|                         |   | except for percentages)                                |   |   | except for percentages)                                |   |
|                         |   |                                                             |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beijing                      |   | $                                                                | 4,101  |   |                                                             |   | 16.2 | % |   | $ | 1,869 |   |   |   | 9.1 | % |   |   | 119.4 | % |   | $ |  6,512 |   |   |   | 16.1 | % |   | $ | 3,692 |   |   |   | 8.9 | % |   |   | 76.4 | % |
| Zhejiang                     |   |                                                             | 5,301  |   |                                                             |   | 21.0 | % |   |   | 4,162 |   |   |   | 20.2 | % |   |   | 27.4 | % |   |   |  8,477 |   |   |   | 21.0 | % |   |   | 8,215 |   |   |   | 19.7 | % |   |   | 3.2 | % |
| Shandong                     |   |                                                             | 3,668  |   |                                                             |   | 14.5 | % |   |   | 2,365 |   |   |   | 11.5 | % |   |   | 55.1 | % |   |   |  5,822 |   |   |   | 14.4 | % |   |   | 4,670 |   |   |   | 11.2 | % |   |   | 24.7 | % |
| Jiangxi                      |   |                                                             | 1,344  |   |                                                             |   | 5.3 | % |   |   | 1,772 |   |   |   | 8.6 | % |   |   | (24.2 | )% |   |   |  2,039 |   |   |   | 5.0 | % |   |   | 3,500 |   |   |   | 8.4 | % |   |   | (41.7 | )% |
| Yunnan                       |   |                                                             | 1,327  |   |                                                             |   | 5.3 | % |   |   | 1,678 |   |   |   | 8.2 | % |   |   | (21.0 | )% |   |   |  2,090 |   |   |   | 5.2 | % |   |   | 3,314 |   |   |   | 7.9 | % |   |   | (36.9 | )% |
| Shaanxi                      |   |                                                             | 548    |   |                                                             |   | 2.2 | % |   |   | 1,032 |   |   |   | 5.0 | % |   |   | (46.9 | )% |   |   |  798 |   |   |   | 2.0 | % |   |   | 2,040 |   |   |   | 4.9 | % |   |   | (60.9 | )% |
| Liaoning                     |   |                                                             | 1,699  |   |                                                             |   | 6.7 | % |   |   | 1,629 |   |   |   | 7.9 | % |   |   | 4.3 | % |   |   |  2,660 |   |   |   | 6.6 | % |   |   | 3,217 |   |   |   | 7.7 | % |   |   | (17.3 | )% |
| Hubei                        |   |                                                             | 3,702  |   |                                                             |   | 14.7 | % |   |   | 2,277 |   |   |   | 11.1 | % |   |   | 62.6 | % |   |   |  5,925 |   |   |   | 14.7 | % |   |   | 4,495 |   |   |   | 10.8 | % |   |   | 31.8 | % |
| Henan                        |   |                                                             | 919    |   |                                                             |   | 3.6 | % |   |   | 970 |   |   |   | 4.7 | % |   |   | (5.3 | )% |   |   |  1,449 |   |   |   | 3.6 | % |   |   | 1,917 |   |   |   | 4.6 | % |   |   | (24.4 | )% |
| Guangxi                      |   |                                                             | 1,047  |   |                                                             |   | 4.1 | % |   |   | 1,395 |   |   |   | 6.8 | % |   |   | (25.0 | )% |   |   |  1,638 |   |   |   | 4.1 | % |   |   | 2,755 |   |   |   | 6.6 | % |   |   | (40.5 | )% |
| Sichuan                      |   |                                                             | 654    |   |                                                             |   | 2.6 | % |   |   | 771 |   |   |   | 3.7 | % |   |   | (15.2 | )% |   |   |  1,019 |   |   |   | 2.5 | % |   |   | 1,520 |   |   |   | 3.6 | % |   |   | (33.0 | )% |
| Fujian (prior distributor    |   |                                                             | -      |   |                                                             |   | - |   |   |   | 668 |   |   |   | 3.2 | % |   |   | (100.0 | )% |   |   | - |   |   |   | - |   |   |   | 2,426 |   |   |   | 5.8 | % |   |   | (100.0 | )% |
| Total net sales-distributors |   |                                                             | 24,310 |   |                                                             |   | 96.2% |   |   |   | 20,588 |   |   |   | 100.0 | % |   |   | 18.1% |   |   |   | 38,429 |   |   |   | 95.0 | % |   |   | 41,761 |   |   |   | 100.0 | % |   |   | (8.0 | )% |
| Fujian (company stores)      |   |                                                             | 958    |   |                                                             |   | 3.8 | % |   |   | - |   |   |   | - |   |   |   | N/A |   |   |   | 2,012 |   |   |   | 5.0 | % |   |   | - |   |   |   | - |   |   |   | N/A |   |
| Total net sales              |   | $                                                                | 25,268 |   |                                                             |   | 100.0 | % |   | $ | 20,588 |   |   |   | 100.00 | % |   |   | 22.7 | % |   | $ | 40,441 |   |   |   | 100.0 | % |   | $ | 41,761 |   |   |   | 100.0 | % |   |   | (3.2 | )% |

|                       |   | Three Months Ended June 30,                                                         |        |
|----------------------------|--------|---------------------------------------------------------------------------------------------------------|-------------|
|                       |   | 2012                                                                                                    |        |   | 2011 |   |
|                       |   | Net Sales                                                                                          |        |   | Cost of sales |   |   | Grossprofit |   |   | Grossmargin |   |   | NetSales |   |   | Cost ofsales |   |   | Grossprofit |   |   | Grossmargin |   |
|                       |   | (Amounts in thousands, in U.S. Dollars, except for percentages) |        |
|                       |   |                                                                                                    |        |
| Beijing                    |   | $                                                                                                       |  4,101 |   |   | $ |  2,264 |   |   | $ |  1,837 |   |   |   | 44.8 | % |   | $ | 1,869 |   |   | $ | 1,041 |   |   | $ | 828 |   |   |   | 44.3 | % |
| Zhejiang                   |   |                                                                                                    |  5,301 |   |   |   |  2,924 |   |   |   |  2,377 |   |   |   | 44.8 | % |   |   | 4,162 |   |   |   | 2,318 |   |   |   | 1,844 |   |   |   | 44.3 | % |
| Shandong                   |   |                                                                                                    |  3,668 |   |   |   |  2,026 |   |   |   |  1,642 |   |   |   | 44.8 | % |   |   | 2,365 |   |   |   | 1,317 |   |   |   | 1,048 |   |   |   | 44.3 | % |
| Jiangxi                    |   |                                                                                                    |  1,344 |   |   |   |  750 |   |   |   |  594 |   |   |   | 44.2 | % |   |   | 1,772 |   |   |   | 987 |   |   |   | 785 |   |   |   | 44.3 | % |
| Yunnan                     |   |                                                                                                    |  1,327 |   |   |   |  728 |   |   |   |  599 |   |   |   | 45.1 | % |   |   | 1,678 |   |   |   | 935 |   |   |   | 743 |   |   |   | 44.3 | % |
| Shaanxi                    |   |                                                                                                    |  548   |   |   |   |  299 |   |   |   |  249 |   |   |   | 45.4 | % |   |   | 1,032 |   |   |   | 575 |   |   |   | 457 |   |   |   | 44.3 | % |
| Liaoning                   |   |                                                                                                    |  1,699 |   |   |   |  939 |   |   |   |  760 |   |   |   | 44.7 | % |   |   | 1,629 |   |   |   | 908 |   |   |   | 721 |   |   |   | 44.3 | % |
| Hubei                      |   |                                                                                                    |  3,702 |   |   |   |  2,091 |   |   |   |  1,611 |   |   |   | 43.5 | % |   |   | 2,277 |   |   |   | 1,269 |   |   |   | 1,008 |   |   |   | 44.3 | % |
| Henan                      |   |                                                                                                    |  919   |   |   |   |  517 |   |   |   |  402 |   |   |   | 43.7 | % |   |   | 970 |   |   |   | 540 |   |   |   | 430 |   |   |   | 44.3 | % |
| Guangxi                    |   |                                                                                                    |  1,047 |   |   |   |  583 |   |   |   |  464 |   |   |   | 44.3 | % |   |   | 1,395 |   |   |   | 777 |   |   |   | 618 |   |   |   | 44.3 | % |
| Sichuan                    |   |                                                                                                    |  654   |   |   |   |  360 |   |   |   |  294 |   |   |   | 45.0 | % |   |   | 771 |   |   |   | 429 |   |   |   | 342 |   |   |   | 44.7 | % |
| Fujian (prior distributor) |   |                                                                                                    | -           |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 668 |   |   |   | 236 |   |   |   | 432 |   |   |   | 64.7 | % |
| Total - distributors       |   |                                                                                                    | 24,310      |   |   |   | 13,481 |   |   |   | 10,829 |   |   |   | 44.5 | % |   |   | 20,588 |   |   |   | 11,332 |   |   |   | 9,256 |   |   |   | 45.0 | % |
| Fujian (company stores)    |   |                                                                                                    | 958         |   |   |   | 322 |   |   |   | 636 |   |   |   | 66.4 | % |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - | % |
| Total                      |   | $                                                                                                       | 25,268      |   |   | $ | 13,803 |   |   | $ | 11,465 |   |   |   | 45.4 | % |   | $ | 20,588 |   |   | $ | 11,332 |   |   | $ | 9,256 |   |   |   | 45.0 | % |

----

|                       |   | Six Months Ended June 30,                                                           |        |
|----------------------------|--------|---------------------------------------------------------------------------------------------------------|-------------|
|                       |   | 2012                                                                                                    |        |   | 2011 |   |
|                       |   | Net Sales                                                                                          |        |   | Cost ofsales |   |   | Grossprofit |   |   | Grossmargin |   |   | Net Sales |   |   | Cost ofsales |   |   | Grossprofit |   |   | Grossmargin |   |
|                       |   | (Amounts in thousands, in U.S. Dollars, except for percentages) |        |
|                       |   |                                                                                                    |        |
| Beijing                    |   | $                                                                                                       |  6,512 |   |   | $ |  3,455 |   |   | $ |  3,057 |   |   |   | 46.9 | % |   | $ | 3,692 |   |   | $ | 2,062 |   |   | $ | 1,630 |   |   |   | 44.2 | % |
| Zhejiang                   |   |                                                                                                    |  8,477 |   |   |   |  4,519 |   |   |   |  3,958 |   |   |   | 46.7 | % |   |   | 8,215 |   |   |   | 4,589 |   |   |   | 3,626 |   |   |   | 44.1 | % |
| Shandong                   |   |                                                                                                    |  5,822 |   |   |   |  3,084 |   |   |   |  2,738 |   |   |   | 47.0 | % |   |   | 4,670 |   |   |   | 2,609 |   |   |   | 2,061 |   |   |   | 44.1 | % |
| Jiangxi                    |   |                                                                                                    |  2,039 |   |   |   |  1,089 |   |   |   |  950 |   |   |   | 46.6 | % |   |   | 3,500 |   |   |   | 1,955 |   |   |   | 1,545 |   |   |   | 44.1 | % |
| Yunnan                     |   |                                                                                                    |  2,090 |   |   |   |  1,114 |   |   |   |  976 |   |   |   | 46.7 | % |   |   | 3,314 |   |   |   | 1,851 |   |   |   | 1,463 |   |   |   | 44.2 | % |
| Shaanxi                    |   |                                                                                                    |  798   |   |   |   |  423 |   |   |   |  375 |   |   |   | 47.0 | % |   |   | 2,040 |   |   |   | 1,139 |   |   |   | 901 |   |   |   | 44.2 | % |
| Liaoning                   |   |                                                                                                    |  2,660 |   |   |   |  1,418 |   |   |   |  1,242 |   |   |   | 46.7 | % |   |   | 3,217 |   |   |   | 1,797 |   |   |   | 1,420 |   |   |   | 44.1 | % |
| Hubei                      |   |                                                                                                    |  5,925 |   |   |   |  3,215 |   |   |   |  2,710 |   |   |   | 45.7 | % |   |   | 4,495 |   |   |   | 2,511 |   |   |   | 1,984 |   |   |   | 44.1 | % |
| Henan                      |   |                                                                                                    |  1,449 |   |   |   |  786 |   |   |   |  663 |   |   |   | 45.8 | % |   |   | 1,917 |   |   |   | 1,071 |   |   |   | 846 |   |   |   | 44.1 | % |
| Guangxi                    |   |                                                                                                    |  1,638 |   |   |   |  862 |   |   |   |  776 |   |   |   | 47.4 | % |   |   | 2,755 |   |   |   | 1,539 |   |   |   | 1,216 |   |   |   | 44.1 | % |
| Sichuan                    |   |                                                                                                    |  1,019 |   |   |   |  528 |   |   |   |  491 |   |   |   | 48.2 | % |   |   | 1,520 |   |   |   | 849 |   |   |   | 671 |   |   |   | 44.1 | % |
| Fujian (prior distributor) |   |                                                                                                    | -           |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,426 |   |   |   | 1,217 |   |   |   | 1,209 |   |   |   | 49.8 | % |
| Total – distributors |   |                                                                                                    | 38,429      |   |   |   | 20,493 |   |   |   | 17,936 |   |   |   | 46.7 | % |   |   | 41,761 |   |   |   | 23,189 |   |   |   | 18,572 |   |   |   | 44.5 | % |
| Fujian (company stores)    |   |                                                                                                    | 2,012       |   |   |   | 700 |   |   |   | 1,312 |   |   |   | 65.2 | % |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - | % |
| Total                      |   | $                                                                                                       | 40,441      |   |   | $ | 21,193 |   |   | $ | 19,248 |   |   |   | 47.6 | % |   | $ | 41,761 |   |   | $ | 23,189 |   |   | $ | 18,572 |   |   |   | 44.5 | % |

|                                |   | Three Months Ended June 30,                                                         |   |   | Six Months Ended June 30,                                                           |   |
|-------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------|--------|
|                                |   | 2012                                                                                                    |   |   | 2011                                                                                                    |   |   | 2012 |   |   | 2011 |   |
|                                |   | $                                                                                                       |   |   | % ofTotalNet Sales                                                                            |   |   | $ |   |   | % ofTotalNet Sales |   |   | $ |   |   | % ofTotalNet Sales |   |   | $ |   |   | % ofTotalNet Sales |   |
|                                |   | (Amounts in thousands, in U.S. Dollars, except for percentages) |   |   | (Amounts in thousands, in U.S. Dollars, except for percentages) |   |
| Gross Profit                   |   | $                                                                                                       | 11,465 |   |                                                                                                    |   | 45.4 | % |   | $ | 9,256 |   |   |   | 44.96 | % |   | $ | 19,248 |   |   |   | 47.6 | % |   | $ | 18,572 |   |   |   | 44.47 | % |
| Operating Expenses:                 |   |                                                                                                    |   |   |                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling Expenses                    |   |                                                                                                    | 3,554  |   |                                                                                                    |   | 14.1 | % |   |   | 3,897 |   |   |   | 18.93 | % |   |   | 5,989 |   |   |   | 14.8 | % |   |   | 6,100 |   |   |   | 14.61 | % |
| General and Administrative Expenses |   |                                                                                                    | 1,481  |   |                                                                                                    |   | 5.9 | % |   |   | 992 |   |   |   | 4.82 | % |   |   | 2,477 |   |   |   | 6.1 | % |   |   | 2,331 |   |   |   | 5.58 | % |
| Total                               |   |                                                                                                    | 5,035  |   |                                                                                                    |   | 19.9 | % |   |   | 4,889 |   |   |   | 23.75 | % |   |   | 8,466 |   |   |   | 20.9 | % |   |   | 8,431 |   |   |   | 20.19 | % |
| Income from Operations              |   | $                                                                                                       | 6,430  |   |                                                                                                    |   | 25.4 | % |   | $ | 4,367 |   |   |   | 21.21 | % |   | $ | 10,782 |   |   |   | 26.7 | % |   | $ | 10,141 |   |   |   | 24.28 | % |

----

|                                                  |   | Six Months Ended June 30, |   |
|-------------------------------------------------------|--------|-------------------------------------|--------|
|                                                  |   | 2012                                |   |   | 2011 |   |
|                                                  |   | (Amounts in thousands, in $)        |   |
| Net cash provided by operating activities             |   | $                                   | 14,197 |   |   | $ | 5,772 |   |
| Net cash used in investing activities                 |   |                                | (37)   |   |   |   | (2,531 | )  |
| Net cash provided by / (used in) financing activities |   |                                | (767   | )  |   |   | 124 |   |

----

|                           |   | Payments Due by Period    |   |
|--------------------------------|--------|------------------------------------------|--------|
|                           |   | Total                                    |   |   | Less than1 year |   |   | 1 year + |   |
|                           |   | (in thousands of dollars) |   |
| Contractual obligations : |   |                                     |   |   |   |   |   |   |   |
| Operating leases - corporate   |   |                                     | 103    |   |   |   | 82 |   |   |   | 21 |   |
| Store leases                   |   |                                     | 663    |   |   |   | 184 |   |   |   | 479 |   |
|                           |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Total contractual obligations: |   | $                                        | 766    |   |   | $ | 266 |   |   | $ | 500 |   |

----

| Exhibit |   |                                                                                                                                                                        |
|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description                                                                                                                                                                 |
| 2.1     |   | Share Exchange Agreement (1)                                                                                                                                                |
| 3.1     |   | Articles of Incorporation (2)                                                                                                                                               |
| 3.2     |   | Amendment to Articles of Incorporation (for 1-for-100 reverse stock split), filed with the Nevada Secretary of State on January 12, 2009 (9)                                |
| 3.3     |   | Articles of Merger filed on March 4, 2009 and effective March 20, 2009 (3)                                                                                                  |
| 3.4     |   | Certificate of Correction filed on March 6, 2009 (3)                                                                                                                        |
| 3.5     |   | Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, filed with the Nevada Secretary of State on October 23, 2009 (4) |
| 3.6     |   | Bylaws (2)                                                                                                                                                                  |
| 3.7     |   | Amendment to the Bylaws (1)                                                                                                                                                 |
| 4.1     |   | Specimen Common Stock Certificate (2)                                                                                                                                       |
| 4.2     |   | Specimen Series A Convertible Preferred Stock Certificate (4)                                                                                                               |
| 4.3     |   | Form of Common Stock Purchase Warrant for the Preferred Shares Financing (4)                                                                                                |
| 4.4     |   | Form of Common Stock Purchase Warrant for the Common Shares Financing (5)                                                                                                   |
| 4.5     |   | Form of Common Stock Purchase Warrant issued to American Capital Ventures, Inc. (15)                                                                                        |
| 10.1    |   | Consulting Services Agreement (1)                                                                                                                                           |
| 10.2    |   | Operating Agreement (1)                                                                                                                                                     |
| 10.3    |   | Equity Pledge Agreement (1)                                                                                                                                                 |
| 10.4    |   | Option Agreement (1)                                                                                                                                                        |
| 10.5    |   | Voting Rights Proxy Agreement (1)                                                                                                                                           |
| 10.6    |   | Form of Securities Purchase Agreement for the Preferred Shares Financing (4)                                                                                                |
| 10.7    |   | Form of Escrow Agreement for the Preferred Shares Financing (4)                                                                                                             |
| 10.8    |   | Form of Securities Purchase Agreement for the Common Shares Financing (5)                                                                                                   |
| 10.9    |   | Supplemental Agreement dated February 18, 2009 (7)                                                                                                                          |
| 10.10   |   | Form of Director Offer Letter entered into with Ying Zhang and Jianwei Shen (10)                                                                                            |
| 10.11   |   | Bridge Loan and Financing Agreement dated June 11, 2008 (14)                                                                                                                |
| 10.12   |   | Form of Securities Purchase Agreement dated February 13, 2009 (11)                                                                                                          |
| 10.13   |   | Form of Securities Purchase Agreement dated February 12, 2009 (11)                                                                                                          |
| 10.14   |   | Loanout Agreement with Worldwide Officers, Inc. dated April 27, 2010 (12)                                                                                                   |
| 10.15   |   | Director Offer Letter with Jianhui Wang dated June 1, 2010 (13)                                                                                                             |
| 10.16   |   | Acquisition of Distributorship Agreement between China Dong Rong and Xiamen Lianyu Commerce Co., Ltd. dated May 26, 2011 (17)                                               |
| 10.17   |   | Loanout Agreement with Worldwide Officers, Inc. dated as of September 28, 2011 (18)                                                                                         |

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| 10.18   |   | Restricted Stock Award Agreement with Worldwide Officers, Inc. dated as of September 28, 2011 (18)                               |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------|
| 10.19   |   | Restricted Stock Award Agreement with Worldwide Officers, Inc. dated as of September 28, 2011 (18)                               |
| 14.1    |   | Code of Ethics (6)                                                                                                               |
| 21.1    |   | List of Subsidiaries (11)                                                                                                        |
| 31.1    |   | Section 302 Certification by the Corporation’s Chief Executive Officer *                                                   |
| 31.2    |   | Section 302 Certification by the Corporation’s Chief Financial Officer *                                                   |
| 32.1    |   | Section 906 Certification by the Corporation’s Chief Executive Officer *                                                   |
| 32.2    |   | Section 906 Certification by the Corporation’s Chief Financial Officer *                                                   |
| 99.1    |   | Trademark License Contract for serial number 3871951 dated February 12, 2009 (11)                                           |
| 99.2    |   | Trademark License Contract for serial number 3884844 dated February 12, 2009 (11)                                           |
| 99.3    |   | Trademark License Contract for serial number 3884845 dated February 12, 2009 (11)                                           |
| 99.4    |   | Trademark License Contract for serial number 4247545 dated February 12, 2009 (11)                                           |
| 99.5    |   | Regional Distributorship Agreement between Yinglin Jinduren and C-002 of Mingzhu 100 Market dated May 25, 2009 (15)              |
| 99.6    |   | Regional Distributorship Agreement between Yinglin Jinduren and Jinyang Commerce Co., Ltd. dated May 25, 2009 (15)               |
| 99.7    |   | Regional Distributorship Agreement between Yinglin Jinduren and Jinduren Store, Tianqiao District, Jinan dated May 25, 2009 (15) |
| 99.8    |   | Regional Distributorship Agreement between Yinglin Jinduren and Clothwork Apparel, Wanma Plaza dated May 25, 2009 (15)           |
| 99.9    |   | Land Use Right and Building Transfer Agreement between Yinglin Jinduren and Zhimeng Wu dated February 20, 2011 (16)              |
| 99.10   |   | Property Transfer Agreement between Yinglin Jinduren and Zhimeng Wu dated January 25, 2011 (16)                                  |
| 99.11   |   | Purchase Agreements between Yinglin Jinduren and its major suppliers for 2010 (16)                                               |
| 99.12   |   | Purchase Agreements between China Dong Rong and its major suppliers for 2011 (16)                                                |
| 101.INS |   | XBRL Instance Document*  **                                                                                            |
| 101.SCH |   | XBRL Taxonomy Extension Schema Document*  **                                                                           |
| 101.CAL |   | XBRL Taxonomy Extension Calculation Linkbase Document*  **                                                             |
| 101.DEF |   | XBRL Taxonomy Extension Definition Linkbase Document*  **                                                              |
| 101.LAB |   | XBRL Taxonomy Extension Label Linkbase Document*  **                                                                   |
| 101.PRE |   | XBRL Taxonomy Extension Presentation Linkbase Document*  **                                                            |

| *  | Filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                        |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |

| (1)  |   | Filed on February 13, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                              |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  |   | Filed on February 9, 2007 as an exhibit to our Registration Statement on Form SB-2, and incorporated herein by reference.                      |
| (3)  |   | Filed on March 20, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                                 |
| (4)  |   | Filed on October 30, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                               |
| (5)  |   | Filed on December 2, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                               |
| (6)  |   | Filed on March 7, 2008 as an exhibit to our Annual Report on Form 10-K, and incorporated herein by reference.                                  |
| (7)  |   | Filed on February 20, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                              |
| (8)  |   | Filed on April 15, 2009, as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                                |
| (9)  |   | Filed on December 17, 2009, as an exhibit to our Registration Statement on Form S-1, and incorporated herein by reference.                     |
| (10) |   | Filed on March 16, 2010, as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                                |
| (11) |   | Filed on April 15, 2010, as an exhibit to our Annual Report on Form 10-K, and incorporated herein by reference.                                |
| (12) |   | Filed on May 3, 2010, as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                                   |
| (13) |   | Filed on June 3, 2010, as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                                  |
| (14) |   | Filed on August 27, 2010, as an exhibit to our Amendment to Registration Statement on Form S-1/A, and incorporated herein by reference.        |
| (15) |   | Filed on October 27, 2010, as an exhibit to our Amendment No. 3 to Registration Statement on Form S-1/A, and incorporated herein by reference. |
| (16) |   | Filed on March 31, 2011, as an exhibit to our Annual Report on Form 10-K, and incorporated herein by reference.                                |
| (17) |   | Filed on August 22, 2011 as an exhibit to our Quarterly Report on Form 10-Q, and incorporated herein by reference.                             |
| (18) |   | Filed on October 4, 2011 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.                                |

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|                  |   | VLOV INC.                 |   |
|-----------------------|--------|---------------------------|--------|
|                  |   | (Registrant)              |   |
|                  |   |                      |   |
|                  |   |                      |   |
| Date: August 13, 2012 | By:    | /s/ Qingqing Wu           |   |
|                  |   | Chief Executive Officer   |   |
|                  |   |                      |   |
| Date: August 13, 2012 | By:    | /s/ Bennet P. Tchaikovsky |   |
|                  |   | Bennet P. Tchaikovsky     |   |
|                  |   | Chief Financial Officer   |   |

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