UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

~~ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15~~ (d)Mark ~~OF THE~~ One)

SECURITIES AND EXCHANGE ACT OF 1934

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

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from		__________ to __________

Commission file number		333-154422

~~For~~EASTERN ~~the~~SECURITY ~~year~~& ~~ended~~PROTECTION ~~June 30~~SERVICES, ~~2010~~INC. (Exact name of registrant as specified in its charter)

Commission file number: 333-154422

Delaware		80-0217073
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

VELVET ROPE SPECIAL EVENTS, INC.

68 Harbin Road, Shenyang, Liaoning, People's Republic of China		110002
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code:		86-24-2250-1035

~~(Exact~~Securities ~~Name~~registered ofpursuant ~~Registrant~~to asSection ~~Specified~~12(b) inof ~~Its~~the ~~Charter)~~Act:

Delaware		80-0217073
State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization		Identification No.)

Title of Each Class		Name of Each Exchange On Which Registered
N/A		N/A

~~264~~Securities S.registered Lapursuant ~~Cienega~~to ~~Blvd,~~Section ~~Ste.~~12(g) ~~700,~~of ~~Beverly~~the ~~Hills, CA 90211~~ Act:

None (~~Address~~Title of ~~Principal Executive Offices~~class)

Registrant's telephone number, including area code: (818) 469-2193

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act.
						Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
						Yes o No x

~~Securities registered pursuant to Section 12(b) of the Act: None~~ 1

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

~~Common~~Indicate ~~Stock,~~by $check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the last 90 days.~~0001~~ ~~par~~Yes ~~value~~x No o

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

Indicate by check mark if ~~the~~disclosure ~~registrant is a well-known seasoned issuer, as defined by Rule 405~~ of ~~the~~delinquent ~~Securities~~filers ~~Act. Yes |_| No |X| Indicate by check mark if the registrant is not required to file reports~~ pursuant to ~~Section~~Item 13 or Section 15(d) of the Exchange Act. Yes |_| No |X| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-K (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes |X| No |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.o

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company		x

Large accelerated filer	\|_\|	Accelerated filer	\|_\|
Non-accelerated filer	\|_\|	Smaller reporting company	\|X\|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes \|_\| No \|X\|
The number of shares outstanding of the registrant's common stock, $.0001 par value, as of September 29, 2010 was 4,140,000 shares.
DOCUMENTS INCORPORATED BY REFERENCE: None.

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

-The 2aggregate market value of Common Stock held by non-affiliates of the Registrant on June 30, 2010 was $nil based on a $nil average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

~~VELVET~~Indicate ~~ROPE~~the ~~SPECIAL~~number ~~EVENTS,~~of ~~INC~~shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date. 7,123,322 as of March 31, 2011

~~Annual~~DOCUMENTS ~~Report~~INCORPORATED onBY ~~Form 10-K~~ REFERENCE

None.

Table of Contents

TABLE OF CONTENTS

		Page
Item 1.	Business	4
PART I		5
Item 1A.	Risk Factors	11
Item 1.	Business	5
Item 1B.	Unresolved Staff Comments	30
Item 1A.	Risk Factors	9
Item 2.	Properties	30
Item 1B.	Unresolved Staff Comments	13
Item 3.	Legal Proceedings	30
Item 2.	Properties	13
Item 4.	(Removed and Reserved)	31
Item 3.	Legal Proceedings	13
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
Item 4.	[Removed and Reserved]	13
Item 6.	Selected Financial Data	32
PART II		14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 5.	Market for our Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 6.	Selected Financial Data	14
Item 8.	Financial Statements and Supplementary Data	43
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	66
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 9A.	Controls and Procedures	66
Item 8.	Financial Statements and Supplementary Data	20
Item 9B.	Other Information	67
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	34
Item 10.	Directors, Executive Officers and Corporate Governance	67
Item 9A.	Controls and Procedures	34
Item 11.	Executive Compensation	72
Item 9B.	Other Information	34
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	74
PART III		35
Item 13.	Certain Relationships and Related Transactions, and Director Independence	75
Item 10.	Directors, Executive Officers and Corporate Governance	35
Item 14.	Principal Accounting Fees and Services	76
Item 11.	Executive Compensation	35
Item 15.	Exhibits, Financial Statement Schedules	77
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13.	Certain Relationships and Related Transactions, and Director Independence	36
Item 14.	Principal Accounting Fees and Services	36
PART IV
Item 15.	Exhibits and Financial Statement Schedules	38
SIGNATURES		39

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~~FORWARD~~Table ~~LOOKING~~of ~~STATEMENT INFORMATION~~Contents

Certain statements made in this Annual Report on Form 10-K are "forward-looking statements "within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth herein under the headings "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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PART I

Item 1. ~~BUSINESS~~ Business

~~OUR~~This ~~BUSINESS~~annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

~~Velvet~~Although ~~Rope~~we ~~Special~~believe ~~Events,~~that ~~Inc.~~the ~~(“Velvet~~expectations ~~Rope~~reflected ~~Special~~in ~~Events”~~the forward-looking statements are reasonable, “we” cannot guarantee future results, ~~“us”~~levels of activity, performance or achievements. Except as required by applicable law, including the ~~“Company”)~~securities ~~was~~laws ~~initially~~of ~~formed~~the asUnited aStates, ~~California~~we ~~Corporation~~do innot ~~August~~intend ~~2005~~to ~~and~~update ~~became~~any aof ~~Delaware~~the ~~corporation~~forward-looking instatements ~~June~~to ~~2008~~conform these statements to actual results.

WeOur ~~are~~financial astatements ~~full-service~~are ~~corporate~~stated ~~and~~in ~~social~~United ~~event~~States ~~planning~~Dollars ~~company,~~(US$) ~~providing organizations~~ and ~~individuals~~are ~~the~~prepared ~~industry~~in ~~expertise~~accordance ~~needed~~with toUnited ~~deliver~~States ~~the~~Generally ~~message~~Accepted orAccounting ~~impression the client wants to communicate to their guests and attendees~~Principles. ~~From weddings to corporate and social events, Velvet Rope helps define and execute the vision of its clients from the initial planning stages to event follow-up and success metrics.~~

~~With~~In ~~operations~~this ~~based~~annual inreport, ~~Los~~unless ~~Angeles,~~otherwise ~~California~~specified, aall ~~majority~~dollar ofamounts ~~our~~are ~~revenue~~expressed isin ~~generated~~United ~~from~~States ~~regional~~dollars ~~markets,~~and ~~primarily~~all ~~Southern~~references ~~California.~~to “common shares” refer to the common shares in our capital stock.

~~Due~~As toused ~~the~~in ~~recent~~this ~~credit~~current ~~crunch~~report and ~~economic~~unless ~~downturn~~otherwise inindicated, the ~~United~~terms ~~States~~"we", ~~the~~"us" ~~need~~and ~~for~~"our" ~~professional~~mean ~~expertise~~Eastern inSecurity ~~planning~~Protection Services, Inc. and ~~executing~~our ~~successful~~wholly ~~events~~owned ~~while~~subsidiary, ~~streamlining~~China ~~costs~~Currency isDevelopment ~~critical. The~~Limited, ~~Company~~a Hong Kong corporation, ~~with~~Liaoning aHuaxun ~~proven~~Security ~~track~~Service ~~record~~Operation ~~and~~Co., ~~list~~Ltd., a People's Republic of ~~vendor~~China corporation (wholly-owned by China Currency Development Limited) and ~~industry~~Shenyang ~~contacts~~Huaxun Jiuding Venture Technology Co., isLtd., ~~well~~a ~~positioned~~People's toRepublic ~~capitalize~~of onChina ~~this~~corporation ~~opportunity~~(wholly-owned ~~within~~by ~~its~~Liaoning ~~current~~Huaxun ~~target~~Security ~~market~~Service Operation Co., Ltd.).

~~Velvet~~General Rope Special Events has been in operations since August 22, 2005. Since our inception, the appropriate people, repeatable business processes, and technology have been put in place with a goal to ensure financial stability and earnings growth. Our mission is to provide professional event planning and related services to individuals and business within the Los Angeles metropolitan area.Overview

~~From~~We were originally organized under the ~~very~~laws ~~beginning,~~of wethe ~~have~~State ~~sought~~of toCalifornia ~~work~~on ~~exclusively~~August ~~with~~22, ~~professional~~2005, ~~creative~~as Velvet Rope Special Events, Inc. and ~~hard-working~~became ~~vendors~~a ~~when~~Delaware ~~hiring~~Corporation ~~outside~~on ~~resources~~June 17, 2008. ~~This~~ ~~has~~From ~~been~~our ~~coupled~~inception, ~~with~~we ~~comprehensive~~were ~~training~~engaged ~~programs~~in tovarious ~~yield~~business ~~superior~~endeavors ~~results~~including full-service corporate and ansocial ~~ability~~event planning for organizations and individuals. Recently, our management decided to ~~deliver~~redirect onour abusiness ~~client’s~~focus ~~vision~~towards identifying and pursuing options regarding the acquisition of operating businesses.

~~Client~~On ~~engagements~~December ~~always~~31, ~~begin~~2010, we completed a reverse acquisition transaction with anChina Currency Development Limited, Maneeja Noory (our former controlling shareholder and former officer and director), and ACE Strategy Holdings Limited (“ACE”), pursuant to which we acquired 100% of the issued and outstanding capital stock of China Currency in exchange for 1,173,000 pre-~~depth~~split ~~understanding~~shares of ~~the~~our ~~organization’s~~common orstock, ~~individual’s~~par ~~expectations~~value $0.0001, and ~~budgetary requirements~~68,445 ~~complete~~warrants with aeach ~~detailed~~warrant ~~survey~~to ~~analysis~~purchase ~~and~~1 ~~several~~share ~~interviews~~of ~~before~~our ~~structuring~~common stock at an ~~event~~exercise price of $5. ~~This~~11 ~~ensures~~per ~~that~~share. The wewarrants ~~have~~vested aimmediately ~~true~~upon ~~understanding~~issuance and will expire on December 31, 2013. Both the number and purchase price of the ~~client~~warrants ~~expectations~~are adjustable for any future dilution or concentration of our common stock resulting from a capital reorganization. The 1,173,000 and ~~vision~~68,445 ~~with~~warrants issued to the ~~goal~~designees of ~~producing~~ACE ~~happy~~constituted ~~clients~~84.94% ~~that~~of ~~will~~our ~~promote~~issued and outstanding capital stock on a fully-diluted basis (which assumes the ~~Company’s~~issuance ~~brand~~of the common shares underlying the warrants) immediately after completion of the reverse acquisition and after giving effect to the concurrent cancellation of 3,920,000 shares of our common stock by Ms. Noory.

~~Historical~~As ~~financial~~a ~~results~~consequence ~~indicate~~of ~~that~~the ~~income~~Exchange ~~generated~~Agreement ~~from~~we ~~social~~adopted ~~event~~the ~~planning~~business ~~and execution has represented approximately 40 percent~~ of ~~revenues~~China ~~with~~Currency ~~the~~and ~~remaining~~its 60subsidiaries, ~~percent~~Shenyang ofHuaxun ~~revenues~~Jiuding ~~coming~~Venture ~~from~~Technology ~~corporate~~Co., ~~events~~Ltd. ~~Management~~ isand ~~currently~~Liaoning ~~looking~~Huaxun toSecurity ~~grow~~Service ~~revenues~~Operation byCo., ~~focusing client development on the corporate market~~Ltd.

~~Operating Overview~~4

~~OPERATING~~Table ~~PHILOSOPHY~~of Contents

~~We have a background in planning, organizing and overseeing events.~~ Our ~~success with events has stemmed from our commitment to our clientele. We are supported by vendors and professional support resources.~~Business

Our ~~commitment~~business ishas torelationships ~~enhance~~with ~~customer~~over ~~corporate~~90 ~~event~~safety ~~experience~~and security systems original equipment manufacturers throughout China. Typically, we enter into master agreements with ~~staff~~our suppliers at the beginning of each year, ~~quality~~which ~~service~~provide ~~and~~the ~~fair~~general terms, prices and conditions for transactions in the supplier's products over the year. We then enter into separate purchase agreements each time we actually purchase products from a supplier. When we purchase the products from our suppliers, we take title to the items and book them as inventory. We then sell and install the products to our customers.

We have integrated operations in the sales and service of security and safety systems, our principal business. We conduct our business through Shenyang Security by purchasing from security and safety system suppliers and then selling, installing and servicing the products to our customers. Our ~~Services~~security ~~Are~~and ~~Perfect~~safety systems business is focused on the market of Liaoning province, which includes major cities such as, Shenyang, Anshan, Benxi, Dalian, and Dandong, which have approximately 42 million people. We operate a large regional security and safety systems network in Liaoning province supported by strategically placed facilities. For: the year ended December 31, 2010, revenue generated from our security and safety systems business was $16.5 million.

*We ~~Grand~~sell, ~~Openings~~install and service over 400 products from approximately 90 suppliers through our distribution network in compliance with PRC regulations. In 2010, revenue derived from the sales, installation and service of third-party products constituted all of our revenue. The terms of our distribution agreements vary between suppliers and vary in terms of payment period, arrangement of delivery, pricing and quality requirements. The general payment terms vary from advance deposit, to cash on delivery, to payment up to 90 days from delivery, and the payment can be settled by means of bank collection, remittance, bills payable, postal check. The delivery is either to our warehouse, railway station, or prescribed destination within Shenyang City. The quality of safety and security systems supplied is in accordance with the prescribed national standard requirement. Our top 5 suppliers in our security and safety systems business accounted for 99% of our purchases in 2010.

*Information ~~Business~~Regarding ~~Outings~~our Operating Divisions

*In ~~Business~~fiscal ~~Meetings~~year &2010, ~~Seminars~~our operations were comprised of two operating divisions:

*● ~~Trade~~The ~~Shows~~Supply &and ~~Conventions~~Installation Project Division provides design, sales, installation, of electronics security and safety systems to residential, commercial, industrial and governmental customers;

*● ~~Fund-Raising~~The ~~Events~~Service Division provides security and safety services and maintenance; and,

*With ~~Promotional~~these two ~~Events~~divisions, we are able to provide one-stop service to our customers, including not only products, but also services, installations, maintenance, software, system upgrading, and other related solutions, which we believe many of our competitors cannot match.

*Supply ~~Class~~and ~~Reunions~~Installation Division

*Our ~~Corporate~~Installation ~~Parties~~Division performs installations of surveillance and safety products and systems for customer projects. It also provides project design, material supply, engineering, and operating maintenance services. Our Installation Segment has provided these services in China for six years and has successfully completed 4 projects in 2010. Our Installation Segment supplied and installed surveillance and safety systems for various projects involving railways, schools, banks, highways, commercial buildings, and public security and government entities, among others.

*In ~~Weddings~~2004, the Chinese government promulgated the “Safe City” (or “Plan 3111”) initiative, which requires about 660 cities throughout China to install and operate street surveillance, and we are a government-recommended Safe City vendor. Our Installation Division is devoted to constructing Safe City projects as well as many other surveillance and safety projects in China. Our one-stop technical support and service system including project design, material supply, engineering and operating maintenance, offers an all-covered solution.

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WeTable ~~are members~~ of~~: “International~~ ~~Special Events Society” (ISES)~~Contents

~~Membership~~Service ~~to ISES, gives us instant access to certain special events resources. Members enjoy discounts, business opportunities and promotion, and tailored educational information.~~Division

~~● Superior~~Our ~~educational~~Service ~~programming~~Division provides general services to our clients. Our Service Division offers a full range of surveillance and safety services, including network alarm response services, safety and surveillance products and solutions’ post-sale, maintenance services, software upgrading services, project integration services, security guard services, safety and surveillance consulting services, and safety and surveillance trustee services.

~~● Extensive~~Principal ~~resources~~ Products

~~● Peer~~We ~~interaction~~sell security, surveillance and safety products supplied by third-party electronic companies. Our main products include standalone DVRs, embedded DVRs, mobile DVRs, digital cameras, intelligent control system software platforms, perimeter security alarm systems, monitors, and auxiliary apparatuses.

~~The~~● ~~Company~~Standalone will need to identify emerging trends and integrate them into business operations, provide quality event consulting services, and continue to invest time and money in new services, marketing and advertising.DVRs

The ~~Company’s~~standalone ~~intention~~DVR isstores todigital ~~add~~images ~~value~~captured toby ~~our~~security ~~target~~cameras. ~~market~~It also controls the recording functions of the cameras and manages the storage of the data. This product has a pre-installed surveillance software system, which enables it to ~~improve~~perform ~~our~~access ~~sales,~~control ~~gross~~and ~~margin~~recording functions. This product has the competitive features of small size, ~~gross~~low ~~profit~~cost and high reliability. The primary markets for this product are small- to medium-size businesses, non-profit organizations and ~~market~~private ~~share~~residences. It is generally used for small-scale surveillance and safety needs.

~~The~~● ~~Company’s~~Embedded operating philosophy is to position itself as a strategic ally with their clients, who are clients more than customers. By building a business based on long-standing relationships with satisfied clients, we will simultaneously build defenses against competition. The longer the relationship exists, the more the clients understand what they are offered and why they need it.DVRs

~~SERVICES~~Similar ~~AND~~to ~~PRODUCTS~~the standalone DVR, the embedded DVR provides recording and compression functions. As compared to the standalone DVR, the embedded DVR has higher capacity to accommodate the recording functions for a greater number of cameras. The primary markets for these products are large projects and community security projects.

~~The~~● ~~Company~~Mobile ~~believes in a client-centered approach; their focus is to assure that every event is a success for the Company and for the people who hire them.~~ DVRs

ToSimilar ~~start~~to athe ~~project~~standalone DVR, ~~they~~the ~~learn~~mobile ~~about~~DVR ~~their~~is ~~client’s~~smaller ~~strategic~~in ~~goals~~size and~~/or~~ ~~their~~has ~~personal~~a ~~vision~~maximum asof ~~well~~4 asports. ~~define~~The ~~the~~mobile ~~event’s~~DVR ~~audience,~~can ~~which~~be ~~may~~installed ~~include~~in ~~family~~a vehicle and ~~friends~~enables ~~for~~recording aof ~~social~~digital ~~event,~~video orimages ~~employees,~~within ~~clients~~the ~~and/or media if it~~vehicle’s ~~a corporate client~~cabin. ~~From~~The ~~that~~primary ~~knowledge,~~markets ~~they~~for ~~execute~~this anproduct ~~event~~are ~~that~~the istransportation ~~carried~~industry ~~out~~and togovernmental ~~the smallest detail~~agencies.

~~The~~● ~~Company’s~~Digital option-based proposals give clients the opportunity to evaluate a wide range of services at various levels to fit their budget. The proposals are prepared to adjust budget selections when the budget is flexible to provide options and alternatives when requested. Cameras

~~This~~Digital ~~client~~cameras can be easily installed in most locations on a customer’s site. The range of cameras that we sell includes high-~~centered~~speed ~~approach~~dome ~~allows~~cameras, ~~Velvet~~which ~~Rope~~can toview ~~team~~360 updegrees, ~~with~~pan, ~~their~~zoom, ~~clients~~and totilt, ~~help~~all ~~them~~at ~~execute~~high anspeed, ~~event~~color Charge Coupled Device (CCD) cameras, indoor color CCD dome cameras, color/black and white CCD flying saucer cameras, infrared CCD multi-function cameras, mini-digital signal processing cameras, indoor standalone sphere CCD cameras, and network high-speed sphere CCD cameras.

~~For~~● ~~corporate~~Intelligent ~~clients, whether the venue is a vacant office space or a tent in a parking lot, Velvet Rope has the expertise to manage the logistics of working on~~High-~~site~~Speed ~~events~~Dome and the knowledge of current fire codes, internal resources and external services. Whether a client’s goal is to save money, increase productivity, build strong attendance or change the dynamics of their workplace, Velvet Rope can transform the venue into something special.Cameras

~~Working~~The ~~with~~intelligent ahigh-speed ~~team~~dome ofcamera ~~professionals~~is an integrated camera system using high-speed, ~~Velvet~~spherical, ~~Rope~~360-degree ~~can~~movement. ~~obtain~~The ~~the~~high-speed ~~best~~dome ~~selection~~camera ofis ~~services~~developed with a shield and ~~maximize~~platform. ~~the~~The ~~client’s~~shield ~~budget~~protects tothe ~~deliver~~camera awhile ~~polished~~the ~~event~~platform ~~that~~provides ~~reflects~~greater control over the ~~client~~camera’s ~~vision~~direction and view. The intelligent high-speed dome camera is mostly used in mountainous, wet and unstable conditions.

~~Velvet~~● ~~Rope~~Intelligent ~~Special~~Control ~~Events~~System ~~manages~~Software ~~all components of an event with a variety of options which make each event memorable and unique:~~Platforms

~~Strategic~~The ~~Planning~~intelligent &control ~~Theme~~system ~~Development~~software platforms are used for the management of all integration of security equipment and IP-based network security management software. We will continue to strengthen our software development platform with a more organic combination with hardware and software to achieve greater success when bidding for Safe City projects.

~~● Strategic planning session to understand client’s vision~~ 6

~~● Budget~~Table ~~analysis~~of ~~and projection~~ Contents

● ~~Theme~~ ~~mapping~~Perimeter toSecurity ~~event~~Alarm ~~design, venue selection, food and services, etc.~~ Systems

~~Event~~The ~~Design~~perimeter security alarm system is a motion sensor which concentrates on protecting all of the accessible entry points and prevents intrusion at home. The alarm system is highly resistant to interference and influence by environmental effects and the surrounding magnetic field.

● ~~Décor~~ ~~and theme props~~ Monitors

~~● Event~~The ~~layouts~~security monitors provide high-definition video, ~~renderings~~reliability and color reducibility. Monitor products include LCD multiple screen combination panel walls, ~~CAD~~LCD ~~design~~advertising players, built-in quadruple LCD/CRT monitors, IP monitor, and progressive scanning color digital monitors.

~~● Communications, details and event marketing~~ Marketing

~~Event~~Our ~~Selections~~customers are primarily: (1) governmental entities, such as customs agencies, courts, public security bureaus, and prisons; (2) non-profit organizations, including schools, museums, sports arenas, and libraries; and (3) commercial entities, such as airports, hotels, real estate, banks, mines, railways, supermarkets, and entertainment venues; and (4) multi-unit residential real estate developers. Because a large percentage of our revenues are derived from the installation of surveillance and safety systems which are generally non-recurring, we do not rely exclusively on one single or a small group of customers. We generally do not generate significant revenues from any existing client after the installation project is completed unless that client has additional installation sites for which our services might be required.

~~● Venue~~We have developed a multi-tiered marketing plan, allowing us to effectively market products and services to our clients. We sell most of our products and services through our own distribution network. Our distribution and sales networks cover most of Liaoning’s populated areas, but we rely on the city of Shenyang for the majority of our revenues.

~~● Catering~~In addition to our own branch offices and employees, we cooperate with independent sales agents and have established close relationships with these sales agents in order to take advantage of their regional resources and provide products and services that are tailored to the needs of our customers in those regions.

~~● Entertainment~~Through this distribution and marketing network, we believe we can continue to promote our brand recognition, strengthen the management of our distribution network and improve our sales revenue and market share.

~~● Promotional design and gift items~~ Seasonality

-Our 6operating -results and operating cash flows historically have been subject to seasonal variations. Our revenues are usually higher in the second half of the year than in the first half of the year, and the first quarter is usually the slowest quarter because fewer projects are undertaken during and around the Chinese spring festival.

~~Event~~Principal ~~Logistics~~Customers

~~● Tents~~We have more than 1000 customers. Our customers are primarily: 1) governmental entities, such as customs agencies, courts, public security bureaus, and ~~rentals~~prisons; (2) non-profit organizations, including schools, museums, sports arenas, and libraries; (3) commercial entities, such as airports, hotels, real estate, banks, mines, railways, supermarkets, and entertainment venues; and (4) multi-unit residential real estate developers. Our five largest customers accounted for approximately 62.01% of our revenues for the year ended December 31, 2010.

● Staffing

Customer Type	Percentage of Revenue
Governmental Entities	3.01%
Non-Profit Organizations	9.92%
Commercial Entities	18.53%
Residential	59.52%
Other	9.02%

~~● Security~~ 7

~~● Valet~~Table of Contents

~~● Production~~For the year ended December 31, 2010, our five largest customers were:

● Transportation

Customer Name	Address	Percentage of Sales
Shenyang Cheng Jian Tong Xin Intelligence Engineering Co., Ltd.	Floor 7, No.8, Renao Road, Shenhe District, Shenyang, Liaoning	50.96
Shenyang Ji Da Intelligence Engineering Co., Ltd.	4A015, Building C, Dongruan Computer Marketplace, Sanhao Street, Heping District, Shenyang, Liaoning	5.46
Shenyang Xin Shan Electronic Engineering Co., Ltd.	No. 114, Nanta Street, Dongling District, Shenyang, Liaoning	2.03
Shenyang Dong Ruan System Integration Engineering Co., Ltd.	No. 84, Sanhao Street, Heping District, Shenyang, Liaoning	1.81
Shenyang Dong Jin Electronic Engineering Co., Ltd.	No. 40, Fengle Second Road, Dongling District, Shenyang, Liaoning	1.75

~~● Printing,~~Principal ~~signage~~ Suppliers

~~● Registration~~Shenzhen is one of the biggest and most concentrated bases for electronic products in China. As a result, there are numerous suppliers and vendors of safety and security systems products. Because of the high level of competition among the suppliers, the prices of our principal products are relatively stable, and we are able to purchase these products at reasonable prices. We have entered into written contracts with several major suppliers and vendors.

~~Technical~~We ~~Production~~purchase ~~Services~~all of the products we sell and install from PRC based manufacturers. We have approximately 155 suppliers. Our five largest suppliers accounted for approximately 99% of our costs for the year ended December 31, 2010.

~~● PowerPoint~~For orthe ~~other~~year ~~presentations~~ended December 31, 2010, our five largest suppliers were:

● Lighting

Supplier Name	Address	Percentage of Purchased Products
Shenyang Jia Jie Wei Ye Electronic Co., Ltd.	No.1-20-3, No.90-1, Sanhao Street, Heping District, Shenyang, Liaoning	48.26
Shenyang Xin Hong Yu Scientific and Technical Co., Ltd.	No. 4-2, Wencui Road, Heping District, Shenyang, Liaoning	17.47
Shenyang New Development Area Xi Ke Rui Electronic Co., Ltd.	No.90, South Sanhao Street, Heping District, Shenyang, Liaoning	13.64
Shenyang Nan Hu Fu Yang Electronics Sales Office Co., Ltd.	No. 148, Weiyong Building, No.88, Sanhao Street, Heping District, Shenyang, Liaoning	11.68
Shenyang New Development Area Xia Guang Intelligence Engineering Sales Office Co., Ltd.	3A003, Building C, Dongruan, No. 84, Sanhao Street, Heping District, Shenyang, Liaoning	7.71

~~● Audio~~ 8

~~● Video~~Table ~~tape~~of ~~for distribution, webcast or archive~~ Contents

~~● Video playback~~ Competition

There are many companies in China engaged in the business of surveillance and safety products and designing and installing surveillance and safety systems. The ~~Industry~~surveillance and safety industry in China is still nascent, and no company has obtained the dominating position. In addition, it is difficult in the surveillance and safety industry for very large companies to reap benefits from their size, because most of surveillance and safety projects require the product to be specially tailored to meet customers’ individual requirements.

~~Velvet~~In ~~Rope~~the ~~Special~~surveillance ~~Events~~and ~~continues~~safety ~~to conduct~~ industry, ~~analysis~~competition tois ~~stay~~based ~~current~~ on ~~the~~price, ~~nature~~product ~~and~~quality, ~~dynamics~~ability ofto ~~the~~distribute ~~industry.~~products, ~~This process helps management develop insight~~ and ~~devise~~ability ~~sustainable~~to ~~business~~provide ~~and~~after-sales ~~marketing strategies~~service.

~~Individual~~We ~~and~~believe ~~social~~our ~~events~~major ~~such~~competitors asinclude, ~~weddings~~but ~~represent~~are ~~approximately~~not ~~40%~~limited ofto, the ~~Company’s~~following: ~~revenues. To~~China ~~capture~~Network ~~industry~~Communication ~~trends~~Corporation; ~~and~~China ~~benchmarks~~Security in& ~~the~~Surveillance ~~special event planning market~~Technology, ~~data~~Inc.; ~~related~~China toTelecommunications ~~weddings~~Corporation; inZhejiang ~~the~~Dahua ~~United~~Technology ~~States~~Co., ~~was analyzed~~Ltd. ~~Weddings~~; ~~represent~~Huawei aTechnologies ~~majority~~Co., ofLtd.; ~~money~~Nanwang ~~spent~~Information inIndustry ~~the~~Group ~~special events market~~Co., ~~making~~Ltd.; ~~them a good indicator of overall trends~~ and, ~~future~~Harbin ~~opportunities~~Synjones inElectronic ~~this~~Co., ~~market~~Ltd.

~~According~~Some ~~to the 2008 Wedding Industry Trends Report, (available free~~ of ~~charge~~our oncompetitors ~~The~~are ~~Wedding~~larger ~~Report~~than ~~website~~we ~~located~~are atand ~~www.theweddingreport.com)~~possess ~~the~~greater ~~actual~~name ~~number~~recognition, ofassets, ~~weddings~~personnel, ~~held~~sales, inand ~~the~~financial Uresources.S isHowever, ~~projected~~these tocompetitors ~~grow~~generally ~~from~~have ~~approximately~~higher ~~2,206,600~~prices infor ~~2007~~their ~~to 2~~products,~~244,811~~ inand ~~2013. The~~most ~~average~~of ~~cost~~them ~~per~~do ~~wedding~~not ishave ~~projected~~distribution tonetworks ~~grow from $28.7K to $33.6K from CY 2007 to CY 2013. In addition, over 80% of weddings~~ in ~~the~~Liaoning ~~United~~that ~~States~~ are ~~under~~as ~~$28.7K~~developed as ours.

~~Private~~We ~~organizations~~believe ~~make~~that upthe ~~approximately~~range ~~60%~~ of ~~the~~our ~~Company’s~~product ~~revenues,~~ and ~~are~~service ~~also~~offerings, ~~one~~our ofbrand ~~the~~recognition ~~growth~~by ~~areas~~the ~~Management~~market, isour ~~looking~~capital toresources, ~~focus~~our ~~on.~~relatively ~~Private~~low ~~organizations~~labor ~~such as businesses~~costs, ~~corporations,~~ and ~~political~~our ~~parties~~extensive ~~host~~distribution ~~the~~channels ~~most~~enable ~~events~~us onto ~~the~~compete ~~largest~~favorably ~~scales;~~in ~~these~~the ~~events~~market ~~typically~~for ~~generate~~the ~~larger~~surveillance ~~revenues~~and ~~per~~safety ~~event.~~products ~~The~~and ~~majority~~services ofthat ~~larger~~we ~~scale~~offer ~~holiday~~in ~~functions will fall under this segment~~China.

~~In addition to private business,~~ Government agencies host many events every year. These events are moderate in scale with middle to low revenues generated. Emphasis is placed on the visibility of the event for public viewing. The majority of organizational family functions will fall under this segment.Regulations

~~According~~Because tomost ~~the FutureWatch 2008 (available free~~ of ~~charge~~our onoperating ~~the~~subsidiaries ~~Meeting~~are ~~Professionals International website~~ located atin ~~www.mpiweb.org)~~the ~~corporate event planning report which surveys over 1~~PRC,~~600~~ ~~meeting~~we ~~professionals,~~are ~~respondents~~regulated ~~provided~~by athe ~~portrait~~national ~~of an industry that is strong, thriving~~ and ~~moving~~local ~~quickly~~laws ~~to meet a variety~~ of ~~internal and external challenges. In addition, findings pointed to less than one-fifth of meetings business is predicted to be outsourced in 2008, but~~ the ~~total will still represent a 13% increase in volume and a 13% increase in spending over 2007~~PRC. ~~Buyers are three times as likely to outsource logistics and meeting services, as opposed to broader meetings strategy development. This is all good news for 3rd party corporate event planners.~~

~~Not~~There ~~only~~is ~~are~~no ~~companies~~private ~~looking~~ownership ~~to outsource more~~ of ~~their~~land ~~corporate events coupled with an increase~~ in ~~their budgets~~China, ~~but~~and ~~they~~all ~~are~~land ~~also~~ownership ~~looking~~is toheld ~~centralize~~by ~~their~~the ~~plans~~government ~~globally.~~of ~~According to~~ the ~~FutureWatch 2008 report~~PRC, ~~the~~its ~~meetings~~agencies and ~~events~~collectives. ~~industry~~Land isuse ~~globalizing~~rights ~~rapidly.~~for ~~Although~~commercial ~~the~~use ~~majority~~can ofbe ~~FutureWatch~~obtained ~~2008~~from ~~respondents~~the ~~work~~government for ~~organizations~~a ~~with~~period ~~operations~~of inup ~~only~~to ~~one~~50 ~~country~~years, ~~20%~~and ~~expect~~are ~~their~~typically ~~global~~renewable. ~~reach~~Land touse ~~expand~~rights ~~over~~can ~~the~~be ~~next~~transferred ~~year.~~upon ~~And~~approval ~~companies~~by ~~with~~ the ~~widest~~land ~~spheres~~administrative authorities of ~~operations~~the ~~are~~PRC ~~most~~(State ~~likely~~Land toAdministration ~~expand~~Bureau) –upon ~~57%~~payment of ~~respondents~~the inrequired ~~organizations~~land ~~with~~transfer ~~offices in six or more countries expect expansion in 2008~~fee.

In ~~summary~~addition, ~~individuals,~~we ~~business~~are ~~organizations,~~also ~~and~~subject ~~government~~to ~~institutions~~the ~~are~~PRC’s ~~looking~~foreign tocurrency ~~event~~regulations. ~~planners~~The toPRC ~~help~~government ~~them~~has ~~stretch~~control ~~their~~over ~~event~~RMB ~~budgets~~reserves through, ~~and~~among ~~take~~other ~~over~~things, ~~additional~~direct ~~activities~~regulation ~~and~~of ~~services~~the ~~traditionally~~conversion ~~kept~~of ~~in-house~~RMB into other foreign currencies. ~~Individuals~~ Although foreign currencies which are ~~looking~~required for ~~innovation~~“current ~~and~~account” ~~creativity~~transactions incan ~~event~~be ~~planners~~bought freely at authorized Chinese banks, ~~helping~~the proper procedural requirements prescribed by Chinese law must be met. At the same time, Chinese companies are also required to ~~make~~sell ~~social~~their ~~events~~foreign ~~and~~exchange ~~weddings~~earnings ato ~~unique~~authorized Chinese banks and ~~stress-free~~the ~~experience~~purchase of foreign currencies for capital account transactions still requires prior approval of the Chinese government.

-We 7believe -that we are in material compliance with all registrations and requirements for the issuance and maintenance of all licenses required by the governing bodies, and that all license fees and filings are current.

~~Corporations~~Environmental need to motivate their customers, employees, and partners with more and exciting events that drive costs and personnel efficiencies. Technology will continue to play a great role in standardizing processes on a global scale. Corporate clients are learning that to be successful they must focus on their core competencies, and outsource the rest. These demands will widen the gap between the growing event planning firms and those that will ultimately lose market share.Regulations

~~Customers~~The major environmental regulations applicable to us include the PRC Environmental Protection Law, the PRC Law on the Prevention and Control of Water Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Air Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Solid Waste Pollution, and the PRC Law on the Prevention and Control of Noise Pollution.

~~Three~~We ~~(3)~~have ~~customers~~not ~~accounted~~been ~~for~~named ~~85.6%~~as a defendant in any legal proceedings alleging violation of ~~total~~environmental ~~net~~laws ~~revenues~~and ~~for~~have ~~the~~no ~~fiscal~~reasonable ~~year~~basis ~~ended~~to ~~June~~believe ~~30,~~that ~~2010~~there ~~and~~is ~~four~~any ~~(4)~~threatened ~~customers~~claim, ~~accounted~~action ~~for~~or ~~77.4%~~legal ofproceedings ~~net~~against ~~sales~~us ~~for~~that ~~the~~would ~~fiscal~~have ~~year~~a ~~ended~~material ~~June~~adverse ~~30,~~effect ~~2009~~on our business, ~~respectively. A~~financial ~~reduction~~condition inor ~~sales~~results ~~from~~of oroperations ~~loss~~due to any non-compliance with environmental laws. To the knowledge of ~~such~~our ~~customers~~management, ~~would~~we have abeen ~~material~~in ~~adverse~~full ~~effect~~compliance onwith ~~the~~environmental ~~Company’s~~protection ~~results~~regulations ofduring ~~operations~~at ~~and~~least ~~financial~~the ~~condition~~past three years.

~~Competition~~9

~~The~~Table market for event planning and services is generally highly fragmented. Our primary competition comes from prospective clients choosing to self plan their event without using professional consulting or assistance. In order to compete with self planned events the company must provide a unique event which in turn is cost effective. Competition on corporate events can also come from in-house staff that coordinates such events. We also have competition from a number of private companies involved in the business of event planning. We are also aware that other companies offer services with some or many features similar to those that we offer. Through unique ideas and a core group of professional vendors and independent contractors we feel that our company can maintain a competitive edge within our target market.Contents

~~MARKETING STRATEGY~~Tax

~~Velvet~~Pursuant ~~Rope~~to ~~Special~~the ~~Events~~Provisional ~~developed~~Regulation ~~its~~of ~~sales~~China on Value Added Tax ("VAT") and ~~marketing~~their ~~strategy~~implementing byrules, ~~analyzing~~all ~~its~~entities ~~own~~and ~~internal~~individuals ~~strengths~~that are engaged in the sale of goods, the provision of repairs and ~~then~~replacement ~~analyzing~~services ~~current~~and ~~market~~the ~~conditions~~importation of goods in China are generally required to pay VAT at a rate of 17.0% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayer. Further, when exporting goods, the exporter is entitled to a portion of or all the refund of VAT that it has already paid or borne.

~~The~~Foreign ~~overall~~Currency ~~marketing plan for the Company’s service is based on the following fundamentals:~~Exchange

~~● The~~Under ~~segment~~the PRC foreign currency exchange regulations applicable to us, the Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Conversion of Renminbi for capital account items, such as direct investment, loan, security investment and repatriation of investment, however, is still subject to the ~~market(s)~~approval ~~planned~~of the PRC State Administration of Foreign Exchange, or SAFE. Foreign-invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to ~~reach~~conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from the SAFE. Capital investments by foreign-invested enterprises outside of China are also subject to limitations, which include approvals by the Ministry of Commerce, the SAFE and the State Reform and Development Commission.

~~● Share~~Dividend ~~of the market expected to capture over a fixed period of time.~~Distributions

Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China are required to ~~standard~~set ~~advertisement~~aside ~~practices,~~at ~~Velvet~~least ~~Rope~~10.0% ~~Special~~of ~~Events~~their ~~has~~after-tax ~~gained~~profit ~~recognition~~based ~~through~~on ~~these~~PRC ~~additional~~accounting ~~promotional~~standards ~~mediums:~~each year to its general reserves until the accumulative amount of such reserves reach 50.0% of its registered capital. These reserves are not distributable as cash dividends.

●Intellectual Property

~~Internet~~Our ~~Marketing~~business ~~Campaigns~~depends, –in ~~All~~part, ~~sales~~on ~~associates’~~our ~~database~~ability ~~contacts~~to ~~generated~~conduct ~~which~~our ~~allows~~business without infringing on the ~~company~~proprietary rights of others. Similarly, we intend to maintain ~~periodic~~and ~~contact~~protect ~~with~~all ~~prospective~~future ~~clients~~intellectual ~~via~~property erights that may arise from our research and development activities. We rely primarily on employee and third-~~mail~~party confidentiality agreements to safeguard our intellectual property. In We ~~addition~~intend to register any rights that we may have in the future and that arise under trademark, copyright or patent law, as reasonably required in order to ensure the ~~company~~success ~~has~~of ~~advertised~~our ~~its~~business. As ~~services~~of onDecember ~~industry~~31, ~~specific~~2010, ~~websites~~we had not attempted to register any such rights.

●PRC law provides that anyone wishing to exploit the patent of another must conclude a written licensing contract with the patent holder and pay the patent holder a fee. One rather broad exception to this, however, is that, where a party possesses the means to exploit a patent but cannot obtain a license from the patent holder on reasonable terms and in reasonable period of time, the PRC State Intellectual Property Office, or SIPO, is authorized to grant a compulsory license. A compulsory license can also be granted where a national emergency or any extraordinary state of affairs occurs or where the public interest so requires. SIPO, however, has not granted any compulsory license up to now. The patent holder may appeal such decision within three months from receiving notification by filing a suit in a people's court.

~~Sales~~Research ~~Brochure~~and ~~– The Company frequently mails its brochure to prospective customers from a database of contacts paid for from the Los Angeles Chamber of Commerce.~~Development

●Currently, we have approximately 15 employees devoted to our research and development efforts, which are aimed at finding new varieties of products, improving existing products, improving overall product quality, and reducing production costs. We established a research and development center located in Shenyang in 2010. We have incurred $24,349 on research and development over the last two fiscal years.

~~Local Media – The Company places adds within local trade publications to create awareness to the services the company provides.~~10

●Table of Contents

Sales Force – The principal shareholder, Ms. Noory is the primary sales generator for the company. In addition to Ms. Noory, the company has one (1) independent contractor sales representatives who works on a commission only basis. The company also cross markets its services with key vendors.Employees

~~The~~We ~~above~~have ~~efforts~~approximately ~~have~~148 ~~helped~~full-time ~~drive~~employees. ~~our~~Approximately ~~revenue~~29 toof ~~date.~~them ~~The~~are ~~above~~administrative ~~marketing~~and ~~strategies~~accounting staff, approximately 15 of them are ~~implemented~~research onand andevelopment ~~ongoing~~staff ~~basis~~and approximately 104 of them are engineers and sales staff.

~~RESEARCH~~As ~~AND~~required ~~DEVELOPMENT~~by applicable Chinese law, we have entered into employment contracts with most of our officers, managers and employees. We believe that we maintain a satisfactory working relationship with our employees, and we have not experienced any significant labor disputes or any difficulty in recruiting staff for our operations. Our employees in China participate in a state pension plan organized by Chinese municipal and provincial governments. We are required to contribute monthly to the plan at the rate of 23% of the average monthly salary. In addition, we are required by Chinese law to cover employees in China with various types of social insurance. We believe that we are in material compliance with the relevant PRC laws.

~~None.~~With the expansion of our business operations and several anticipated acquisitions, we expect that the number of our employees will increase in the next 12 months.

~~Employees~~Our management believes that we maintain good relations with our employees.

~~As of September 29, 2010, we had 1 part-time employee. The employee is not represented by a labor union and we believe that our relationship with our employee is good.~~Subsidiaries

-We 8have -the following subsidiaries:

~~OUR~~China ~~OFFICES~~Currency Development Limited, a Hong Kong corporation, Liaoning Huaxun Security Service Operation Co., Ltd., a People's Republic of China corporation (wholly-owned by China Currency Development Limited) and Shenyang Huaxun Jiuding Venture Technology Co., Ltd., a People's Republic of China corporation (wholly-owned by Liaoning Huaxun Security Service Operation Co., Ltd.).

~~Velvet~~Item ~~Rope Special Events currently operates out of the chief executive officer’s home office where it conducts basic business operations~~1A. ~~Space~~ Risk requirements for the Company has been kept to a minimum: for social event clients, most meetings are conducted at restaurants, coffee houses, the client’s home, facilities wishing to be used for the event, or over the phone. For corporate clients, interactions often take place over the phone, via web-conference, or at the client’s place of business. Factors

~~Available~~Our ~~Information~~business operations are subject to a number of risks and uncertainties, including, but not limited to those set forth below:

~~Our~~Risks ~~website~~Relating address is www.vrspecialevents.com. We are not including the information contained on our website as part of, or incorporating it by reference into, this annual report on Form 10-K. We make available free of charge with written request our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Forms 3, 4 and 5, and all amendments to ~~those~~Our ~~reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).~~ Business

~~The~~Our ~~public~~operating ~~may~~history ~~read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public~~ may ~~obtain~~not ~~information~~serve onas ~~the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains~~ an ~~Internet~~adequate ~~site~~basis ~~that~~to ~~contains~~judge ~~reports,~~our ~~proxy~~future ~~and~~prospects ~~information statements,~~ and ~~other~~results ~~information~~of ~~regarding issuers such as us that file electronically with the SEC~~operations. ~~The website address is www.sec.gov.~~

~~Item~~Our 1Aoperating history may not provide a meaningful basis on which to evaluate our business. ~~RISK~~We ~~FACTORS~~cannot assure you that we will maintain our profitability or that we will not incur net losses in the future. We expect that our operating expenses will increase as we expand. Any significant failure to realize anticipated revenue growth could result in significant operating losses.

InDue ~~addition~~ to the ~~other~~nature ~~information~~of ~~provided in this report, you should carefully consider the following factors in evaluating~~ our business, ~~operations~~we ~~and~~do ~~financial condition. Additional risks and uncertainties~~ not ~~presently~~have ~~known~~significant toamounts usof ~~that~~recurring werevenues ~~currently~~from ~~deem immaterial or that are similar to those faced by other companies in~~ our ~~industry~~existing ~~or business in general~~customers, ~~such~~and aswe ~~competitive~~are ~~conditions,~~highly ~~may~~dependent ~~also~~on ~~impair~~new ~~our~~ business ~~operations~~development.

~~The~~Most ~~occurrence~~ of ~~any~~our revenues are derived from the installation of surveillance and safety systems which are generally non-recurring. Our customers are primarily governmental entities, non-profit organizations and commercial entities, such as airports, customs agencies, hotels, real estate developments, banks, mines, railways, supermarkets, and entertainment enterprises. We sell and install security systems for these customers and generate revenues from the ~~following~~sale ~~risks~~of ~~could~~these systems to our customers and, to a lesser extent, from maintenance of these systems for our customers. After we have sold and installed a ~~material~~system ~~adverse~~at ~~effect~~any onparticular customer site, we have generated the majority of revenues from that particular client. We do not expect to generate significant revenues from any existing client in future years unless that client has additional installation sites for which our ~~business~~services might be required. Therefore, ~~financial~~in ~~condition~~order ~~and~~to ~~results~~maintain a level of ~~operations~~revenues each year that is at or in excess of the level of revenues we generated in prior years, we must identify and be retained by new clients. If our business development, marketing and sales techniques do not

~~RISKS RELATED TO OUR BUSINESS~~11

WeTable ~~may not be able to continue as a going concern and if we do not our stock may become worthless. As reflected in the accompanying financial statements, the Company had an accumulated deficit~~ of $63,376 at June 30, 2010, net loss from operations and net cash used in operations of $11,819 and $12,952 for the fiscal year then ended. While the Company is attempting to produce sufficient revenues, the Company’s cash position may not be enough to support the Company’s daily operations. Management will continue to make efforts to increase revenues by operating at higher levels. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.Contents

Ifresult wein doan ~~not~~equal ~~receive~~or ~~additional~~greater ~~funding~~number ~~to expand operations the value~~ of ~~our~~projects ~~stock could be adversely affected. As~~ of ~~June~~at ~~30,~~least ~~2010,~~comparable wesize ~~had~~and ~~cash~~value offor ~~approximately~~us ~~$0. We~~in ~~estimate~~a ~~that~~given ~~such~~year ~~cash~~compared ~~reserves are not sufficient~~ to ~~fund~~the ~~our~~prior ~~daily~~year, ~~operations.~~then ~~To fund our daily operations~~ we ~~must~~may ~~raise additional capital. No assurance can~~ be ~~given~~unable ~~that~~to weincrease ~~will~~our ~~receive~~revenues ~~additional~~and ~~funds~~earnings ~~required~~or toeven ~~fund~~sustain ~~our~~current ~~daily~~levels ~~operations. In addition,~~ in the ~~absence of the receipt of additional funding we may be required to scale back current operations~~future.

~~Our~~A ~~officer~~decrease ~~has~~or nodelay ~~experience~~ in ~~managing~~state aor ~~public~~local ~~company. Our~~mandating ~~sole officer has no previous experience in managing a public company~~ and wefunding ~~do not have a sufficient number~~ of ~~employees~~surveillance ~~to segregate responsibilities~~ and ~~may~~safety besystem ~~unable~~installation toand ~~afford~~operation ~~increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we~~ may ~~identify~~cause other deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our ~~internal~~revenues controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and ~~are~~profits ~~important~~ to ~~help prevent financial fraud~~decrease. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.

-We 9depend -substantially on national, state and local government laws mandating and funding surveillance and safety system installation and operation in China. We expect that this dependence will continue for the foreseeable future. If China’s priorities change, whether due to tightening budgets, shifting policy, or otherwise, initiatives such as the Safe City Project may be abandoned or cut back, and our financial condition and results of operations may suffer material adverse effects.

We ~~do not presently have a Chief Financial Officer. Our CEO does not have any experience as a chief financial officer (“CFO”). While we are seeking to hire a CFO, we~~ may ~~not~~ be ~~successful in these efforts. In the absence of a CFO we will be~~ unable to ~~fully~~compete ~~implement~~successfully ~~internal~~against ~~controls~~new and ~~procedures~~existing ~~required of a public corporation~~competitors. ~~As a result we may become subject to regulatory inquiries and reviews which may hamper our ability to move forward with our business.~~

WeThe domajor ~~not~~market for ~~have~~our ~~any~~products ~~independent~~and ~~directors. Our~~business ~~sole~~operations ~~officer~~is the cities, Msvillages and towns of province. ~~Noory,~~We ismay face increasing competition in the future as we expand our ~~sole~~business ~~director~~in Liaoning province and ~~there~~our isadjacent noprovinces. ~~director~~As ~~who~~we isexpand ~~independent~~our ofoperations ~~management. We~~in ~~are~~the ~~continuing~~sales and service security and safety systems market, we will encounter competition from other companies existing in our ~~efforts~~target tomarkets, ~~attract~~such ~~independent~~as ~~directors~~China Network Communication Corporation, ~~but~~China ~~until~~Security we& doSurveillance soTechnology, ~~conflicts~~Inc., ~~between~~and China Telecommunications Corporation, and may face future competition from new foreign and domestic competitors entering the ~~interests~~security ofand Mssafety systems market in China. ~~Noory~~Our current and ~~our~~future ~~other~~competitors ~~shareholders~~may ~~will~~ be ~~resolved~~able ~~solely~~to byrespond ~~Ms.~~more ~~Noory~~quickly to new or changing opportunities and ~~this~~customer requirements and may ~~prove~~be ~~detrimental~~able to ~~the~~undertake ~~interests~~more ofextensive promotional and distribution activities, offer more attractive terms to customers, and adopt more aggressive pricing policies. Competition could reduce our ~~other~~market ~~shareholders~~share or force us to lower our prices to unprofitable levels.

Our ~~officer~~current ~~does~~business ~~not have an employment agreement with us and could cease working for us at any time causing us to cease our~~ operations~~. Our~~ ~~sole~~rely ~~officer~~heavily ~~does~~upon ~~not have an employment agreement with us~~Mr. In ~~the~~Rui ~~absence of an employment agreement with a restrictive covenant on the part of the employee~~Tan, our ~~officer~~Chief ~~could~~Executive ~~leave~~Officer usand ~~at any time or commence working for a competitive company. Furthermore~~Chair, ~~California~~and ~~law,~~adding ~~under~~other ~~which~~key weemployees ~~operate,~~essential ~~may~~to ~~cast~~growing ~~substantial doubt on the enforceability of any restrictive covenant that we may obtain from~~ our ~~sole officer in the future~~business. ~~Accordingly, the continued services of our sole officer cannot be assured. If Ms. Noory were to cease working for us, we would have to cease operations.~~

~~There~~We ishave ~~the~~been ~~risk~~heavily ofdependent ~~personal~~upon ~~injuries~~the expertise and ~~accidents~~management inof ~~connection~~Mr. ~~with~~Rui ~~our planned events~~Tan, ~~which~~our ~~could~~Chair ~~subject~~and usChief toExecutive ~~personal~~Officer, ~~injury~~and orhis ~~other~~continued ~~claims~~services. ~~and~~The ~~increase~~loss ~~our~~of ~~expenses~~Mr. ~~There~~ ~~are~~Tan’s ~~inherent~~services ~~risks~~could ~~involved~~seriously ~~with~~interrupt ~~producing~~our ~~events~~business operations. AsAlthough awe ~~result,~~have ~~personal~~entered ~~injuries~~into ~~and~~an ~~accidents~~employment ~~have,~~contract ~~and~~with ~~may~~Mr. Tan, ~~occur~~pursuant ~~from time~~ to ~~time,~~ which ~~could~~Mr. ~~subject~~Tan usagrees to ~~claims~~serve ~~and~~as ~~liabilities~~our ~~for~~full ~~personal~~time ~~injuries.~~Chief ~~Incidents~~Executive inOfficer, ~~connection~~and ~~with~~Mr. ~~our~~Tan ~~events~~has atnot indicated any ~~venues~~intention ~~that~~of weleaving ~~rent~~us, ~~could~~the ~~also~~loss ~~result~~of inhis ~~claims,~~service ~~reducing~~for ~~operating~~any ~~income. While~~reason wecould ~~maintain~~have ~~insurance~~a ~~polices~~very ~~that~~negative ~~provide~~impact ~~coverage~~on ~~within~~our ~~limits~~ability ~~that~~to ~~are~~fulfill ~~sufficient,~~our inbusiness ~~management’s~~plan. In ~~judgment~~addition, towe ~~protect~~face uscompetition ~~from~~for ~~material~~attracting ~~financial~~skilled ~~loss~~personnel. ~~for~~If ~~personal~~we ~~injuries~~fail ~~sustained~~to byattract ~~persons~~and atretain ~~our~~qualified ~~venues~~personnel orto ~~accidents~~meet incurrent ~~the~~and ~~ordinary~~future ~~course of business~~needs, ~~there~~this ~~can~~could beslow noour ~~assurance~~ability ~~that~~to ~~such~~grow ~~insurance~~our ~~will~~business, bewhich ~~adequate~~could atresult ~~all~~in ~~times~~a ~~and~~decrease in ~~all~~market ~~circumstances~~share.

~~Our~~The ~~revenues~~limited ~~depend~~public incompany ~~part~~experience ~~on the success~~ of our ~~marketing~~management ~~campaigns,~~team ~~and~~could ~~there~~adversely ~~can~~impact beour noability ~~assurance that such advertising, promotional and other marketing campaigns will be successful or will generate revenue or profits. Similar~~ to ~~many~~comply ~~companies,~~with wethe ~~spend~~reporting ~~amounts~~requirements onof ~~advertising, promotional and other marketing campaigns for securing events and other business activities~~U. ~~Such marketing activities include, among others, internet marketing campaigns, sales brochure, direct mail and local media~~S. ~~There~~Securities ~~can be no assurance that such advertising, promotional and other marketing campaigns will be successful or will generate revenue or profits~~Laws.

~~Dependence~~Our management onteam ~~Key~~has ~~Customers. Three~~limited ~~(3)~~public ~~customers~~company ~~accounted~~experience, ~~for~~which ~~85.6%~~could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of ~~total~~2002. ~~net~~Our ~~revenues~~senior management has never had sole responsibility for ~~the~~managing ~~fiscal~~a ~~year~~publicly ~~ended~~traded ~~June~~company. ~~30,~~Such ~~2010~~responsibilities include complying with federal securities laws and ~~four~~making ~~(4)~~required ~~customers~~disclosures ~~accounted~~on ~~for~~a 77timely basis.4% ofOur ~~net~~senior ~~sales~~management ~~for~~may ~~the~~not ~~fiscal~~be ~~year~~able ~~ended~~to ~~June~~implement 30programs and policies in an effective and timely manner that adequately respond to such increased legal, ~~2009~~regulatory compliance and reporting requirements, ~~respectively. A~~including ~~reduction~~the inestablishing ~~sales~~and ~~from~~maintaining orinternal ~~loss~~controls ofover financial reporting. Any such ~~customers~~deficiencies, ~~would~~weaknesses or lack of compliance could have a ~~material~~materially adverse effect on our ability to comply with the ~~Company’s~~reporting ~~results~~requirements of ~~operations~~the ~~and~~Securities ~~financial~~Exchange ~~condition~~Act of 1934 (the “Exchange Act”), which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company.

Our business is subject to general economic and business factors that are largely out of our control, any of which could have a material adverse effect on our operating results. We are also affected by recessionary economic cycles as clients are less likely to engage a professional event planner and substitute such services by self planning events. Economic conditions may adversely affect our clients and their ability to pay for our services or to host events. If fewer and smaller events become a trend, this may negatively impact our operations.12

~~Our~~Table ~~success depends to a large extent upon the continued services~~ of key managerial employees and our ability to attract and retain qualified personnel. Specifically, we are highly dependent on the ability and experience of our key employee, Maneeja Noory. The loss of Ms. Noory, the principal owner of the Company, would present a significant setback for us and could impede the implementation of our business plan. Our success depends upon the continued contributions of our key staff and skilled employees, many of whom would be extremely difficult to replace. Competition for skilled employees in the industry is intense. If we are unable to retain our existing key staff or skilled employees, or hire and integrate new key staff or skilled employees, our operating results would likely be harmed. There is no assurance that we will be successful in acquiring and retaining qualified personnel to execute our current plan of operations.Contents

-If 10we -need additional capital to fund our growing operations, we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations.

~~The~~In ~~ability~~connection ofwith our ~~president~~growth ~~to control our business will limit minority shareholders’ ability to influence corporate affairs. Our president~~strategies, ~~Maneeja~~we ~~Noory,~~may ~~owns~~experience ~~3,920,000~~increased orcapital ~~95%~~needs ofand ~~our 4~~accordingly,~~140,000~~ ~~issued~~we ~~and~~may ~~outstanding~~not ~~shares.~~have ~~Even~~sufficient ifcapital ~~she were~~ to ~~sell~~fund ~~all~~our offuture ~~her~~operations ~~shares~~without ~~that~~additional ~~are~~capital ~~covered by this prospectus, she would still own 3,590,000 shares or 87% of our issued and outstanding shares~~investments. ~~Because~~Our ofcapital ~~her~~needs ~~stock ownership, our president~~ will bedepend inon anumerous ~~position to continue to elect our board of directors~~factors, ~~decide~~including ~~all~~(i) ~~matters requiring stockholder approval and determine~~ our ~~policies.~~profitability; ~~The~~(ii) ~~interests of our president may differ from~~ the ~~interests~~release of ~~other~~competitive ~~shareholders~~products with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. The minority shareholders would have no way of overriding decisions made by our ~~president.~~competition; ~~This~~and ~~level~~(iii) ~~of control may also have an adverse impact on~~ the ~~market~~amount ~~value~~ of our ~~shares~~capital ~~because~~expenditures, ~~she~~including ~~may~~acquisitions. ~~institute~~We orcannot ~~undertake~~assure ~~transactions,~~you ~~policies or programs~~ that ~~result~~we inwill ~~losses~~be ~~may~~able ~~not take any steps~~ to ~~increase~~obtain ~~our~~capital ~~visibility~~ in the ~~financial~~future ~~community and/ or may sell sufficient numbers of shares~~ to ~~significantly~~meet ~~decrease~~ our ~~price per share~~needs.

~~Our~~If ~~industry~~we iscannot ~~fragmented~~obtain ~~and~~additional competitive. The corporate and social event planning industry is highly competitive and fragmented. The Company expects competition to intensify in the future. We compete with numerous regional and local event planning companiesfunding, ~~many~~we ofmay ~~which~~be ~~have~~required ~~substantially greater financial, managerial and other resources than those presently available~~ to: ~~us.~~(i) ~~Numerous~~limit ~~well-established~~our ~~companies are focusing significant resources on providing event~~ marketing, ~~design~~efforts; and ~~planning~~(ii) ~~services~~decrease ~~that will compete with our services. No assurance can be given that we will be able to effectively compete with these other companies~~ or ~~that~~eliminate ~~competitive~~capital ~~pressures, including possible downward pressure on the prices we can charge for our products and services, will not impact our results~~expenditures. InSuch ~~the~~reductions ~~event~~could ~~that~~materially weadversely ~~cannot~~affect ~~effectively compete on a continuing basis or competitive pressures arise, such inability to compete or competitive pressures will have a material adverse effect on~~ our business, ~~results of operations~~ and ~~financial condition and the price of~~ our ~~shares~~ability into ~~any market that might develop~~compete.

~~Risks~~Even ~~Related~~if we do find a source of additional capital, we may not be able to ~~Our~~negotiate ~~Common~~terms ~~Stock~~and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

~~Currently,~~Our ~~there~~business iscould ~~no public market for our securities, and there can~~ be no assurances that any public market will ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to significant price fluctuations. Prior to the date of this prospectus, there has not been any established trading market for our common stock, and there is currently no public market whatsoever for our securities. Spartan Securities Group Ltd. filed an application with FINRA on our behalf so as to be able to quote the shares of our common stock on the OTC Bulletin Board (“OTCBB”) maintained by FINRA commencing upon the effectiveness of our registration statement of which this prospectus is a part. We have obtained the symbol VELV, but no active trading market has developed. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. In addition, our common stock has not been and is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for the common stock. Either of these factors could adversely ~~affect~~affected the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by ~~many~~reduced ~~factors,~~levels ~~including the depth and liquidity~~ of ~~the market for shares of our common stock~~cash, ~~developments~~whether ~~affecting~~from ~~our~~operations ~~business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception, and general economic and market conditions. No assurances can be given that an orderly~~ or ~~liquid~~from ~~market will ever develop for the shares of our common stock~~borrowings. Because of the anticipated low price of the securities, many brokerage firms may not be willing to effect transactions in these securities. See “Plan of Distribution” subsection entitled “Selling Shareholders and any purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock restrictions.”

~~Our~~Historically, ~~Board~~our principal sources of ~~Directors~~funds ishave ~~authorized~~been tocash ~~issue~~flows ~~shares~~from ofoperations ~~preferred~~and ~~stock,~~borrowings ~~which~~from ~~may~~banks ~~have~~and ~~rights~~other institutions. Our operating and ~~preferences~~financial ~~detrimental~~performance tomay ~~the~~generate ~~rights~~less ofcash ~~the~~and ~~holders~~could ofresult in our ~~common~~failing ~~shares~~to comply with our credit agreement covenants. We ~~are~~were ~~authorized~~in tomaterial ~~issue~~compliance upwith these covenants in fiscal year 2009 and expect to ~~5,000,000~~be ~~shares~~in ofcompliance ~~preferred~~with ~~stock,~~these ~~$0.0001~~covenants ~~par~~during ~~value~~fiscal year 2010. AsHowever, ofour ability to remain in compliance in the ~~date~~future ofwill ~~this~~depend ~~prospectus,~~on weour ~~have~~future ~~not~~financial ~~issued~~performance ~~any~~and ~~shares~~may ofbe ~~preferred~~affected ~~stock~~by events beyond our control. ~~Our~~There ~~preferred~~can ~~stock~~be ~~may~~no ~~bear~~assurance ~~such~~that ~~rights~~we ~~and~~will ~~preferences,~~generate ~~including~~sufficient ~~dividend~~earnings and ~~liquidation~~cash ~~preferences,~~flow asto ~~the~~remain ~~Board~~in ofcompliance ~~Directors~~with ~~may~~the ~~fix~~credit ~~and~~agreement, ~~determine~~or ~~from~~that ~~time~~we towill ~~time.~~be ~~Any~~able ~~such~~to ~~preferences~~obtain ~~may~~future ~~operate~~amendments to the ~~detriment~~credit ofagreement ~~the~~to ~~rights~~avoid ofa default. In the ~~holders~~event of ~~the~~a ~~common~~default, ~~stock~~there ~~being~~can ~~offered~~be ~~hereby~~no assurance that we could negotiate a new credit agreement or that we could obtain a new credit agreement with satisfactory terms and conditions within a reasonable time period.

~~Our~~We ~~articles~~sometimes ofextend ~~incorporation~~credit ~~provide~~to ~~for indemnification of officers and directors at~~ our ~~expense~~customers. ~~and~~Failure ~~limit their liability which may result in a major cost~~ to uscollect ~~and hurt~~ the ~~interests~~trade ofreceivables ~~our shareholders because corporate resources may be expended for the benefit of officers and/~~or ~~directors.~~untimely ~~Our~~collection ~~articles~~ of incorporation and applicable Delaware law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them incould ~~any~~affect ~~litigation to which they become a party arising from their association with or activities on~~ our ~~behalf~~liquidity. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person’s promise to repay us, therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us, which we will be unable to recoup.

-We 11extend -credit to some of our customers while generally requiring no collateral. Generally, our customers pay in installments, with a portion of the payment upfront, a portion of the payment upon receipt of our products by our customers and before the installation, and a portion of the payment after the installation of our products and upon satisfaction of our customer. Sometimes, a small portion of the payment will not be paid until after a certain period following the installation. We perform ongoing credit evaluations of our customers’ financial condition and generally have no difficulties in collecting our payments. However, if we encounter future problems collecting amounts due from our clients or if we experience delays in the collection of amounts due from our clients, our liquidity could be negatively affected.

WeIf ~~have~~our ~~been~~subcontractors ~~advised~~fail ~~that,~~to inperform ~~the~~their ~~opinion~~contractual ~~of the SEC~~obligations, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against these types of liabilities, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our ~~counsel,~~ability ~~the matter has been settled by controlling precedent) submit~~ to aprovide ~~court~~services ~~of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act~~ and ~~will~~products ~~be governed by the final adjudication of such issue. The legal process relating~~ to ~~this~~our ~~matter if it were to occur is likely to be very costly and may result in us receiving negative publicity~~customers, ~~either~~as ofwell ~~which~~as ~~factors~~our ~~are~~ability ~~likely~~ to ~~materially~~obtain ~~reduce~~future ~~the market and price for our shares~~business, ifmay ~~such~~be ~~a market ever develops~~harmed.

~~Any~~Many ~~market that develops in shares~~ of our ~~common~~contracts ~~stock~~involve ~~will~~subcontracts bewith ~~subject~~other tocompanies ~~the~~upon ~~penny~~which ~~stock~~we ~~restrictions~~rely ~~which~~to ~~will~~perform ~~create~~ a ~~lack~~portion of ~~liquidity~~the ~~and~~services ~~make~~that ~~trading~~we ~~difficult~~must orprovide ~~impossible.~~to ~~SEC~~our ~~Rule~~customers. ~~15g-9~~There ~~(as~~is ~~most~~a ~~recently~~risk ~~amended~~that ~~and~~we ~~effective~~may onhave ~~September~~disputes ~~12,~~with ~~2005)~~our ~~establishes the definition of a “penny stock~~subcontractors,” ~~for~~including ~~purposes~~disputes ~~relevant~~regarding tothe ~~us,~~quality asand ~~any~~timeliness ~~equity security that has a market price~~ of ~~less~~work ~~than~~performed ~~$5.00~~by ~~per~~those ~~share or with an exercise price of less than $5~~subcontractors.00 ~~per~~A ~~share,~~failure ~~subject~~by toone aor ~~limited~~more ~~number~~ of ~~exceptions. It is likely that~~ our ~~shares~~subcontractors ~~will be considered~~ to besatisfactorily ~~penny~~perform ~~stocks for~~ the ~~immediately~~agreed-upon ~~foreseeable~~services ~~future.~~may ~~This~~materially ~~classification severely~~ and adversely ~~affects~~impact ~~the~~our ~~market~~ability ~~liquidity~~to ~~for~~perform our ~~common~~obligations ~~stock.~~to ~~For~~our ~~any transaction involving a penny stock~~customers, ~~unless~~could ~~exempt,~~expose ~~the~~us ~~penny~~to ~~stock~~liability ~~rules~~and ~~require~~could ~~that~~have a ~~broker-dealer~~material ~~approve~~adverse aeffect ~~person’s~~on ~~account~~our ~~for~~ability ~~transactions in penny stocks and the broker-dealer receive from the investor a written agreement~~ to ~~the~~compete ~~transaction~~for ~~setting~~future ~~forth~~contracts ~~the identity~~ and ~~quantity of the penny stock to be purchased~~orders.

In order to approve a person’s account for transactions in penny stocks, the broker-dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.13

~~The~~Table ~~broker-dealer~~of ~~must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:~~Contents

●We ~~the~~may ~~basis~~have ondifficulty ~~which~~defending ~~the~~our ~~broker-dealer~~intellectual ~~made~~property ~~the~~rights ~~suitability~~from ~~determination,~~infringement ~~and~~resulting ●in ~~that~~lawsuits ~~the~~requiring ~~broker-dealer~~us ~~received~~to adevote ~~signed,~~financial ~~written~~and ~~agreement~~management ~~from~~resources ~~the~~that ~~investor~~would ~~prior~~have toa ~~the~~negative ~~transaction~~impact on our operating results.

~~Disclosure~~We ~~also~~regard ~~has~~our totrademarks beand ~~made~~other ~~about~~similar ~~the~~intellectual ~~risks~~properties ofas ~~investing~~critical into ~~penny~~our ~~stock~~success. inWe ~~both~~rely ~~public~~on ~~offerings~~trademark and inother ~~secondary~~similar ~~trading~~intellectual properties, as well as confidentiality and ~~commissions~~license ~~payable~~agreements towith ~~both~~certain ~~the~~of ~~broker-dealer~~our employees, customers and ~~the~~others ~~registered~~to ~~representative,~~protect ~~current~~our ~~quotations~~proprietary rights. We have received trademark registration for ~~the~~certain ~~securities~~of ~~and~~our products in the ~~rights~~PRC. ~~and~~No ~~remedies~~assurance ~~available~~can tobe angiven ~~investor~~that inour ~~cases~~licenses ofwill ~~fraud~~not inbe ~~penny~~challenged, ~~stock~~invalidated, ~~transactions.~~infringed ~~Finally~~or circumvented, ~~monthly~~or ~~statements~~that ~~have~~our intellectual property rights will provide competitive advantages to us. There can be ~~sent~~no ~~disclosing~~assurance ~~recent~~that ~~price~~we ~~information~~will ~~for~~be ~~the~~able ~~penny~~to ~~stock~~obtain ~~held~~a inlicense ~~the~~from ~~account~~a ~~and~~third-party ~~information~~technology onthat ~~the~~we ~~limited~~may ~~market~~need into ~~penny~~conduct ~~stocks~~our business or that such technology can be licensed at a reasonable cost.

~~Because of these regulations~~Presently, ~~broker-dealers~~we ~~may~~sell ~~not~~our ~~wish~~products tomainly ~~engage~~ in ~~the~~PRC. ~~above-referenced~~To ~~necessary~~date, ~~paperwork~~no ~~and~~trademark ~~disclosures and/~~or ~~may~~patent ~~encounter~~filings ~~difficulties~~have inbeen ~~their~~made ~~attempt~~other tothan ~~sell~~in ~~shares~~PRC. ofTo ~~our common stock, which may affect~~ the ~~ability~~extent ofthat ~~selling~~we ~~shareholders~~market orour ~~other~~products ~~holders to sell their shares~~ in ~~the~~other ~~secondary~~countries, ~~market~~we ~~and~~may have ~~the~~to ~~effect~~take ofadditional ~~reducing~~action ~~the~~to ~~level~~protect ofour ~~trading~~intellectual ~~activity in the secondary market~~property. ~~These~~The ~~additional~~measures ~~sales~~we ~~practice~~take ~~and~~to ~~disclosure~~protect ~~requirements~~our ~~could~~proprietary ~~impede~~rights ~~the~~may ~~sale~~be ofinadequate ~~our securities, if~~ and ~~when~~we ~~our~~cannot ~~securities~~give ~~become~~you ~~publicly~~any ~~traded.~~assurance Inthat ~~addition, the liquidity for~~ our ~~securities~~competitors ~~may~~will ~~decrease,~~not ~~with~~independently adevelop ~~corresponding~~products ~~decrease~~and inprocesses ~~the~~that ~~price~~are ofsubstantially ~~our~~equivalent ~~securities.~~or ~~Our~~superior ~~shares in all probability will be subject~~ to ~~such~~our ~~penny~~own ~~stock~~or ~~rules~~copy ~~for the foreseeable future and~~ our ~~shareholders will, in all likelihood, find it difficult to sell their securities~~products.

WeThere dois ~~not~~no ~~intend~~assurance tothat ~~pay~~we ~~dividends~~will onpay ~~our common stock. We have not paid any~~ dividends ~~on our common stock~~ to ~~date~~shareholders ~~and there are no plans for paying dividends on the common stock~~ in the ~~foreseeable~~ future.

WeOur ~~intend~~board toof ~~retain~~directors ~~earnings,~~does ifnot ~~any,~~intend to ~~provide~~distribute ~~funds~~dividends ~~for~~in the ~~implementation~~near offuture. ~~our~~The ~~business~~declaration, ~~plan.~~payment Weand doamount ~~not~~of ~~intend~~any tofuture ~~declare~~dividends orwill ~~pay~~be ~~any~~made ~~dividends~~at inthe discretion of the ~~foreseeable~~board ~~future.~~of ~~Therefore~~directors, ~~there~~and ~~can~~will bedepend noupon, ~~assurance~~among ~~that~~other ~~holders~~things, the results of our ~~common~~operations, ~~stock~~cash ~~will~~flows ~~receive~~and ~~any~~financial ~~additional cash~~condition, ~~stock~~operating orand capital requirements, and other ~~dividends~~factors onas ~~their~~the ~~shares~~board of ~~our~~directors ~~common~~considers ~~stock~~relevant. ~~until~~There weis ~~have~~no ~~funds~~assurance ~~which~~that ~~the~~future ~~Board~~dividends ofwill ~~Directors~~be ~~determines~~paid, ~~can~~and, beif ~~allocated~~dividends are paid, there is no assurance with respect to ~~dividends~~the amount of any such dividend.

-We 12may -incur significant costs to ensure compliance with United States corporate governance and accounting requirements.

IfWe amay ~~market~~incur ~~develops~~significant ~~for~~costs ~~our~~associated ~~shares,~~with ~~sales of~~ our ~~shares~~public ~~relying~~company ~~upon~~reporting ~~rule~~requirements, ~~144~~costs ~~may~~associated ~~depress~~with ~~prices~~newly inapplicable ~~that~~corporate ~~market~~governance byrequirements, aincluding ~~material~~requirements ~~amount. All~~under of the ~~outstanding~~Sarbanes-Oxley ~~shares~~Act of ~~our~~2002 ~~common~~and ~~stock~~other ~~are~~rules ~~“restricted~~implemented ~~securities”~~by ~~within~~ the ~~meaning of Rule 144 under the~~ Securities ~~Act~~and ofExchange ~~1933, as amended~~Commission. AsWe ~~restricted~~expect ~~shares,~~all of these ~~shares~~applicable ~~may~~rules beand ~~resold~~regulations ~~only pursuant~~ to ansignificantly ~~effective~~increase ~~registration~~our ~~statement~~legal orand ~~under~~financial ~~the~~compliance ~~requirements~~costs ofand ~~Rule~~to ~~144~~make orsome ~~other~~activities ~~applicable~~more ~~exemptions~~time ~~from~~consuming ~~registration under the Act~~ and ~~as required under applicable state securities laws~~costly. ~~Rule~~We ~~144~~also ~~provides~~expect ~~in essence~~ that athese ~~person~~applicable ~~who~~rules ~~has~~and ~~held~~regulations ~~restricted securities for a prescribed period~~ may, ~~under~~make ~~certain~~it ~~conditions,~~more ~~sell~~difficult ~~every~~and ~~three~~more ~~months,~~expensive infor ~~brokerage~~us ~~transactions, a number of shares that does not exceed 1.0% of a company’s outstanding common stock. The alternative average weekly trading volume during the four calendar weeks prior~~ to ~~the~~obtain ~~sale~~director isand ~~not~~officer ~~available~~liability toinsurance ~~our shareholders being that the OTCBB (if~~ and ~~when~~we ~~listed~~may ~~thereon)~~be isrequired ~~not~~to anaccept ~~“automated~~reduced ~~quotation~~policy ~~system”~~limits and, ~~accordingly,~~coverage ~~market~~or ~~based~~incur ~~volume~~substantially ~~limitations~~higher ~~are~~costs ~~not~~to ~~available~~obtain ~~for~~the ~~securities~~same ~~quoted~~or ~~only~~similar ~~over the OTCBB~~coverage. As a result ~~of revisions to Rule 144 which became effective on or about February 15~~, ~~2008,~~it ~~there is no limit on the amount of restricted securities that~~ may be ~~sold~~more bydifficult ~~a non-affiliate (i.e., a stockholder who has not been an officer, director or control person~~ for atus ~~least~~to 90attract ~~consecutive~~and ~~days)~~retain ~~after~~qualified ~~the~~individuals ~~restricted~~to ~~securities~~serve ~~have~~on ~~been~~our ~~held~~board byof ~~the~~directors ~~owner~~or ~~for~~as aexecutive ~~period of one year~~officers. AWe ~~sale~~are ~~under~~currently ~~Rule~~evaluating ~~144~~and ormonitoring ~~under~~developments ~~any~~with ~~other~~respect ~~exemption~~to ~~from~~these ~~the~~newly ~~Act,~~applicable ~~if available~~rules, orand ~~pursuant~~we tocannot ~~registration~~predict ofor ~~shares~~estimate ofthe ~~common~~amount ~~stock~~ of ~~present~~additional ~~stockholders,~~costs we may ~~have~~incur aor ~~depressive effect upon~~ the ~~price~~timing of ~~the~~such ~~common stock in any market that may develop~~costs.

~~Any~~Our ~~trading~~growth ~~market~~strategy ~~that~~requires ~~may~~us ~~develop~~to ~~may be restricted by virtue of state securities “Blue Sky” laws which prohibit trading absent compliance with individual state laws. These restrictions may~~ make itacquisitions ~~difficult or impossible to sell shares~~ in ~~those states. There is no public market for our common stock, and there can be no assurance that any public market will develop in~~ the ~~foreseeable~~ future. ~~Transfer~~which ofcould ~~our~~subject ~~common~~us ~~stock may also be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred~~ to assignificant ~~“Blue Sky” laws. Absent compliance with such individual state laws~~risks, ~~our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the “Blue Sky” laws of~~ any ~~state, the holders~~ of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state “Blue Sky” law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend and may not be able to qualify securities for resale in approximately 17 states which docould ~~not~~harm ~~offer manual exemptions and require shares to be qualified before they can be resold by~~ our ~~shareholders~~business. ~~Accordingly, investors should consider the secondary market for our securities to be a limited one.~~

~~Item~~Our 1Bgrowth strategy includes identifying and acquiring or investing in suitable candidates on acceptable terms. ~~UNRESOLVED~~Over ~~STAFF~~time, ~~COMMENTS~~we may acquire or make investments in other providers of products that complement our business and other companies in the security industry. The successful integration of these companies and any other acquired businesses require us to:

~~None.~~● integrate and retain key management, sales, research and development, production and other personnel;

~~Item~~● 2.incorporate ~~PROPERTIES~~the acquired products or capabilities into our offerings from an engineering, sales and marketing perspective;

~~None.~~14

~~Item~~Table 3.of ~~LEGAL PROCEEDINGS~~Contents

We● ~~are~~coordinate ~~not~~research aand ~~party~~development ~~to any material legal proceedings.~~ efforts;

~~Item~~● 4.integrate ~~[REMOVED~~and ~~AND~~support ~~RESERVED]~~pre-existing supplier, distribution and customer relationships; and

-● 13consolidate -duplicate facilities and functions and combine back office accounting, order processing and support functions.

~~PART~~Acquisitions IIinvolve a number of risks and present financial, managerial and operational challenges, including:

~~Item~~● 5.diversion ~~MARKET~~of ~~FOR~~management’s ~~OUR~~attention ~~COMMON~~from ~~EQUITY,~~running ~~RELATED~~our ~~STOCKHOLDER~~existing ~~MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~business;

~~Our~~● ~~common~~increased ~~stock~~expenses, ~~was~~including ~~included~~travel, inlegal, ~~the~~administrative ~~Nasdaq~~and ~~Over-the-Counter~~compensation ~~Bulletin~~expenses ~~Board~~resulting ~~(“OTCBB”)~~from ~~under~~newly ~~the~~hired ~~symbol “VELV” commencing on April 22, 2009.~~employees;

We● doincreased ~~not~~costs ~~believe~~to ~~there~~integrate ~~has~~personnel, ~~been~~customer ~~any~~base ~~trading in our stock,~~ and ~~few~~business ~~market~~practices ~~makers~~of ~~are currently submitting quotations. Our common stock has yet to trade on~~ the ~~OTCBB.~~acquired Ascompany ofwith ~~September~~our ~~29, 2010 we had approximately 37 record and beneficial stockholders.~~ own;

~~Dividend~~● ~~policy~~adverse effects on our reported operating results due to possible write-down of goodwill associated with acquisitions;

We● ~~have~~potential ~~never~~disputes ~~declared~~with orsellers ~~paid a cash dividend on our common stock. It has been the policy~~ of ~~our~~acquired ~~board~~businesses, oftechnologies, ~~directors~~services, toproducts ~~retain all available funds to finance the development~~ and ~~growth~~potential ofliabilities; ~~our business. The payment of cash dividends in the future will be dependent upon our earnings~~ and ~~financial requirements and other factors deemed relevant by our board of directors.~~ ,

~~Item~~● 6.dilution ~~SELECTED~~to ~~FINANCIAL~~our ~~DATA~~earnings per share if we issue common stock in any acquisition.

~~The~~Moreover, ~~following~~performance isproblems with an acquired business, technology, product or service could also have a ~~summary~~material ofadverse ~~our~~impact ~~selected~~on ~~financial~~our ~~data~~reputation ~~for~~as ~~the~~a ~~years~~whole. ~~ended~~Any ~~June~~acquired 30business, ~~2010~~technology, ~~2009~~product or service could significantly underperform relative to our expectations, and ~~2008.~~we ~~The~~may ~~financial~~not ~~data~~achieve ~~has~~the ~~been~~benefits ~~derived~~we expect from our ~~audited~~acquisitions. Geographic distance between business operations, the compatibility of the technologies and operations being integrated and the disparate corporate cultures being combined also presents significant challenges. Acquired businesses are likely to have different standards, controls, contracts, procedures and policies, making it more difficult to implement and harmonize company-wide financial, ~~statements~~accounting, billing, information and ~~accompanying~~other ~~notes~~systems. If we cannot overcome these challenges, we may not realize actual benefits from past and future acquisitions, which will impair our overall business results.

~~The~~Our ~~selected~~acquisition ~~financial~~strategy ~~data~~also ~~set~~depends ~~forth~~on ~~below~~our ~~should~~ability beto ~~read~~obtain ~~together~~necessary ~~with~~government approvals, ~~and~~as ~~are~~described ~~qualified~~under by“- ~~reference~~Risks Related to, ~~the~~Doing ~~“Management’s~~Business ~~Discussion~~in ~~and~~China ~~Analysis~~- ofWe ~~Financial~~may ~~condition~~be ~~and~~unable ~~Results~~to ofcomplete ~~Operations”~~a ~~section~~business ofcombination ~~this~~transaction ~~report~~efficiently ~~and~~or ~~our~~on ~~audited~~favorable ~~financial~~terms ~~statements~~due to complicated merger and ~~accompanying~~acquisition ~~notes~~regulations ~~included~~which ~~elsewhere~~became ineffective ~~this~~on ~~report~~September 8, 2006.”

	Fiscal Year ended June 30,
Statement of Operations Data:	2010	2009	2008
Gross revenues	$ 26,933	$ 89,384	$ 47,155
Cost of services	16,662	32,810	26,345
Gross profit	10,271	56,574	20,810
Operating expenses	21,290	74,913	51,655
Net loss	($ 11,819)	($ 18,339)	($ 30,845)
Net loss per share, Basic and diluted
Continuing operations	($ 0.00)	($0.00)	($0.01)

Due to our rapid growth in recent years, our past results may not be indicative of our future performance so evaluating our business and prospects may be difficult.

	As at June 30,
Balance Sheet Data:	2010	2009
Cash	$ -	$ 6,452
Prepaid rent	-	-
Property, equipment and software, net	2,596	3,760
Security deposit	-	1,453
Total assets	2,596	11,665
Total liabilities	10,250	7,500
Accumulated deficit	(63,376)	(51,557)
Stockholders’ equity (deficit)	(7,654)	4,165

Our business has grown and evolved rapidly in recent years as demonstrated by our growth in sales revenue from approximately $6,273,361 in 2009 to $16,494,752 in 2010. We may not be able to achieve similar growth in future periods, and our historical operating results may not provide a meaningful basis for evaluating our business, financial performance and prospects. Therefore, you should not rely on our past results or our historical rate of growth as an indication of our future performance.

-Management's 14estimates -and assumptions affect reported amounts of expenses and changes in those estimates could impact operating results.

~~Item~~Goodwill 7and other indefinite-lived intangible assets are tested for impairment at least annually, and the results of such testing may adversely affect our financial results. ~~MANAGEMENT’S~~We ~~DISCUSSION~~use ~~AND~~a ~~ANALYSIS~~variety OFof ~~FINANCIAL~~valuation ~~CONDITION~~techniques ~~AND~~in ~~RESULTS~~determining OFfair ~~OPERATIONS~~value. The impairment review is highly judgmental and involves the use of significant estimates and assumptions. These estimates and assumptions have a significant impact on the amount of any impairment charge recorded, and actual results may differ significantly from the estimates and assumptions used.

~~Cautionary statement identifying important factors that could cause our actual results to differ from those projected in forward looking statements.~~ 15

~~Readers~~Table of this report are advised that this document contains both statements of historical facts and forward looking statements. Forward looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those indicated by the forward looking statements. Examples of forward looking statements include, but are not limited to (i) projections of revenues, income or loss, earnings per share, capital expenditures, dividends, capital structure and other financial items, (ii) statements of our plans and objectives with respect to business transactions and enhancement of shareholder value, (iii) statements of future economic performance, and (iv) statements of assumptions underlying other statements and statements about our business prospects. Contents

~~This~~We ~~report~~recognize ~~also~~deferred ~~identifies~~tax ~~important~~assets ~~factors,~~and ~~which~~liabilities ~~could~~for ~~cause~~the ~~actual~~expected ~~results~~future totax ~~differ~~consequences ~~materially~~of ~~from~~events ~~those~~which ~~indicated~~are byincluded in the ~~forward~~financial ~~looking~~ statements or tax returns. ~~These~~In ~~risks~~assessing ~~and~~the ~~uncertainties~~realizability ~~include~~of the ~~factors~~deferred ~~discussed~~tax ~~under~~assets, ~~the~~management ~~heading~~makes ~~“Risk~~certain ~~Factors”~~assumptions ~~beginning~~about atwhether ~~page~~the 9deferred oftax ~~this~~assets ~~report~~will be realized. We expect the deferred tax assets currently recorded to be fully realizable; however, there can be no assurance that an increased valuation allowance would not need to be recorded in the future.

~~The~~Our ~~following~~facilities, ~~Management’s~~or ~~Discussion~~facilities ~~and Analysis~~ of ~~Financial~~our ~~Condition~~customers ~~and~~or ~~Results~~suppliers, ofcould ~~Operations should~~ be ~~read~~susceptible into ~~conjunction~~natural ~~with our financial statements and the notes thereto appearing elsewhere in this report~~disasters.

~~Plan~~All of ~~Operation~~our facilities and many of the facilities of our customers and suppliers are located in China. Natural disasters, such as floods and earthquakes, occur frequently in China, and they pose substantial threats to businesses with operations there. As a developing country, China’s emergency-response ability is limited, and its ability to provide emergency reconstruction and other aid to businesses affected by natural disasters is limited. Should a natural disaster severely damage one of our facilities, or damage a major facility of one or more of our significant customers or suppliers, our business could be materially disrupted.

Our ~~plan~~insurance ofcoverage ~~operation~~may ~~for~~be ~~2010~~inadequate is to ~~continue~~protect ~~being~~us aagainst full-service corporate and social event planning company, providing organizations and individuals the industry expertise needed to deliver the message or impression the client wants to communicate to their guests and attendeeslosses.

~~Results~~Like many other Chinese companies, we do not carry property insurance coverage for our facilities and inventories and do not have any business liability, loss of ~~Operations~~data or business interruption insurance coverage for our operations in China. If any claims for injury are brought against us, or if we experience any business disruption, litigation or natural disaster, we might incur substantial costs and diversion of resources.

~~Comparison~~Our ofquarterly ~~2010~~operating vsresults ~~2009~~are likely to fluctuate, which may affect our stock price.

~~The~~Our ~~following~~quarterly ~~table~~revenues, ~~represents~~expenses, ~~certain~~operating ~~statement~~results and gross profit margins vary from quarter to quarter. As a result, our operating results may fall below the expectations of ~~operation~~securities ~~data~~analysts asand investors in some quarters, which could result in a ~~percentage~~decrease in the market price of ~~net~~our ~~revenues~~common stock. The reasons our quarterly results may fluctuate include:

	2010	2009
Gross revenues	100.0%	100.0%
Cost of services	61.9	36.7
Gross profit	38.1	63.3
Operating expenses	79.0	82.0
Net loss	(43.9%)	(20.5%)

●

seasonality inherent in the surveillance and safety industry;

~~Revenues~~● variations in profit margins attributable to product mix;

~~Total~~● ~~revenue~~changes for the fiscal year ended June 30, 2010 was $26,933 compared to $89,384 for the fiscal year ended June 30, 2009. This represents a decrease of $62,451 from that of the fiscal year ended June 30, 2009, or 69.9%. This decrease reflects a decrease in the ~~number~~general ofcompetitive ~~corporate~~ and ~~social event services provided due to the~~ economic ~~slowdown in the United States. It is unknown at this time if this trend will continue.~~ conditions;

~~Cost~~● delays in, or uneven timing in the delivery of, ~~services~~customer orders;

-● 15the -introduction of new products by us or our competitors; and

~~Total~~● ~~cost~~delays of services for fiscal year ended June 30, 2010 was $16,662 compared to $32,810 for the fiscal year ended June 30, 2009. This represents a decrease of $16,148 from that of the fiscal year ended June 30, 2009, or 49.2%. This decrease reflects a decrease in ~~the~~surveillance ~~number~~and ofsafety ~~corporate~~funding and ~~social~~budgetary ~~event~~restraints ~~services~~on ~~provided.~~national ~~Expenses within cost of services included independent contractors, vendors, party rentals~~ and ~~party~~local ~~supplies. As~~government ~~a percentage of revenue, cost of services deteriorated to 61~~spending.~~9% for the fiscal year ended June 30, 2010 from 36.7% for the fiscal year ended June 30, 2009. This deteriorate is due to the economic slowdown in the United States.~~

~~Operating~~Period ~~expenses~~to period comparisons of our results should not be relied on as indications of future performance.

~~Operating~~Future ~~Expenses~~government ~~decreased~~regulations ~~period~~or ~~over~~other ~~period~~standards ~~due~~could tohave aan ~~decrease~~adverse ineffect ~~the~~on ~~number~~our ~~of corporate and social event services provided due to the economic slowdown in the United States~~operations.

~~Comparison~~Our operations are subject to a variety of ~~2009~~laws, vsregulations and licensing requirements of national and local authorities in the PRC. ~~2008~~In certain jurisdictions, we are required to obtain licenses or permits and to meet certain standards in the conduct of our business. The loss of such licenses, or the imposition of conditions to the granting or retention of such licenses, could have an adverse effect on us. In the event that these laws, regulations and/or licensing requirements change, we may be required to modify our operations or to utilize resources to maintain compliance with such rules and regulations. In addition, new regulations may be enacted that could have an adverse effect on us.

~~The following table represents certain statement of operation data as a percentage of net revenues:~~16

	2009	2008
Gross revenues	100.0%	100.0%
Cost of services	36.7	55.9
Gross profit	63.3	44.1
Operating expenses	82.0	109.5
Net loss	(20.5%)	(65.4%)

Table of Contents

~~Revenues~~Our limited ability to protect our intellectual property, and the possibility that our technology could inadvertently infringe technology owned by others, may adversely affect our ability to compete.

~~Total~~We ~~revenue~~rely ~~for~~on ~~the~~a ~~fiscal~~combination ~~year~~of ~~ended~~trademarks, ~~June 30~~copyrights, ~~2009~~trade ~~was~~secret ~~$89~~laws,~~384~~ ~~compared~~confidentiality procedures and licensing arrangements to ~~$47,155~~protect ~~for~~our intellectual property rights. A successful challenge to the ~~fiscal~~ownership ~~year~~of ~~ended~~our ~~June~~technology ~~30,~~could ~~2008~~materially damage our business prospects. ~~This~~Our ~~represents~~competitors anmay ~~increase~~assert ofthat ~~$42,229~~our technologies or products infringe on their patents or proprietary rights. We may be required to obtain from others licenses that ofmay ~~the~~not ~~fiscal~~be ~~year~~available ~~ended~~on ~~June~~commercially ~~30,~~reasonable ~~2008~~terms, orif 89at all.~~6%.~~ ~~This~~Problems ~~increase~~with ~~reflects~~intellectual anproperty ~~increase~~rights incould increase the ~~number~~cost of ~~corporate~~our products or delay or preclude our new product development and ~~social~~commercialization. ~~event~~If ~~services~~infringement ~~provided~~claims ~~due~~against us are deemed valid, we may not be able to ~~increased~~obtain ~~marketing~~appropriate ~~initiatives~~licenses on acceptable terms or at all. Litigation could be costly and ~~organic~~time-consuming ~~revenue~~but ~~growth~~may ~~from~~be ~~client~~necessary ~~referrals~~to protect our technology license positions or to defend against infringement claims.

~~Cost~~We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated any of ~~services~~these laws could have a material adverse effect on our business.

~~Total~~We ~~cost~~are ofsubject ~~services~~to ~~for~~the ~~fiscal~~Foreign ~~year~~Corrupt ~~ended~~Practice ~~June~~Act, 30or FCPA, ~~2009~~and ~~was~~other ~~$32,810~~laws ~~compared~~that prohibit improper payments or offers of payments to ~~$26,345~~foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the ~~fiscal~~purpose ~~year~~of ~~ended~~obtaining ~~June~~or ~~30,~~retaining ~~2008~~business. ~~This~~We ~~represents~~are ansimilarly ~~increase~~subject ofto $6Chinese anti-corruption laws. We have operations,~~465~~ ~~from~~agreements ~~that~~with ofthird ~~the~~parties ~~fiscal~~and ~~year~~make ~~ended~~sales ~~June~~in 30China, ~~2008,~~which ormay 24experience corruption.~~5%.~~ ~~This~~Our ~~increase~~activities ~~reflects~~in anChina ~~increase~~create inthe risk of unauthorized payments or offers of payments by one of the ~~number~~employees, consultants, sales agents or distributors of ~~corporate~~our ~~and~~Company, ~~social~~even ~~event~~though ~~services~~these ~~provided~~parties are not always subject to our control. ~~Expenses~~It ~~within~~is ~~cost~~our ofpolicy ~~services~~to ~~included~~implement ~~independent~~safeguards ~~contractors,~~to ~~vendors~~discourage these practices by our employees. However, ~~party~~our ~~rentals~~existing safeguards and ~~party~~any ~~supplies. As~~future aimprovements ~~percentage~~may ofprove ~~revenue~~to be less than effective, ~~cost~~and the employees, consultants, sales agents or distributors of ~~services~~our ~~improved~~Company tomay ~~36.7%~~engage in conduct for which we might be held responsible. Violations of the ~~fiscal~~FCPA ~~year~~or ~~ended~~Chinese ~~June~~anti-corruption 30laws may result in severe criminal or civil sanctions, ~~2009~~and ~~from~~we ~~55.9%~~may ~~for~~be ~~the~~subject ~~fiscal~~to ~~year~~other ~~ended~~liabilities, ~~June~~which 30could negatively affect our business, ~~2008~~operating results and financial condition. ~~This~~ ~~improvement~~In isaddition, ~~due~~the U.S. government may seek to ~~better~~hold ~~pricing~~our ofCompany ~~events~~liable ~~and~~for ~~improved~~successor ~~selection~~liability ~~and~~FCPA ~~pricing~~violations ~~from~~committed ~~vendors~~by companies in which we invest or that we acquire.

~~Operating~~China ~~expenses~~Currency is a Hong Kong company, while our operating subsidiaries are PRC companies, and most of our officers and directors reside outside the United States. Therefore, certain judgments obtained against our Company by our shareholders may not be enforceable in Hong Kong or China.

~~Operating~~China ~~Expenses~~Currency ~~increased~~is ~~period~~a ~~over~~Hong ~~period~~Kong ~~due~~company toand ~~increasing~~our ~~costs~~operating tosubsidiaries ~~fulfill~~are ~~the~~PRC ~~increased~~companies. ~~level~~Most of ~~event~~our ~~services~~officers ~~provided~~and directors reside outside of the United States. In ~~addition,~~All or substantially all of our assets and the ~~company~~assets ~~incurred~~of ~~additional~~these ~~costs~~persons ~~related~~are tolocated ~~its~~outside ~~S-1~~of ~~filing.~~the United States.

~~Trends~~As a result, it may not be possible for investors to effect service of process within the United States upon our Company or such persons or to enforce against it or these persons the United States federal securities laws, or to enforce judgments obtained in United States courts predicated upon the civil liability provisions of the federal securities laws of the United States, including the Securities Act and ~~uncertainties~~the Exchange Act.

~~The~~Risks ~~market~~Related ~~for~~To ~~event planning and services is generally highly fragmented.~~ Our primary competition comes from prospective clients choosing to self plan their event without using professional consulting or assistance. In order to compete with self planned events the company must provide a unique event which in turn is cost effective. Competition on corporate events can also come from in-house staff that coordinates such events. We also have competition from a number of private companies involved in the business of event planning. We are also aware that other companies offer services with some or many features similar to those that we offer. Through unique ideas and a core group of professional vendors and independent contractors we feel that our company can maintain a competitive edge within our target market.Industry

-Seasonality 16affects -our operating results.

~~For~~Our ~~the~~sales ~~fiscal~~are ~~year~~affected ~~ended~~by ~~June~~seasonality. ~~30,~~Our ~~2010, our gross~~ revenues ~~decreased~~are ~~from~~usually ~~$89,384~~higher toin ~~$26,933~~the ~~and~~second ~~had~~half ~~net loss~~ of ~~$11,819~~the asyear ~~compared~~than ~~with $18,339~~ in the ~~prior~~first ~~year.~~half As of ~~June~~the ~~30,~~year ~~2010,~~because wefewer ~~had~~projects anare ~~accumulated~~undertaken ~~deficit~~during ofand ~~$63,376~~around ~~compared~~the toChinese ~~$51,557~~spring ~~at June 30, 2009~~festival. ~~Factors that could adversely affect our operating results include:~~

~~● the success of Velvet Rope in expanding its business operations; and~~17

●Table ~~changes~~of ~~in general economic conditions.~~Contents

~~Depending~~Our onsuccess ~~our~~relies ~~ability~~on ~~to generate revenues, we may require additional funds to expand~~ our ~~business~~management’s operations and for working capital and general corporate purposes. Any additional equity financing may be dilutive to stockholders, and debt financings may involve restrictive covenants that further limit our ability to ~~make~~understand ~~decisions that we believe will be in our best interests. In~~ the ~~event~~highly weevolving ~~cannot~~surveillance ~~obtain~~and ~~additional~~safety ~~financing on terms acceptable to us when required, our ability to expand our operations may be materially adversely affected~~industry.

~~Liquidity~~The Chinese surveillance and ~~capital~~safety ~~resources~~industry is nascent and rapidly evolving. Therefore, it is critical that our management is able to understand industry trends and make good strategic business decisions. If our management is unable to identify industry trends and act in response to such trends in a way that is beneficial to us, our business will suffer.

~~During~~If ~~the~~we ~~past~~are ~~two~~unable ~~(2)~~to ~~years,~~respond to the rapid changes in our ~~sources~~industry ~~for~~and ~~cash~~changes ~~have~~in ~~been~~our ~~cash~~customer’s ~~flow~~requirements ~~generated~~and ~~from~~preferences, ~~operations~~our business, financial condition and ~~available~~results ~~borrowings~~of ~~from~~operations ~~the~~could ~~majority~~be ~~stockholder~~adversely affected.

AtIf ~~June~~we 30are unable, ~~2010~~for technological, legal, financial or other reasons, to adapt in a timely manner to changing market conditions or customer requirements, we ~~had~~could ~~liquid~~lose ~~assets~~customers ofand ~~approximately~~market $0share. ~~Available~~The ~~cash~~surveillance and safety industry is ~~used~~characterized toby ~~reduce~~rapid ~~borrowings~~technological onchange. Sudden changes in customer requirements and preferences, the frequent introduction of new products and services embodying new technologies and the emergence of new industry standards and practices could render our ~~line~~existing products, services and systems obsolete. The emerging nature of ~~credit~~products and services in the surveillance and safety industry and their rapid evolution will require that we continually improve the performance, features and reliability of our products and services. Our success will depend, in part, on our ability to:

~~Inflation~~● ~~and~~enhance ~~changing prices had no material impact on~~ our ~~revenues~~existing orproducts ~~the~~and ~~results of operations for the fiscal year ended June 30, 2010.~~services;

~~Critical~~● ~~Accounting~~anticipate ~~Policies~~changing customer requirements by designing, developing, and launching new products and services that address the increasingly sophisticated and varied needs of our current and prospective customers; and

~~Preparation~~● ofrespond ~~our financial statements requires management~~ to ~~make~~technological ~~estimates~~advances and ~~assumptions~~emerging ~~that~~industry ~~affect~~standards ~~the reported amounts of assets~~ and ~~liabilities~~practices ~~and~~on disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 2 of the Notes to the Financial Statements includes a ~~summary~~cost-effective ~~of the significant accounting policies~~ and ~~methods~~timely ~~used in the preparation of our financial statements~~basis. ~~The most significant areas involving our estimates and assumptions are described below. Actual results could differ materially from our estimates under different assumptions or conditions.~~

~~Revenue~~The ~~Recognition~~development of additional products and services involves significant technological and business risks and requires substantial expenditures and lead time. If we fail to introduce products with new technologies in a timely manner, or adapt our products to these new technologies, our business, financial condition and results of operations could be adversely affected. We cannot assure you that even if we are able to introduce new products or adapt our products to new technologies that our products will gain acceptance among our customers. In addition, from time to time, we or our competitors may announce new products, product enhancements or technological innovations that have the potential to replace or shorten the life cycles of our existing products, and that may cause customers to refrain from purchasing our existing products, resulting in inventory obsolescence.

~~The~~We ~~Company~~may ~~applies~~not ~~paragraph~~be ~~605-10-S99-1~~able ofto ~~the~~maintain ~~FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized~~ or ~~realizable~~improve ~~and~~our ~~earned~~competitive ~~less~~position ~~estimated~~among ~~future~~strong ~~doubtful~~competition ~~accounts. The~~in ~~Company~~the ~~considers~~surveillance ~~revenue realized or realizable~~ and ~~earned~~safety ~~when all of the following criteria are met: (i) persuasive evidence of an arrangement exists~~industry, ~~(ii)~~and ~~the~~we ~~product~~expect ~~has~~this ~~been~~competition ~~shipped~~to orcontinue ~~the services have been rendered~~ to ~~the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured~~intensify.

~~Recently~~The ~~Issued~~Chinese ~~Accounting~~surveillance ~~Standards~~and safety industry is highly competitive. In addition, since China joined the World Trade Organization, we also face competition from international competitors. Some of our international competitors are larger than us and possess greater name recognition, assets, personnel, sales and financial resources. These entities may be able to respond more quickly to changing market conditions by developing new products and services that meet customer requirements or are otherwise superior to our products and services and may be able to more effectively market their products than we can because they have significantly greater financial, technical and marketing resources than we do. They may also be able to devote greater resources than we can to the development, promotion and sale of their products. Increased competition could require us to reduce our prices, result in our receiving fewer customer orders, and result in a loss of our market share. We cannot assure you that we will be able to distinguish ourselves in a competitive market. To the extent that we are unable to successfully compete against existing and future competitors, our business, operating results and financial condition could be materially adversely affected.

In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-01 “Equity Topic 505 – Accounting for Distributions to Shareholders with Components of Stock and Cash”, which clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share (“EPS”)). Those distributions should be accounted for and included in EPS calculations in accordance with paragraphs 480-10-25- 14 and 260-10-45-45 through 45-47 of the FASB Accounting Standards codification. The amendments in this Update also provide a technical correction to the Accounting Standards Codification. The correction moves guidance that was previously included in the Overview and Background Section to the definition of a stock dividend in the Master Glossary. That guidance indicates that a stock dividend takes nothing from the property of the corporation and adds nothing to the interests of the stockholders. It also indicates that the proportional interest of each shareholder remains the same, and is a key factor to consider in determining whether a distribution is a stock dividend.18

InTable ~~January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-02 “Consolidation Topic 810 – Accounting and Reporting for Decreases in Ownership~~ of a Subsidiary – a Scope Clarification”, which provides amendments to Subtopic 810-10 and related guidance within U.S. GAAP to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to the following:Contents

-Our 17product -offerings involve a lengthy sales cycle and we may not anticipate sales levels appropriately, which could impair our profitability.

1Some of our products and services are designed for medium to large commercial, industrial and government facilities desiring to protect valuable assets and/or prevent intrusion into high security facilities in China. Given the nature of our products and the customers that purchase them, sales cycles can be lengthy as customers conduct intensive investigations and deliberate between competing technologies and providers. For these and other reasons, the sales cycle associated with some of our products and services is typically lengthy and subject to a number of significant risks over which we have little or no control. If sales in any period fall significantly below anticipated levels, our financial condition and results of operations could suffer.

AWe ~~subsidiary~~could orface ~~group~~liability offor ~~assets~~our ~~that~~failure isto arespond ~~business~~adequately orto ~~nonprofit~~alarm ~~activity~~activations.

2The nature of the services we provide potentially exposes us to greater risks of liability for employee acts or omissions or system failures that may be inherent in other businesses. In the event of litigation with respect to such matters, our financial condition and results of operations could be materially and adversely affected. In addition, the costs of such litigation could have an adverse effect on us.

ARisks ~~subsidiary~~Relating ~~that~~To isThe aPeople’s ~~business~~Republic orOf ~~nonprofit activity that is transferred to an equity method investee or joint venture~~China

3Substantially all of our operating assets are located in China and substantially all of our revenue will be derived from our operations in China so our business, results of operations and prospects are subject to the economic, political and legal policies, developments and conditions in China.

AnThe ~~exchange~~PRC’s economic, political and social conditions, as well as government policies, could impair our business. The PRC economy differs from the economies of amost ~~group~~developed countries in many respects. China’s GDP has grown consistently since 1978 (National Bureau of ~~assets~~Statistics of China). However, we cannot assure you that ~~constitutes~~such growth will be sustained in the future. If, in the future, China’s economy experiences a ~~business~~downturn or ~~nonprofit~~grows ~~activity~~at a slower rate than expected, there may be less demand for aspending ~~noncontrolling~~in ~~interest~~certain industries. A decrease in andemand ~~entity~~for ~~(including~~spending anin ~~equity~~certain ~~method~~industries ~~investee~~could impair our ability to remain profitable. The PRC’s economic growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall PRC economy, but may have a negative effect on us. For example, our financial condition and results of operations may be hindered by PRC government control over capital investments or ~~joint~~changes ~~venture)~~in tax regulations.

The ~~amendments~~PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although in ~~this~~recent ~~Update~~years ~~also~~the ~~clarify~~PRC ~~that~~government has implemented measures emphasizing the ~~decrease~~use inof market forces for economic reform, the reduction of state ownership ~~guidance~~of productive assets and the establishment of sound corporate governance in ~~Subtopic~~business ~~810-10~~enterprises, ~~does~~a ~~not~~substantial ~~apply~~portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over PRC economic growth through the ~~following~~allocation ~~transactions~~of ~~even~~resources, ifcontrolling ~~they~~payment ~~involve~~of ~~businesses:~~foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

1Adverse changes in political and economic policies of the PRC government could impede the overall economic growth of China, which could reduce the demand for our products and damage our business.

~~Sales~~We ofconduct insubstantially ~~substance~~all ~~real~~of ~~estate. Entities~~our ~~should~~operations ~~apply~~and ~~the~~generate ~~sale~~most of ~~real~~our ~~estate~~revenue ~~guidance~~ in ~~Subtopics~~China. ~~360-20~~Accordingly, ~~(Property~~our business, ~~Plant~~financial condition, ~~and~~results ~~Equipment)~~of operations and ~~976-605~~prospects ~~(Retail/Land)~~are toaffected ~~such~~significantly ~~transactions~~by economic, political and legal developments in China. The PRC economy differs from the economies of most developed countries in many respects, including:

2.● the higher level of government involvement;

Conveyances of oil and gas mineral rights. Entities should apply the mineral property conveyance and related transactions guidance in Subtopic 932-360 (Oil and Gas-Property, Plant, and Equipment) to such transactions.19

IfTable ~~a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, an entity first needs to consider whether the substance~~ of the transaction causing the decrease in ownership is addressed in other U.S. GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, sales of in substance real estate, or conveyances of oil and gas mineral rights, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in Subtopic 810-10.Contents

In● ~~January 2010,~~ the ~~FASB~~early ~~issued~~stage ~~the~~of ~~FASB~~development ~~Accounting~~of ~~Standards~~the ~~Update No. 2010~~market-06oriented ~~“Fair~~sector ~~Value~~of ~~Measurements~~the ~~and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements”, which provides amendments to Subtopic 820-10 that require new disclosures as follows:~~ economy;

1.● the rapid growth rate;

~~Transfers~~● ~~in and out of Levels 1 and 2. A reporting entity should disclose separately~~ the ~~amounts~~higher oflevel ~~significant transfers in and out~~ of ~~Level~~control 1over ~~and~~foreign ~~Level~~exchange; ~~2 fair value measurements~~ and ~~describe the reasons for the transfers.~~

2● the allocation of resources.

~~Activity~~As inthe ~~Level~~PRC 3economy ~~fair~~has ~~value~~been ~~measurements.~~transitioning Infrom ~~the~~a ~~reconciliation~~planned ~~for~~economy ~~fair~~to ~~value~~a ~~measurements~~more ~~using~~market-oriented ~~significant~~economy, ~~unobservable~~the ~~inputs~~PRC ~~(Level~~government ~~3),~~has aimplemented ~~reporting~~various ~~entity~~measures ~~should~~to ~~present~~encourage ~~separately~~economic ~~information~~growth ~~about~~and ~~purchases,~~guide ~~sales,~~the ~~issuances,~~allocation ~~and~~of ~~settlements~~resources. ~~(that~~While ~~is,~~these onmeasures amay ~~gross~~benefit ~~basis~~the ~~rather~~overall ~~than~~PRC aseconomy, ~~one~~they ~~net~~may ~~number).~~also have a negative effect on us.

~~This~~Although ~~Update~~the ~~provides~~PRC ~~amendments~~government has in recent years implemented measures emphasizing the utilization of market forces for economic reform, the PRC government continues to ~~Subtopic~~exercise ~~820~~significant control over economic growth in China through the allocation of resources, controlling payment of foreign currency-10denominated obligations, setting monetary policy and imposing policies that ~~clarify~~impact ~~existing~~particular ~~disclosures~~industries asor ~~follows:~~companies in different ways.

1Any adverse change in the economic conditions or government policies in China could have a material adverse effect on the overall economic growth and the level of surveillance and safety investments and expenditures in China, which in turn could lead to a reduction in demand for our products and consequently have a material adverse effect on our business and prospects.

~~Level~~The ofPRC ~~disaggregation.~~government Aexerts ~~reporting~~substantial ~~entity~~influence ~~should~~over ~~provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in~~ the ~~statement~~manner ~~of financial position. A reporting entity needs to use judgment~~ in ~~determining~~which ~~the~~we ~~appropriate~~conduct ~~classes~~our ofbusiness ~~assets and liabilities~~activities.

2The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

~~Disclosures~~Accordingly, ~~about~~government ~~inputs~~actions ~~and~~in ~~valuation~~the ~~techniques.~~future, Aincluding ~~reporting~~any ~~entity~~decision ~~should~~not ~~provide~~to ~~disclosures~~continue ~~about~~to ~~the~~support ~~valuation~~recent ~~techniques~~economic reforms and ~~inputs~~to ~~used~~return to ~~measure~~a ~~fair~~more ~~value~~centrally ~~for~~planned ~~both~~economy ~~recurring~~or ~~and~~regional ~~nonrecurring~~or ~~fair~~local ~~value~~variations ~~measurements.~~in ~~Those~~the ~~disclosures~~implementation ~~are~~of ~~required~~economic ~~for~~policies, ~~fair~~could ~~value~~have ~~measurements~~a ~~that~~significant ~~fall~~effect on economic conditions in ~~either~~China ~~Level~~or 2particular regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties or ~~Level~~joint 3ventures.

~~This~~Adverse ~~Update~~changes ~~also~~in ~~includes~~political ~~conforming~~and ~~amendments~~economic topolicies ~~the~~of ~~guidance on employers’ disclosures about postretirement benefit plan assets (Subtopic 715-20). The conforming amendments to Subtopic 715-20 change~~ the ~~terminology~~PRC ~~from~~government ~~major~~could ~~categories~~impede ~~of assets to classes of assets and provide a cross reference to~~ the ~~guidance~~overall ineconomic ~~Subtopic~~growth ~~820-10 on how to determine appropriate classes to present fair value disclosures. The new disclosures and clarifications~~ of ~~existing disclosures are effective for interim and annual reporting periods beginning after December 15~~China, ~~2009,~~which ~~except~~could ~~for~~reduce the ~~disclosures~~demand ~~about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective~~ for ~~fiscal~~our ~~years~~products ~~beginning after December 15, 2010,~~ and ~~for~~damage ~~interim~~our ~~periods within those fiscal years~~business.

InWe ~~February 2010,~~conduct ~~the~~substantially ~~FASB~~all ~~issued~~of ~~the~~our ~~FASB~~operations ~~Accounting~~and ~~Standards~~generate ~~Update~~most ~~No.~~of ~~2010-09~~our ~~“Subsequent~~revenue ~~Events~~in ~~(Topic~~China. ~~855)~~Accordingly, ~~Amendments~~our tobusiness, ~~Certain~~financial ~~Recognition~~condition, results of operations and ~~Disclosure~~prospects ~~Requirements”~~are affected significantly by economic, ~~which~~political ~~provides~~and ~~amendments~~legal todevelopments ~~Subtopic~~in ~~855-10~~China. asThe ~~follows~~PRC economy differs from the economies of most developed countries in many respects, including:

1.● the higher level of government involvement;

An● ~~entity~~the ~~that~~early ~~either~~stage ~~(a)~~of isdevelopment anof ~~SEC~~the ~~filer or(b) is a conduit bond obligor for conduit debt securities that are traded in a public~~ market ~~(a domestic or foreign stock exchange or an over~~-~~the-counter~~oriented ~~market,~~sector ~~including local or regional markets) is required to evaluate subsequent events through the date that the financial statements are issued. If an entity meets neither~~ of ~~those criteria, then it should evaluate subsequent events through~~ the ~~date the financial statements are available to be issued.~~economy;

2.● the rapid growth rate;

An● ~~entity that is an SEC filer is not required to disclose~~ the ~~date~~higher ~~through~~level ~~which~~of ~~subsequent~~control ~~events~~over ~~have~~foreign ~~been~~exchange; ~~evaluated. This change alleviates potential conflicts between Subtopic 855-10~~ and ~~the SEC’s requirements.~~

3● the allocation of resources.

The scope of the reissuance disclosure requirements is refined to include revised financial statements only. The term revised financial statements is added to the glossary of Topic 855. Revised financial statements include financial statements revised either as a result of correction of an error or retrospective application of U.S. generally accepted accounting principles.20

~~All~~Table of the amendments in this Update are effective upon issuance of the final Update, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010.Contents

-As 18the PRC economy has been transitioning from a planned economy to a more market-oriented economy, the PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. While these measures may benefit the overall PRC economy, they may also have a negative effect on us.

InAlthough ~~April 2010,~~ the ~~FASB~~PRC ~~issued~~government ~~the~~has ~~FASB~~in ~~Accounting~~recent ~~Standards~~years ~~Update~~implemented ~~No.~~measures ~~2010-17~~emphasizing ~~“Revenue~~the ~~Recognition~~utilization ~~— Milestone Method (Topic 605) Milestone Method~~ of ~~Revenue~~market ~~Recognition”,~~forces ~~which provides guidance on the criteria that should be met~~ for ~~determining~~economic ~~whether~~reform, the ~~milestone~~PRC ~~method~~government ofcontinues ~~revenue~~to ~~recognition~~exercise issignificant ~~appropriate.~~control Aover ~~vendor~~economic ~~can~~growth ~~recognize~~in ~~consideration~~China ~~that~~through isthe ~~contingent~~allocation ~~upon achievement~~ of aresources, ~~milestone~~controlling inpayment ~~its~~of ~~entirety~~foreign ascurrency-denominated ~~revenue~~obligations, insetting ~~the~~monetary ~~period~~policy inand ~~which~~imposing ~~the~~policies ~~milestone~~that isimpact ~~achieved~~particular ~~only~~industries ifor ~~the~~companies ~~milestone~~in ~~meets~~different ~~all criteria to be considered substantive~~ways.

~~Determining~~Any ~~whether~~adverse achange ~~milestone~~in isthe ~~substantive~~economic isconditions or government policies in China could have a ~~matter~~material ofadverse ~~judgment~~effect ~~made~~on atthe overall economic growth and the ~~inception~~level of ~~the~~surveillance ~~arrangement.~~and ~~The~~safety ~~following~~investments ~~criteria~~and ~~must~~expenditures bein ~~met~~China, ~~for~~which ain ~~milestone~~turn could lead to bea ~~considered~~reduction ~~substantive.~~in ~~The~~demand ~~consideration~~for ~~earned~~our byproducts ~~achieving~~and ~~the~~consequently ~~milestone~~have ~~should:~~a material adverse effect on our business and prospects.

1If the Ministry of Commerce, or MOFCOM, China Securities Regulatory Commission, or CSRC, or another PRC regulatory agency, determines that MOFCOM and CSRC approval of our merger was required or if other regulatory obligations are imposed upon us, we may incur sanctions, penalties or additional costs which would damage our business.

BeOn ~~commensurate~~August 8, 2006, six PRC regulatory agencies, including the MOFCOM and the CSRC, promulgated the Rules on Acquisition of Domestic Enterprises by Foreign Investors, or the M&A Rules, a new regulation with ~~either~~respect to the mergers and acquisitions of domestic enterprises by foreign investors that became effective on September 8, 2006. Article 11 of the ~~following:~~New M&A Rules requires when a domestic company, enterprise or natural person uses an offshore company legally established or controlled by the domestic company, enterprise or natural person to engage in the merger and acquisition of a related domestic company, the application must be submitted to MOFCOM for approval. Article 40 of the New M&A Rules requires that an offshore special purpose vehicle formed for overseas listing purposes and controlled directly or directly by PRC companies or individuals should obtain the approval of the CSRC prior to the listing and trading of such offshore special purpose vehicle’s securities on an overseas stock exchange, especially in the event that the offshore special purpose vehicle acquires shares of or equity interests in the PRC companies in exchange for the shares of offshore companies. Article 39 of the New M&A Rules defines an offshore special purpose vehicle as an offshore company directly or directly controlled by a PRC domestic company or natural person for the purpose of the offshore listing of their equity interests in the domestic company. On September 21, 2006, the CSRC published on its official website procedures and filing requirements for offshore special purpose vehicles seeking CSRC approval of their overseas listings.

We believe that MOFCOM and CSRC approvals were not required for our merger transaction or for the listing and trading of our securities on a trading market because we are not an offshore special purpose vehicle that is directly or directly controlled by PRC companies or individuals. Although the merger and acquisition regulations provide specific requirements and procedures, there are still many ambiguities in the meaning of many provisions. Further regulations are anticipated in the future, but until there has been clarification either by pronouncements, regulation or practice, there is some uncertainty in the scope of the regulations and the regulators have wide latitude in the enforcement of the regulations and approval of transactions. If the MOFCOM, CSRC or another PRC regulatory agency subsequently determines that the MOFCOM and CSRC approvals were required, we may face sanctions by the MOFCOM, CSRC or another PRC regulatory agency. If this happens, these regulatory agencies may impose fines and penalties on our operations in China, limit our operating privileges in China, delay or restrict the repatriation of the net proceeds, restrict or prohibit payment or remittance of dividends paid by Shenyang Security, or take other actions that could damage our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our securities.

The ~~vendor’s~~New ~~performance~~M&A Rules establish more complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to ~~achieve~~pursue ~~the~~growth ~~milestone~~through acquisition in China.

bThe New M&A Rules establish additional procedures and requirements that could make some acquisitions of PRC companies by foreign investors, such as ours, more time-consuming and complex, including requirements in some instances that the approval of the Ministry of Commerce shall be required for transactions involving the shares of an offshore listed company being used as the acquisition consideration by foreign investors. In the future, we may

~~The enhancement of the value of the item delivered as a result of a specific outcome resulting from the vendor’s performance to achieve the milestone~~ 21

2.Table of Contents

~~Relate~~grow ~~solely~~our business in part by acquiring complementary businesses. Complying with the requirements of the New M&A Rules to ~~past~~complete ~~performance~~such transactions could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

3If the PRC imposes restrictions designed to reduce inflation, future economic growth in the PRC could be severely curtailed which could hurt our business and profitability.

BeWhile ~~reasonable~~the ~~relative~~economy of the PRC has experienced rapid growth, this growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth often can lead to ~~all~~growth ~~deliverables~~in the supply of money and ~~payment~~rising ~~terms~~inflation. In order to control inflation in the ~~arrangement~~past, the PRC has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. Imposition of similar restrictions may lead to a slowing of economic growth, a decrease in demand for our products and generally damage our business and profitability.

AFluctuations ~~milestone should be considered substantive~~ in ~~its~~exchange ~~entirety.~~rates Ancould ~~individual~~harm ~~milestone~~our ~~may~~business ~~not be bifurcated. An arrangement may include more than one milestone,~~ and ~~each milestone should be evaluated separately to determine whether~~ the ~~milestone~~value isof ~~substantive.~~our ~~Accordingly, an arrangement may contain both substantive and nonsubstantive milestones~~securities.

AThe ~~vendor’s~~value ~~decision~~of toour ~~use~~ordinary shares will be directly affected by the ~~milestone~~foreign ~~method~~exchange rate between U.S. dollars and RMB and between those currencies and other currencies in which our sales may be denominated. Because substantially all of ~~revenue~~our ~~recognition~~earnings ~~for~~and ~~transactions~~cash ~~within~~assets are denominated in RMB and the ~~scope~~net proceeds (after the payment of fees and expenses in connection with the ~~amendments~~Private Placement) received by us from the Private Placement will be denominated and our financial results are reported in U.S. dollars, fluctuations in the exchange rate between the U.S. dollar and the RMB will affect the relative purchasing power of these proceeds, our balance sheet and our earnings per share in U.S. dollars following this ~~Update~~offering. In isaddition, aappreciation ~~policy~~or ~~election~~depreciation in the value of the RMB relative to the U.S. ~~Other~~dollar ~~proportional~~would ~~revenue~~affect ~~recognition~~our ~~methods~~financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also ~~may~~affect the relative value of any dividend we issue that will be ~~applied~~exchanged into U.S. dollars as ~~long~~well as earnings from, and the ~~application~~value of, ~~those~~any ~~other~~U.S. ~~methods~~dollar-denominated ~~does~~investments ~~not~~we ~~result~~make in the ~~recognition~~future. Since July 2005, the RMB has not been pegged to the U.S. dollar. Although the People’s Bank of ~~consideration~~China regularly intervenes in ~~its~~the ~~entirety~~foreign exchange market to prevent significant short-term fluctuations in the ~~period~~exchange rate, the ~~milestone~~RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is ~~achieved~~possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

AVery ~~vendor~~limited ~~that~~hedging istransactions ~~affected~~are byavailable ~~the~~in ~~amendments~~China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in ~~this~~the ~~Update~~future, isthe ~~required~~availability and effectiveness of these transactions may be limited, and we may not be able to ~~provide~~successfully hedge our exposure at all. ofIn ~~the~~addition, ~~following~~our ~~disclosures:~~foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.

1Exchange controls that exist in the PRC may limit our ability to utilize our cash flow effectively.

AWe ~~description~~are subject to the PRC’s rules and regulations on currency conversion. In the PRC, the State Administration for Foreign Exchange, or SAFE, regulates the conversion between Renminbi and foreign currencies. Currently, foreign investment enterprises, or FIEs, are required to apply to the SAFE for “Foreign Exchange Registration Certificates for FIEs.” As a result of our ownership of Shenyang Security, Shenyang Security is a FIE. With such registration certificates, which need to be renewed annually, FIEs are allowed to open foreign currency accounts including a “current account” and “capital account.” Currency conversion within the ~~overall~~scope ~~arrangement~~of the “current account,” such as remittance of foreign currencies for payment of dividends, can be effected without requiring the approval of the SAFE. However, conversion of currency in the “capital account,” including capital items such as direct foreign investment, loans and securities, still require approval of the SAFE. Further, any capital contributions to Shenyang Security by its offshore shareholder must be approved by the Ministry of Commerce in China or its local counterpart. We cannot assure you that the PRC regulatory authorities will not impose further restrictions on the convertibility of the Renminbi. Any future restrictions on currency exchanges may limit our ability to use our cash flow for the distribution of dividends to our shareholders or to fund operations it may have outside of the PRC.

2.22

ATable ~~description~~ of ~~each milestone and related contingent consideration~~ Contents

3In August 2008, SAFE promulgated Circular 142, a notice regulating the conversion by FIEs of foreign currency into Renminbi by restricting how the converted Renminbi may be used. Circular 142 requires that Renminbi converted from the foreign currency-dominated capital of a FIE may only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC unless specifically provided for otherwise. In addition, SAFE strengthened its oversight over the flow and use of Renminbi funds converted from the foreign currency-dominated capital of a FIE. The use of such Renminbi may not be changed without approval from SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Violations of Circular 142 may result in severe penalties, including substantial fines as set forth in the SAFE rules.

APRC ~~determination~~regulations relating to the establishment of ~~whether~~offshore ~~each~~special ~~milestone~~purpose iscompanies ~~considered~~by ~~substantive~~PRC residents may subject our PRC resident shareholders to personal liability and limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute profits to us, or otherwise adversely affect us.

4SAFE issued a public notice in October 2005, or the SAFE notice, requiring PRC residents to register with the local SAFE branch before establishing or controlling any company outside of China for the purpose of capital financing with assets or equities of PRC companies, referred to in the notice as an “offshore special purpose company.” PRC residents that are shareholders of offshore special purpose companies established before November 1, 2005 were required to register with the local SAFE branch before March 31, 2006.The failure of our beneficial owners to timely amend their SAFE registrations pursuant to the SAFE notice or the failure of future beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in the SAFE notice may subject such beneficial owners to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute dividends to our company or otherwise adversely affect our business.

~~The~~Because ~~factors~~Chinese ~~that~~law ~~the~~governs ~~entity~~many ~~considered~~of inour ~~determining~~material ~~whether~~agreements, we may not be able to enforce our rights within the ~~milestone~~PRC or ~~milestones~~elsewhere, ~~are~~which ~~substantive~~could result in a significant loss of business, business opportunities or capital.

5Chinese law governs many of our material agreements, some of which may be with Chinese governmental agencies. We cannot assure you that we will be able to enforce any of our material agreements or that remedies will be available outside of the PRC. The system of laws and the enforcement of existing laws and contracts in the PRC may not be as certain in implementation and interpretation as in the United States. The Chinese judiciary is relatively inexperienced in enforcing corporate and commercial law, leading to a higher than usual degree of uncertainty as to the outcome of any litigation. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital.

~~The~~Because ~~amount~~our offunds ~~consideration~~are ~~recognized~~held ~~during~~in ~~the~~banks ~~period~~in ~~for~~uninsured PRC bank accounts, the ~~milestone~~failure orof ~~milestones.~~any bank in which we deposit our funds could affect our ability to continue in business.

~~The~~Funds ~~amendments~~on indeposit ~~this~~at ~~Update~~banks ~~are~~and ~~effective~~other onfinancial ainstitutions ~~prospective~~in ~~basis~~the ~~for~~PRC ~~milestones~~are ~~achieved~~often inuninsured. A ~~fiscal~~significant ~~years,~~portion ~~and~~of ~~interim~~our ~~periods~~assets ~~within~~are ~~those~~in ~~years,~~the ~~beginning~~form onof orcash ~~after~~deposited ~~June~~with ~~15,~~banks ~~2010.~~in ~~Early~~the ~~adoption~~PRC, isand ~~permitted.~~in Ifthe event of a ~~vendor~~bank ~~elects~~failure, ~~early~~we ~~adoption~~may ~~and~~not ~~the~~have ~~period~~access ofto ~~adoption~~our isfunds ~~not~~on deposit. Depending upon the ~~beginning~~amount of ~~the~~money ~~entity’s~~we ~~fiscal~~maintain ~~year,~~in ~~the~~a ~~entity~~bank ~~should~~that ~~apply~~fails, ~~the~~our ~~amendments~~inability ~~retrospectively~~to ~~from~~have ~~the~~access ~~beginning~~to ofour ~~the~~cash ~~year~~could ofimpair ~~adoption.~~our ~~Additionally~~operations, aand, ~~vendor~~if ~~electing~~we ~~early~~are ~~adoption~~not ~~should~~able ~~disclose~~to ~~the~~access ~~following~~funds ~~information~~to atpay aour ~~minimum~~suppliers, ~~for~~employees ~~all~~and ~~previously~~other ~~reported~~creditors, ~~interim~~we ~~periods~~may inbe ~~the~~unable ~~fiscal~~to ~~year~~continue ofin ~~adoption:~~business.

1PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to our PRC operating subsidiaries.

~~Revenue~~As an offshore holding company of our PRC operating subsidiaries, we may make loans to our PRC subsidiaries. Any loans to our PRC subsidiaries are subject to approval by relevant governmental authorities in China and other requirements under relevant PRC regulations.

2We may also decide to finance our PRC subsidiaries by means of capital contributions. According to the relevant PRC regulations on foreign-invested enterprises in China, depending on the amount of total investment and the type of business in which a foreign-invested enterprise is engaged, capital contributions to foreign-invested enterprises in

~~Income before income taxes~~ 23

3.Table of Contents

~~Net~~China ~~income~~are subject to approval by the Ministry of Commerce or its local branches. We may not obtain these government approvals on a timely basis, if at all, with respect to future capital contributions by us to our PRC subsidiaries. If we fail to receive such approvals, our ability to capitalize our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

4Our business could be severely harmed if the Chinese government changes its policies, laws, regulations, tax structure or its current interpretations of its laws, rules and regulations relating to our operations in China.

~~Earnings~~Our ~~per~~business ~~share~~is located in Liaoning province, China and virtually all of our assets are located in China. We generate our sales revenue only from customers located in China. Our results of operations, financial state of affairs and future growth are, to a significant degree, subject to China’s economic, political and legal development and related uncertainties. Our operations and results could be materially affected by a number of factors, including, but not limited to

5.● Changes in policies by the Chinese government resulting in changes in laws or regulations or the interpretation of laws or regulations;

~~The~~● ~~effect~~Changes ofin ~~the change for the captions presented.~~ taxation;

A● ~~vendor~~Changes ~~may elect, but is not required, to adopt the amendments~~ in ~~this~~employment ~~Update retrospectively for all prior periods.~~restrictions;

~~Management~~● ~~does~~Import ~~not~~duties; ~~believe that any other recently issued~~and, ~~but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.~~

~~Off-balance~~● ~~Sheet~~Currency ~~Arrangements~~ revaluation.

WeOver dothe past several years, the Chinese government has pursued economic reform policies including the encouragement of private economic activities and greater economic decentralization. If the Chinese government does not ~~have~~continue ~~any~~to ~~off~~pursue its present policies that encourage foreign investment and operations in China, or if these policies are either not successful or are significantly altered, then our business could be harmed. Following the Chinese government’s policy of privatizing many state-~~balance~~owned ~~sheet~~enterprises, ~~arrangements~~the Chinese government has attempted to augment its revenues through increased tax collection. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Continued efforts to increase tax revenues could result in increased taxation expenses being incurred by us. Economic development may be limited as well by the imposition of austerity measures intended to reduce inflation, the inadequate development of infrastructure and the potential unavailability of adequate power and water supplies, transportation and communications. In addition, the Chinese government continues to play a significant role in regulating industry by imposing industrial policies.

~~Contractual~~The ~~Obligations~~Chinese laws and regulations which govern our current business operations are sometimes vague and uncertain and may be changed in a way that hurts our business.

WeChina’s dolegal ~~not~~system is a civil law system based on written statutes, in which system decided legal cases have ~~any~~little ~~contractual~~value ~~obligations~~as precedents, unlike the common law system prevalent in the United States. There are substantial uncertainties regarding the interpretation and application of Chinese laws and regulations, including but not limited to the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. The Chinese government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We are considered an FIE under Chinese laws, and as a result, we must comply with Chinese laws and

~~Item 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~24

~~None.~~Table of Contents

-regulations. We 19cannot -predict what effect the interpretation of existing or new Chinese laws or regulations may have on our business. If the relevant authorities find us to be in violation of Chinese laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation: levying fines; revoking our business and other licenses; requiring that we restructure our ownership or operations; and requiring that we discontinue any portion or all of our business.

~~Item~~A 8.slowdown ~~FINANCIAL~~or ~~STATEMENTS~~other ~~AND~~adverse ~~SUPPLEMENTARY~~developments ~~DATA~~in the Chinese economy may materially and adversely affect our customers’ demand for our services and our business.

~~Velvet~~All ~~Rope~~of ~~Special~~our ~~Events~~operations are conducted in China and all of our revenues are generated from sales to businesses operating in China. Although the Chinese economy has grown significantly in recent years, ~~Inc~~such growth may not continue. We do not know how sensitive we are to a slowdown in economic growth or other adverse changes in the Chinese economy which may affect demand for our products. A slowdown in overall economic growth, an economic downturn or recession or other adverse economic developments in China may materially reduce the demand for our services and in turn reduce our results of operations.

~~June~~Failure ~~30,~~to ~~2010~~comply with the U.S. Foreign Corrupt Practices Act and ~~2009~~Chinese Anti-Corruption Laws could subject us to penalties and other adverse consequences.

~~Index~~Our executive officers, employees and other agents may violate applicable law in connection with the marketing or sale of our products, including China’s anti-corruption laws and the U.S. Foreign Corrupt Practices Act, or the FCPA, which generally prohibits United States companies from engaging in bribery or other prohibited payments to ~~Financial~~foreign ~~Statements~~officials for the purpose of obtaining or retaining business. In addition, we are required to maintain records that accurately and fairly represent our transactions and have an adequate system of internal accounting controls. Foreign companies, including some that may compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage over us. The PRC also strictly prohibits bribery of government officials. However, corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC.

~~Contents~~While ~~Page(s)~~we ~~Report~~intend ofto ~~Independent~~implement ~~Registered~~measures ~~Public~~to ~~Accounting~~ensure ~~Firm~~compliance 21with ~~Balance~~the ~~Sheets~~FCPA atand ~~June~~Chinese ~~30,~~anti-corruption ~~2010~~laws ~~and~~by ~~June~~all 30individuals involved with our company, ~~2009~~our 22employees ~~Statements~~or ofother ~~Operations~~agents may engage in such conduct for ~~the~~which ~~Fiscal~~we ~~Year~~might ~~Ended~~be ~~June~~held 30responsible. If our employees or other agents are found to have engaged in such practices, ~~2010~~we ~~and~~could ~~2009~~suffer 23severe ~~Statement~~penalties ofand ~~Stockholders’~~other ~~Equity~~consequences ~~(Deficit)~~that ~~for~~may ~~the~~have ~~Fiscal~~a ~~Year~~material ~~Ended~~adverse ~~June~~effect 30on our business, ~~2010~~financial 24condition ~~Statements~~and results of ~~Cash~~operations. In ~~Flows~~addition, ~~for~~our brand and reputation, our sales activities or the ~~Fiscal~~price ~~Year~~of ~~Ended~~our ~~June~~ordinary ~~30,~~shares ~~2010~~could ~~and~~be ~~2009~~adversely 25affected ~~Notes~~if towe become the ~~Financial~~target ~~Statements~~of ~~26-33~~any negative publicity as a result of actions taken by our employees or other agents.

-The 20implementation -of the new PRC Employment Contract Law and increases in the labor costs in China may hurt our business and profitability.

~~REPORT~~A OFnew ~~INDEPENDENT~~employment ~~REGISTERED~~contract ~~PUBLIC~~law ~~ACCOUNTING~~became ~~FIRM~~effective on January 1, 2008 in China. It imposes more stringent requirements on employers in relation to entry into fixed-term employment contracts, recruitment of temporary employees and dismissal of employees. In addition, under the newly promulgated Regulations on Paid Annual Leave for Employees, which also became effective on January 1, 2008, employees who have worked continuously for more than one year are entitled to paid vacation ranging from 5 to 15 days, depending on the length of the employee’s service. Employees who waive such vacation entitlements at the request of the employer will be compensated for three times their normal daily salaries for each vacation day so waived. As a result of the new law and regulations, our labor costs may increase. There is no assurance that disputes, work stoppages or strikes will not arise in the future. Increases in the labor costs or future disputes with our employees could damage our business, financial condition or operating results.

~~To the Board of Directors and Stockholders of~~25

~~Velvet~~Table ~~Rope~~of ~~Special Events, Inc.~~Contents

~~Beverly~~Under ~~Hills~~the PRC EIT Law, ~~California~~we, Liaoning and/or China Currency may be classified as a “resident enterprise” of the PRC. Such classification could result in tax consequences to us, our non-PRC resident shareholders, Liaoning and China Currency.

WeOn ~~have~~March ~~audited~~16, 2007, the ~~accompanying~~National ~~balance~~People’s ~~sheets~~Congress ofapproved ~~Velvet~~and ~~Rope~~promulgated ~~Special~~a ~~Events~~new tax law, ~~Inc~~the PRC Enterprise Income Tax Law, or “EIT Law,” which took effect on January 1, 2008. (Under the EIT Law, enterprises are classified as resident enterprises and non-resident enterprises. An enterprise established outside of China with “~~VRSE~~de facto management bodies” orwithin China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define “~~Company~~de facto management bodies”) as ofa ~~June~~managing ~~30,~~body ~~2010~~that in practice exercises “substantial and ~~2009,~~overall management and ~~the~~control ~~related~~over ~~statements~~the ofproduction and operations, ~~stockholders’~~personnel, ~~equity~~accounting, ~~(deficit)~~ and ~~cash~~properties” ~~flows~~of ~~for~~the enterprise; however, it remains unclear whether the ~~fiscal~~PRC ~~years~~tax ~~then~~authorities ~~ended~~would deem our managing body as being located within China. ~~These~~ ~~financial~~Due ~~statements~~to ~~are~~the short history of the ~~responsibility~~EIT Law and lack of applicable legal precedents, the ~~Company’s~~PRC ~~management. Our~~tax ~~responsibility~~authorities isdetermine tothe ~~express~~PRC antax ~~opinion~~resident ontreatment ~~these~~of ~~financial~~a ~~statements~~foreign ~~based~~company on ~~our~~a ~~audit~~case-by-case basis.

WeIf ~~conducted our audits in accordance with~~ the ~~standards~~PRC oftax ~~the~~authorities ~~Public~~determine ~~Company Accounting Oversight Board (United States). Those standards require~~ that we, ~~plan~~Liaoning and/or ~~perform~~China ~~the~~Currency ~~audit~~are toa ~~obtain~~“resident ~~reasonable~~enterprise” ~~assurance~~for ~~about~~PRC ~~whether~~enterprise ~~the~~income ~~financial~~tax ~~statements~~purposes, ~~are~~a ~~free~~number of ~~material~~PRC ~~misstatement. The~~tax ~~Company~~consequences iscould ~~not~~follow. ~~required to have~~First, ~~nor were~~ we, ~~engaged~~Liaoning toand/or ~~perform,~~China anCurrency ~~audit~~could ofbe ~~its~~subject ~~internal~~to ~~control~~the ~~over~~enterprise ~~financial~~income ~~reporting. Our~~tax ~~audit~~at ~~included~~a ~~consideration~~rate of ~~internal~~25 ~~control~~percent ~~over~~on ~~financial~~our, ~~reporting~~Liaoning’ asand/or aChina ~~basis~~Currency’s ~~for~~worldwide ~~designing~~taxable ~~audit~~income, ~~procedures~~as ~~that~~well ~~are~~as ~~appropriate~~PRC inenterprise ~~the~~income ~~circumstances,~~tax ~~but~~reporting ~~not~~obligations. ~~for~~Second, under the ~~purposes~~EIT ofLaw ~~expressing~~and anits ~~opinion~~implementing onrules, ~~the~~dividends ~~effectiveness~~paid ofbetween ~~the~~“qualified ~~Company’s~~resident ~~internal~~enterprises” ~~control~~are ~~over~~exempt ~~financial~~from ~~reporting. Accordingly,~~enterprise weincome ~~express no such opinion~~tax. An ~~audit~~As ~~includes examining on~~ a ~~test basis~~result, ~~evidence~~if ~~supporting~~we, ~~the~~Liaoning ~~amount~~ and ~~disclosures~~China inCurrency ~~the~~are ~~financial~~treated ~~statements. An~~as ~~audit~~PRC ~~also~~“qualified ~~includes~~resident ~~assessing the accounting principles used and significant estimates made by management~~enterprises,” asall ~~well~~dividends aspaid ~~evaluating~~from ~~the~~Shenyang ~~overall~~Security ~~financial~~to ~~statement~~us ~~presentation. We~~(through ~~believe~~China ~~that~~Currency ~~our~~and ~~audits~~Liaoning) ~~provide~~should abe ~~reasonable~~exempt ~~basis~~from ~~for~~PRC ~~our opinion~~tax.

~~In our opinion~~Finally, the ~~financial~~new ~~statements~~“resident ~~referred~~enterprise” toclassification ~~above~~could ~~present~~result ~~fairly,~~in a situation in ~~all~~which ~~material~~a ~~respects,~~10 ~~the~~percent ~~financial~~PRC ~~position~~tax ofis ~~the~~imposed ~~Company~~on asdividends ofwe ~~June~~pay ~~30,~~to ~~2010~~our non-PRC stockholders that are not PRC tax “resident enterprises” and ~~2009~~gains derived by them from transferring our common stock, ~~and~~if such income is considered PRC-sourced income by the ~~related~~relevant ~~statements~~PRC ofauthorities. ~~operations~~In such event, we may be required to withhold a 10 percent PRC tax on any dividends paid to non-PRC resident stockholders’. ~~equity~~Our ~~(deficit)~~non-PRC ~~and~~resident ~~cash~~stockholders ~~flows~~also may be responsible for ~~the~~paying ~~fiscal~~PRC ~~years~~tax ~~then~~at ~~ended~~a inrate ~~conformity~~of ~~with~~10 ~~accounting~~percent ~~principles~~on ~~generally~~any ~~accepted~~gain inrealized from the ~~United~~sale ~~States~~or transfer of ~~America~~our common stock in certain circumstances. We would not, however, have an obligation to withhold PRC tax with respect to such gain.

~~The~~Moreover, ~~accompanying~~the ~~financial~~State ~~statements~~Administration ~~have~~of ~~been~~Taxation ~~prepared~~(“SAT”) ~~assuming~~released Circular Guoshuihan No. 698 (“Circular 698”) on December 15, 2009 that reinforces the ~~Company~~taxation ~~will~~of ~~continue~~non-listed equity transfers by non-resident enterprises through overseas holding vehicles. Circular 698 addresses direct share transfers as awell ~~going~~as ~~concern~~other issues. As ~~discussed~~Circular in698 ~~Note~~is 3retroactively effective from January 1, 2008. According to Circular 698, where a foreign (non-PRC resident) investor who directly holds shares in a PRC resident enterprise through a non-PRC offshore holding company directly transfers equity interests in a PRC resident enterprise by selling the ~~financial~~shares ~~statements~~of the offshore holding company, and the ~~Company~~latter ~~had~~is anlocated ~~accumulated~~in ~~deficit~~a atcountry ~~June~~or 30jurisdiction where the effective tax burden is less than 12.5 percent or where the offshore income of his, ~~2010~~her, or its residents is not taxable, the foreign investor is required to provide the PRC tax authority in charge of that PRC resident enterprise with certain relevant information within 30 days of the transfer. The tax authorities in charge will evaluate the offshore transaction for tax purposes. In the event that the tax authorities determine that such transfer is abusing forms of business organization and a ~~net~~reasonable ~~loss~~commercial purpose for the ~~fiscal~~offshore ~~year~~holding ~~then~~company ~~ended~~other than the avoidance of PRC income tax liability is lacking, the PRC tax authorities will have the power to re-assess the nature of the equity transfer under the doctrine of substance over form. ~~These~~ ~~factors~~A ~~raise~~reasonable ~~substantial~~commercial ~~doubt~~purpose ~~about~~may be established when the ~~Company’s~~overall ~~ability~~international (including U.S.) offshore structure is set up to ~~continue~~comply aswith athe ~~going~~requirements ~~concern~~of supervising authorities of international (including U.S.) ~~Management~~capital markets. If the SAT’s ~~plans~~challenge inof ~~regards~~a transfer is successful, it may deny the existence of the offshore holding company that is used for tax planning purposes and subject the seller to ~~these~~PRC ~~matters~~tax ~~are~~on ~~also~~the ~~described~~capital ingain ~~Note~~from 3such transfer. ~~The~~ ~~financial~~Since ~~statements~~Circular do698 ~~not~~has ~~include~~a ~~any~~short ~~adjustments~~history, there is uncertainty as to its application. We (or a foreign investor) may become at risk of being taxed under Circular 698 and may be required to expend valuable resources to comply with Circular 698 or to establish that ~~might~~we ~~result~~(or ~~from~~such ~~the~~foreign ~~outcome~~investor) should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of ~~this~~operations ~~uncertainty~~(or such foreign investor’s investment in us).

~~/s/Li & Company, PC~~26

LiTable &of ~~Company, PC~~Contents

~~Skillman~~If any such PRC tax applies, ~~New~~a ~~Jersey~~non-PRC resident investor may be entitled to a reduced rate of PRC tax under an applicable income tax treaty and/or a deduction against such investor’s domestic taxable income or a foreign tax credit against such investor’s domestic income tax liability (subject to applicable conditions and limitations). In the case of a U.S. Holder (as defined in the section of this prospectus captioned “Material United States Federal Income Tax Considerations—General”), if a PRC tax applies to dividends paid on our common stock, or to gain from the disposition of our common stock, such tax should be treated as a foreign tax eligible for a deduction from such holder’s U.S. federal taxable income or a foreign tax credit against such holder’s U.S. federal income tax liability (subject to applicable conditions and limitations). In addition, the U.S. Holder should be entitled to certain benefits under the Agreement between the Government of the United States of America and the Government of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income (the “U.S.-PRC Tax Treaty”), including the treatment of any such income as arising in the PRC for purposes of calculating such foreign tax credit, if such holder is considered a resident of the United States for the purposes of the U.S.-PRC Tax Treaty. Prospective investors should consult with their own tax advisors regarding the applicability of any such taxes, the effects of any applicable income tax treaties, and any available foreign tax credits. For further information, see the discussion in the sections of this prospectus entitled “Material United States Federal Income Tax Considerations” and “Material PRC Income Tax Considerations” below.

~~September~~Uncertainties ~~29,~~with ~~2010~~respect to the PRC legal system could limit the legal protections available to you and us.

-We 21conduct substantially all of our business through our operating subsidiaries in China. Our operating subsidiaries are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based on written statutes, and prior court decisions may be cited for reference, but have limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to you and us. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. In addition, all of our executive officers and all but one of our directors are residents of China and not of the United States, and substantially all the assets of these persons are located outside the United States. As a result, it could be difficult for investors to effect service of process in the United States or to enforce a judgment obtained in the United States against our Chinese officers, directors and subsidiaries.

VELVET ROPE SPECIAL EVENTS, INC.
BALANCE SHEETS
				June 30, 2010		June 30, 2009
ASSETS
CURRENT ASSETS:
	Cash			$	-	$	6,452
		Total Current Assets			-		6,452
PROPERTY AND EQUIPMENT
	Property and equipment - original cost				2,788		2,788
	Accumulated depreciation				(966)		(414)
		PROPERTY AND EQUIPMENT, net			1,822		2,374
SOFTWARE
	Software - original cost				1,845		1,845
	Accumulated amortization				(1,071)		(459)
		SOFTWARE, net			774		1,386
SECURITY DEPOSIT					-		1,453
			Total Assets	$	2,596	$	11,665
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
	Advances from stockholder			$	6,500	$	-
	Accrued professional fees				3,750		7,500
		Total Current Liabilities			10,250		7,500
STOCKHOLDERS' EQUITY (DEFICIT):
	Preferred stock at $0.0001 par value: 5,000,000 shares
		authorized; none issued or outstanding			-		-
	Common stock at $0.0001 par value: 100,000,000 shares
		authorized, 4,140,000 shares issued and outstanding			414		414
	Additional paid-in capital				55,308		55,308
	Accumulated deficit				(63,376)		(51,557)
		Total Stockholders' Equity (Deficit)			(7,654)		4,165
			Total Liabilities and Stockholders' Equity (Deficit)	$	2,596	$	11,665
See accompanying notes to the financial statements.

It may be difficult to affect service of process and enforcement of legal judgments upon our company and our officers and directors because they reside outside the United States.

-As 22our -operations are presently based in PRC and a majority of our directors and all of our officers reside in PRC, service of process on our company and such directors and officers may be difficult to effect within the United States. Also, our main assets are located in PRC and any judgment obtained in the United States against us may not be enforceable outside the United States.

VELVET ROPE SPECIAL EVENTS, INC.
STATEMENTS OF OPERATIONS
			For the Fiscal Year		For the Fiscal Year
			Ended		Ended
			June 30, 2010		June 30, 2009
NET REVENUES			$	26,933	$	89,384
COST OF SERVICES				16,662		32,810
GROSS PROFIT				10,271		56,574
OPERATING EXPENSES:
	Professional fees			9,550		27,646
	General and administrative expenses			11,740		45,667
		Total operating expenses		21,290		73,313
LOSS BEFORE INCOME TAXES				(11,019)		(16,739)
INCOME TAXES				800		1,600
NET LOSS			$	(11,819)	$	(18,339)
NET LOSS PER COMMON SHARE
	- BASIC AND DILUTED:		$	(0.00)	$	(0.00)
	Weighted common shares outstanding
		- basic and diluted		4,140,000		4,116,214
See accompanying notes to the financial statements

Risks Related To The Market For Our Stock

-The 23market -price of our common stock can become volatile, leading to the possibility of its value being depressed at a time when you may want to sell your holdings.

VELVET ROPE SPECIAL EVENTS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE FISCAL YEAR ENDED June 30, 2010
		Common Stock, $0.0001 Par Value			Additional				Total
		Number of			Paid-in		Accumulated		Stockholders'
		Shares	Amount		Capital		Deficit		Equity (Deficit)
Balance, June30, 2008		4,000,000	$	400	$	20,322	$	(33,218)	$	(12,496)
Issuance of common stock for cash
	at $0.25 per share from August 21,
	2008 through September 11, 2008	140,000		14		34,986				35,000
Net loss								(18,339)		(18,339)
Balance, June 30, 2009		4,140,000		414		55,308		(51,557)		4,165
Net loss								(11,819)		(11,819)
Balance, June 30, 2010		4,140,000	$	414	$	55,308	$	(63,376)	$	(7,654)
See accompanying notes to the financial statements.

The market price of our common stock can become volatile. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include: our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investors; changes in financial estimates by us or by any securities analysts who might cover our stock; speculation about our business in the press or the investment community; significant developments relating to our relationships with our customers or suppliers; stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry; customer demand for our products; investor perceptions of our industry in general and our Company in particular; the operating and

~~- 24 -~~27

VELVET ROPE SPECIAL EVENTS, INC.
STATEMENTS OF CASH FLOWS
				For the Fiscal Year		For the Fiscal Year
				Ended		Ended
				June 30, 2010		June 30, 2009
	CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(11,819)	$	(18,339)
	Adjustments to reconcile net loss to net cash
		used in operating activities
		Depreciation expense			552		414
		Amortization expense			612		459
			Prepaid rent		-		1,839
			Security deposit		1,453		(1,453)
			Accounts payable		-		(300)
			Accrued professional fees		(3,750)		(7,500)
	NET CASH USED IN OPERATING ACTIVITIES				(12,952)		(24,880)
	CASH FLOWS FROM INVESTING ACTIVITIES:
		Purchases of property and equipment			-		(2,788)
		Purchases of software			-		(1,845)
	NET CASH USED IN INVESTING ACTIVITIES				-		(4,633)
	CASH FLOWS FROM FINANCING ACTIVITIES:
		Amounts received from (paid to) stockholder			6,500		(1,887)
		Proceeds from sale of common stock			-		35,000
	NET CASH PROVIDED BY FINANCING ACTIVITIES				6,500		33,113
	NET CHANGES IN CASH				(6,452)		3,600
	Cash at beginning of year				6,452		2,852
	Cash at end of year			$	-	$	6,452
	SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
		Interest paid		$	-	$	-
		Taxes paid		$	800	$	1,600
See accompanying notes to the financial statements.

Table of Contents

-stock 25performance -of comparable companies; general economic conditions and trends; announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures; changes in accounting standards, policies, guidance, interpretation or principles; loss of external funding sources; sales of our common stock, including sales by our directors, officers or significant stockholders; and additions or departures of key personnel. Securities class action litigation is often instituted against companies following periods of volatility in their stock price. Should this type of litigation be instituted against us, it could result in substantial costs to us and divert our management’s attention and resources.

~~Velvet~~Moreover, ~~Rope~~securities ~~Special~~markets ~~Events,~~may ~~Inc~~from time to time experience significant price and volume fluctuations for reasons unrelated to the operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our Company at a time when you want to sell your interest in us. We do not intend to pay dividends on shares of our common stock for the foreseeable future.

~~June~~We ~~30,~~have ~~2010~~never ~~and~~declared ~~2009~~or paid any cash dividends on shares of our common stock.

~~Notes~~We intend to retain any future earnings to fund the ~~Financial~~operation ~~Statements~~and expansion of our business and, therefore, we do not anticipate paying cash dividends on shares of our common stock in the foreseeable future.

~~NOTE~~We 1may –be ~~ORGANIZATION~~subject ~~AND~~to ~~OPERATIONS~~penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

~~Velvet~~The ~~Rope~~SEC ~~Special~~has ~~Events,~~adopted ~~Inc.~~regulations ~~(“VRSE”~~which orgenerally ~~the~~define so-called “~~Company~~penny stocks”) ~~was~~to ~~incorporated~~be asan aequity ~~Subchapter~~security Sthat ~~corporation~~has ona ~~August~~market ~~22,~~price ~~2005~~less ~~under~~than ~~the laws of the State of California~~$5. It00 ~~was~~per ~~converted~~share ~~into~~or aan Cexercise ~~corporation,~~price ~~incorporated in the State~~ of ~~Delaware~~less onthan ~~June~~$5.00 ~~17,~~per ~~2008~~share, insubject ato ~~transaction~~certain inexemptions. ~~which~~If ~~the~~our ~~newly-formed~~common ~~corporation~~stock ~~issued~~becomes ana ~~aggregate~~“penny ~~of 3~~stock,~~920,000~~” ~~shares~~we ofmay ~~common~~become ~~stock~~subject to ~~the~~Rule ~~former~~15g-9 ~~stockholder~~under of the SExchange ~~corporation~~Act, ~~for~~or ~~all of~~ the ~~issued~~Penny ~~and~~Stock ~~outstanding~~Rule. ~~shares~~This ofrule ~~the~~imposes ~~Company. All~~additional ~~shares~~sales ~~were~~practice ~~held~~requirements byon ~~and~~broker-dealers ~~all~~that ~~shares~~sell ofsuch ~~common~~securities ~~stock~~to ~~were~~persons ~~issued~~other tothan ~~the~~established ~~Company’s~~customers ~~President~~ and ~~Chief~~“accredited ~~Executive~~investors” ~~Officer. No~~(generally, ~~cash~~individuals ~~consideration~~with ~~was~~a ~~paid. No~~net ~~value~~worth ~~was~~in ~~given~~excess toof ~~the~~$1,000,000 ~~shares~~or ~~issued~~annual byincomes ~~the~~exceeding ~~newly~~$200,000, ~~formed~~or ~~corporation. Therefore~~$300,000 ~~the~~together ~~shares~~with ~~were~~their ~~recorded to reflect the $~~spouses).~~0001~~ ~~par~~For ~~value~~transactions ~~and~~covered ~~additional~~by ~~paid-in~~the ~~capital~~Penny ~~was~~Stock ~~recorded~~Rule, as a ~~negative~~broker-dealer ~~amount~~must ~~($392). The~~make ~~Company~~a ~~applied~~special ~~paragraph~~suitability ~~505-10-S99-3~~determination offor the ~~FASB~~purchaser ~~Accounting~~and ~~Standards~~have ~~Codification,~~received ~~by reclassifying all of~~ the ~~Company~~purchaser’s ~~undistributed~~written ~~earnings~~consent ~~and losses~~ to ~~additional~~the ~~paid-in~~transaction ~~capital~~prior asto ofsale. ~~June~~As 17a result, ~~2008. The~~this ~~accompanying~~rule ~~financial~~may ~~statements~~affect ~~have~~the ~~been~~ability ~~prepared~~of asbroker-dealers ifto ~~the~~sell ~~Company~~our ~~had~~securities ~~its~~and ~~corporate~~may ~~capital~~affect ~~structure~~the asability of ~~the~~purchasers ~~first~~to ~~date~~sell any of ~~the~~our ~~first~~securities ~~period~~in ~~presented~~the secondary market.

~~The~~For ~~Company~~any ~~provides~~transaction ~~services~~involving ina ~~event~~penny ~~planning~~stock, ~~coordination,~~unless ~~music~~exempt, ~~entertainment,~~the ~~floral,~~rules ~~theme~~require ~~decor~~delivery, ~~theme~~prior ~~props,~~to ~~sound,~~any ~~lighting,~~transaction ~~audio~~in ~~visual~~a ~~services,~~penny ~~linens~~stock, ~~fabrics,~~of ~~costumes,~~a ~~off~~disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-~~site~~dealer ~~catering,~~and ~~party~~the ~~rentals,~~registered ~~video~~representative ~~production,~~and ~~photography,~~current ~~invitations,~~quotations ~~graphics,~~for ~~destination~~the ~~management~~securities. Finally, ~~signage~~monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and ~~gifts~~information on the limited market in penny stock.

~~NOTE~~There 2can –be ~~SUMMARY~~no OFassurance ~~SIGNIFICANT~~that ~~ACCOUNTING~~our ~~POLICIES~~common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.

~~Basis~~Certain provisions of ~~presentation~~our Articles of Incorporation may make it more difficult for a third party to effect a change-of-control.

~~The~~As ~~Company’s~~of ~~financial~~March ~~statements~~31, ~~have~~2011, ~~been~~there ~~prepared~~were in7,123,322,000 ~~accordance~~shares ~~with~~of ~~accounting~~our ~~principles~~common ~~generally~~stock ~~accepted~~issued inand outstanding. Our officers and directors own approximately 44.13% of our common stock. As a result, they are able to influence the ~~United~~outcome ~~States~~of stockholder votes on various matters, including the election of ~~America~~directors ~~(“U~~and extraordinary corporate transactions including business combinations.S Yet our officers’ and directors’ interests may differ from those of other stockholders. ~~GAAP”)~~Furthermore, ownership of 44.13% of our common stock by our officers and directors reduces the public float and liquidity of our stock, and may therefore adversely affect the market price of our common stock.

~~Use of estimates~~28

~~The~~Table ~~preparation~~ of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Significant estimates include the estimated useful lives of property and equipment and software. Actual results could differ from those estimates.Contents

~~Reclassification~~We are not likely to pay cash dividends in the foreseeable future.

~~Certain~~We ~~amounts~~intend to retain any future earnings for use in the ~~prior~~operation ~~period~~and ~~financial~~expansion ~~statements~~of our ~~have~~business. ~~been~~We ~~reclassified~~do not expect to ~~conform~~pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the ~~current~~receipt ~~period~~of ~~presentation~~dividends or other payments from our operating subsidiaries. ~~These~~ ~~reclassifications~~In ~~had~~addition, noour ~~effect~~operating subsidiaries, from time to time, may be subject to restrictions on ~~reported~~their ~~net~~ability ~~loss~~to ~~for~~make distributions to us, including restrictions on the ~~prior~~conversion ~~period~~of local currency into U.S. dollars or other hard currency and other regulatory restrictions.

~~Fiscal~~Our ~~year~~common ~~end~~stock is illiquid and subject to price volatility unrelated to our operations.

~~The~~If ~~Company~~a ~~elected~~market ~~June~~for 30our ascommon stock does develop, its ~~fiscal~~market ~~year~~price ~~ending~~could ~~date~~fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting us or our competitors. In addition, the stock market itself is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

~~Cash~~Investors ~~equivalents~~may have difficulty liquidating their investment because our common stock is subject to the “penny stock" rules, which require delivery of a schedule explaining the penny stock market and the associated risks before any sale.

Our common stock may be subject to regulations prescribed by the SEC relating to "penny stocks." The ~~Company~~SEC ~~considers~~has ~~all~~adopted ~~highly~~regulations ~~liquid~~that ~~investments~~generally define a penny stock to be any equity security that has a market price (as defined in such regulations) of less than $5 per share, subject to certain exceptions. These regulations impose additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors (generally institutions with ~~maturities~~assets in excess of ~~three~~$5,000,000 ~~months~~and individuals with a net worth in excess of $1,000,000 or ~~less~~annual atincome exceeding $200,000 (individually) or $300,000 (jointly with their spouse). For transactions covered by these rules, the ~~time~~broker-dealer ofmust make a special suitability determination for the purchase of these securities and have received the purchaser's prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealers presumed control over the market. Finally, monthly statements must be ~~cash~~sent ~~equivalents~~disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

~~Property~~Legal ~~and~~remedies, ~~equipment~~which may be available to the investor, are as follows:

~~Property~~● ~~and~~If ~~equipment~~penny ~~are~~stocks ~~recorded at cost. Expenditures for major additions and betterments~~ are ~~capitalized. Maintenance~~sold ~~and~~in ~~repairs~~violation ~~are charged to operations as incurred. Depreciation~~ of ~~property and equipment is computed by~~ the ~~straight-line~~investor's ~~method~~rights ~~(after~~listed ~~taking~~above, ~~into account their respective estimated residual values) over the assets estimated useful lives ranging from five (5) years to seven (7) years. Upon sale~~ or ~~retirement~~other offederal ~~property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain~~ or ~~loss~~state issecurities ~~reflected in consolidated statements of income and comprehensive income. Leasehold improvements~~laws, ~~if any, are amortized on a straight-line basis over~~ the ~~lease~~investor ~~period~~may orbe ~~the~~able ~~estimated~~to ~~useful~~cancel ~~life,~~his ~~whichever~~purchase ~~is shorter. Upon becoming fully amortized, the related cost~~ and ~~accumulated~~get ~~amortization~~his ~~are~~money ~~removed from the accounts.~~back;

-● 26If -the stocks are sold in a fraudulent manner, the investor may be able to sue the persons and firms that caused the fraud for damages;

~~Software~~● If the investor has signed an arbitration agreement, however, s/he may have to pursue a claim through arbitration.

~~Software~~If the person purchasing the securities is ~~recorded~~someone atother ~~cost~~than ~~and~~an ~~amortized~~accredited oninvestor aor ~~straight~~an established customer of the broker-~~line~~dealer, ~~basis~~the ~~over~~broker-dealer must also approve the ~~software~~potential ~~estimated~~customer's ~~useful~~account ~~life~~by ofobtaining ~~three~~information ~~(3)~~concerning ~~years. Upon~~the ~~becoming~~customer's ~~fully~~financial ~~amortized~~situation, investment experience and investment objectives. The broker-dealer must also make a determination whether the ~~related~~transaction ~~cost~~is ~~and~~suitable ~~accumulated~~for ~~amortization~~the ~~are~~customer ~~removed~~and ~~from~~whether the ~~accounts.~~customer has

~~Impairment of long-lived assets~~29

~~The~~Table ~~Company has adopted paragraph 360-10-35-17~~ of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which include property and equipment and software, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.Contents

~~The~~sufficient ~~Company~~knowledge ~~assesses~~and ~~the~~experience ~~recoverability~~in offinancial ~~its~~matters ~~long-lived~~to ~~assets~~be byreasonably ~~comparing~~expected ~~the~~to ~~projected~~be ~~undiscounted~~capable ~~net~~of ~~cash~~evaluating ~~flows associated with~~ the ~~related~~risk ~~long-lived asset or group~~ of ~~long-lived~~transactions ~~assets~~in ~~over~~such ~~their remaining estimated useful lives against their respective carrying amounts~~securities. ~~Impairment,~~ ~~if any~~Accordingly, ~~is based on~~ the ~~excess~~SEC's ofrules ~~the~~may ~~carrying~~limit ~~amount over~~ the ~~fair~~number ~~value~~ of ~~those~~potential ~~assets. Fair~~purchasers ~~value~~of ~~is generally determined using~~ the ~~asset’s~~shares expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of ~~the~~our ~~long-lived~~common ~~assets~~stock ~~are~~and ~~depreciated~~stockholders ~~over~~may ~~the~~have ~~newly~~difficulty ~~determined~~selling ~~remaining~~their ~~estimated useful lives~~securities. ~~The Company determined that there were no impairments of long-lived assets as of June 30, 2010 or 2009.~~

~~Fair~~A ~~value~~large number of ~~financial~~shares ~~instruments~~may be eligible for future sale and may depress our stock price.

~~The~~We ~~Company~~may ~~follows~~be ~~paragraph~~required, ~~825-10-50-10~~under ofterms ~~the FASB Accounting Standards Codification for disclosures about fair value~~ of ~~its~~future ~~financial~~financing ~~instruments~~arrangements, ~~and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”)~~ to ~~measure~~offer ~~the fair value of its financial instruments. Paragraph 820-10-35-37 establishes~~ a ~~framework~~large ~~for~~number ~~measuring fair value in accounting principles generally accepted in the United States~~ of ~~America~~common ~~(U.S.~~shares GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to ~~valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives~~ the ~~highest~~public, ~~priority~~or to ~~quoted~~register ~~prices (unadjusted) in active markets~~ for ~~identical~~sale ~~assets~~by orfuture ~~liabilities~~private ~~and~~investors ~~the~~a ~~lowest~~large ~~priority~~number ~~to unobservable inputs. The three (3) levels~~ of ~~fair~~shares ~~value~~sold ~~hierarchy~~in ~~defined~~private bysales ~~Paragraph~~to ~~820-10-35-37 are described below:~~them.

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

Sales of substantial amounts of common stock, or a perception that such sales could occur, and the existence of options or warrants to purchase shares of common stock at prices that may be below the then-current market price of our common stock, could adversely affect the market price of our common stock and could impair our ability to raise capital through the sale of our equity securities, either of which would decrease the value of any earlier investment in our common stock.

~~The~~Item ~~carrying~~1B. Unresolved ~~amounts~~Staff ~~of the Company’s financial assets and liabilities, such as cash and accrued professional fees, approximate their fair values because of the short maturity of these instruments.~~Comments

~~The~~As ~~Company does not have any assets or liabilities measured at fair value on~~ a ~~recurring~~“smaller orreporting ~~a non-recurring basis~~company”, ~~consequently,~~we ~~the~~are ~~Company did~~ not ~~have~~required ~~any fair value adjustments for assets and liabilities measured at fair value at June 30, 2010 or 2009, nor gains or losses are reported in the statement of operations that are attributable~~ to ~~the~~provide ~~change in unrealized gains or losses relating to those assets and liabilities still held at~~ the ~~reporting~~information ~~date~~required ~~for~~by ~~the~~this ~~fiscal year ended June 30, 2010 or 2009~~Item.

~~Revenue~~Item ~~recognition~~2. Properties

~~The~~Offices ~~Company applies paragraph 605-10-S99-1~~ of ~~the~~China ~~FASB~~Currency ~~Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable~~ and ~~earned~~Shenyang less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. Security

~~Equity~~Our ~~instruments~~principal ~~issued~~executive tooffices ~~parties~~are ~~other~~located ~~than~~at ~~employees~~68 ~~for~~Harbin ~~acquiring~~Road, ~~goods~~Shenyang, orLiaoning, ~~services~~People’s Republic of China, 110002. This facility is approximately 8,400 square feet which also houses the offices of our subsidiary Shenyang Security, as well as the warehouse and distribution facility for Shenyang Security.

-Offices 27of -Liaoning Huaxun

The ~~Company~~offices ~~accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance~~ of ~~section~~our ~~505-50-30~~subsidiary ofLiaoning ~~the~~Huaxun ~~FASB~~are ~~Accounting~~located ~~Standards~~at ~~Codification~~No. ~~Pursuant~~68, toHeping ~~paragraph~~North ~~718-10-30-6~~Street, ofHeping ~~the~~District, ~~FASB Accounting Standards Codification~~Shenyang, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issuedLiaoning, ~~whichever is more reliably measurable~~PRC. ~~The~~ This ~~measurement~~facility ~~date used to determine the fair value of the equity instrument issued~~ is ~~the~~approximately ~~earlier~~4,950 ofsquare ~~the~~feet ~~date~~and houses onour ~~which~~sales ~~the~~and ~~third-party~~administration ~~performance~~departments. We ishave ~~complete~~a orlease ~~the~~to ~~date~~use onthis ~~which~~facility ituntil isJanuary, ~~probable that performance will occur~~2014.

~~Income~~Shenyang ~~taxes~~Security Training and Demonstration Center

~~The~~At ~~Company~~Shoubingtai ~~was~~Village, aGuchengzi ~~Subchapter~~Town, SDongling ~~corporation~~District, ~~until~~Shenyang, ~~June~~Liaoning, 17PRC, ~~2008~~we ~~during~~maintain ~~which~~a ~~time~~5380 ~~the~~square ~~Company~~foot ~~was~~facility ~~treated~~which ashouses a ~~pass~~training ~~through~~and ~~entity~~demonstration center for ~~federal~~Shenyang ~~income tax purposes~~Security. Under Subchapter S of the Internal Revenue Code stockholders of an S corporation are taxed separately on their distributive share of the S corporation’s income whether or not that income is actually distributed.

~~Effective~~Development June 18, 2008, the Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.Property

~~The~~We ~~Company~~paid ~~adopted~~for ~~section~~land ~~740-10-25~~use ofrights ~~the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25.addresses the determination of whether tax benefits claimed or expected~~ to ~~be claimed on~~ a ~~tax~~piece ~~return~~of ~~should~~land besituated ~~recorded~~at inShoubingtai ~~the~~Village, ~~financial~~Guchengzi ~~statements. Under~~Town, ~~Section~~Dongling ~~740-10-25~~District, ~~the~~Shenyang, ~~Company~~Liaoning, ~~may~~PRC, ~~recognize~~on ~~the~~which ~~tax~~part ~~benefit~~of ~~from an uncertain tax position only if~~ it is ~~more~~occupied ~~likely than not that the tax position will be sustained on examination~~ by ~~the~~training ~~taxing~~and ~~authorities,~~demonstration ~~based~~center ~~on the technical merits~~ of ~~the~~Shenyang ~~position~~Security. ~~The~~ ~~tax~~We ~~benefits~~intend ~~recognized~~to inuse the ~~financial~~balance ~~statements~~of ~~from~~the ~~such~~land afor ~~position should be measured based on~~ the ~~largest~~development ~~benefit that has a greater than fifty percent (50%) likelihood~~ of ~~being~~new ~~realized~~facilities upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to ~~its~~house ~~liabilities~~our ~~for~~various ~~unrecognized income tax benefits according to the provisions of Section 740-10-25~~operations.

~~Net~~Item ~~income~~3. Legal ~~(loss) per common share~~Proceedings

~~Net~~We ~~loss~~know ~~per common share is computed pursuant to section 260-10-45~~ of ~~the~~no ~~FASB~~material, ~~Accounting~~existing ~~Standards~~or ~~Codification. Basic~~pending ~~net~~legal ~~loss~~proceedings ~~per~~against ~~share~~us, isnor ~~computed~~are bywe ~~dividing~~involved ~~net~~as ~~loss~~a byplaintiff ~~the~~in ~~weighted~~any ~~average~~material ~~number~~proceeding ofor ~~shares~~pending ~~of common stock outstanding during the period~~litigation. ~~Diluted~~ ~~net~~There ~~loss~~are ~~per~~no ~~share~~proceedings isin ~~computed~~which byany ~~dividing net loss by the weighted average number~~ of ~~shares~~our ofdirectors, ~~common~~officers ~~stock~~or ~~and~~affiliates, ~~potentially~~or ~~outstanding~~any ~~shares~~registered ofor ~~common~~beneficial ~~stock~~shareholder, ~~during~~is ~~each~~an ~~period. There~~adverse ~~were~~party noor ~~potentially~~has ~~dilutive~~a ~~shares~~material ~~outstanding~~interest asadverse ofto ~~June~~our ~~30, 2010 or 2009~~company.

~~Commitments and contingencies~~30

~~The~~Table ~~Company follows subtopic 450-20~~ of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.Contents

~~Cash~~Item ~~flows~~4. (Removed ~~reporting~~and Reserved)

-PART ~~28 -~~II

~~The~~Item ~~Company~~5. Market ~~adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification~~ for ~~cash~~Registrant’s ~~flows~~Common ~~reporting~~Equity, ~~classifies~~Related ~~cash~~Stockholder ~~receipts~~Matters and ~~payments~~Issuer ~~according~~Purchases ~~to whether they stem from operating, investing, or financing activities and provides definitions~~ of ~~each~~Equity category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.Securities

~~Subsequent~~Our ~~events~~common shares are quoted on the Over-the-Counter Bulletin Board under the symbol “EAST.” The following quotations, obtained from Stockwatch, reflect the high and low bids for our common shares based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

The ~~Company~~high ~~follows~~and ~~the~~low ~~guidance~~bid inprices ~~Section 855-10-50~~ of ~~the~~our ~~FASB~~common ~~Accounting~~stock ~~Standards Codification~~ for the ~~disclosure~~periods ofindicated ~~subsequent~~below events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are ~~widely distributed to users, such~~ as ~~through filing them on EDGAR.~~follows:

Recently issued accounting pronouncements

OTC Bulletin Board(1)
Quarter Ended	High	Low
December 31, 2010	$1.10	$1.10
September 30, 2010	$1.10	$0.25
June 30, 2010	N/A(2)	N/A(2)
March 31, 2010	N/A(2)	N/A(2)
December 31, 2009	N/A(2)	N/A(2)
September 30, 2009	N/A(2)	N/A(2)
June 30, 2009	N/A(2)	N/A(2)

In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-01 “Equity Topic 505 – Accounting for Distributions to Shareholders with Components of Stock and Cash”, which clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (~~Equity and Earnings Per Share (“EPS”~~1)~~). Those distributions should be accounted for and included in EPS calculations in accordance with paragraphs 480~~ Over-10the-~~25-~~counter 14market ~~and~~quotations ~~260-10-45-45~~reflect ~~through 45~~inter-47dealer ofprices ~~the~~without ~~FASB~~retail ~~Accounting~~mark-up, ~~Standards~~mark-down ~~codification. The~~or amendments in this Update also provide a technical correction to the Accounting Standards Codification. The correction moves guidance that was previously included in the Overview and Background Section to the definition of a stock dividend in the Master Glossary. That guidance indicates that a stock dividend takes nothing from the property of the corporation and adds nothing to the interests of the stockholders. It also indicates that the proportional interest of each shareholder remains the samecommission, and ismay anot ~~key~~represent ~~factor~~actual ~~to consider in determining whether a distribution is a stock dividend~~transactions.

In(2) Our ~~January 2010,~~common ~~the~~stock ~~FASB~~was ~~issued~~quoted on the ~~FASB Accounting Standards Update No. 2010~~Over-02the-Counter ~~“Consolidation~~Bulletin ~~Topic~~Boards ~~810~~on –April ~~Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification”~~22, ~~which provides amendments to Subtopic 810-10 and related guidance within U~~2009.S. The ~~GAAP~~first totrade ~~clarify~~did ~~that~~not ~~the~~occur ~~scope~~until ofSeptember ~~the~~24, ~~decrease in ownership provisions of the Subtopic and related guidance applies to the following:~~2010.

1Our shares are issued in registered form. Transhare Corporation, 5105 DTC Parkway, Suite 325, Greenwood Village, CO 80111 (Telephone: (888) 662-1113; Facsimile: (303) 6621113) is the registrar and transfer agent for our common shares.

AOn ~~subsidiary~~March or31, ~~group~~2011, ofthe ~~assets~~shareholders' ~~that~~list isshowed a50 ~~business~~registered orshareholders ~~nonprofit~~with ~~activity~~7,123,322 common shares outstanding.

2.Dividend Policy

AWe ~~subsidiary~~have ~~that~~not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is ato retain earnings, if any, for use in our operations and in the development of our business. orOur ~~nonprofit~~future ~~activity~~dividend ~~that~~policy iswill ~~transferred~~be todetermined anfrom ~~equity~~time ~~method~~to ~~investee~~time orby ~~joint~~our ~~venture~~board of directors.

3.31

AnTable ~~exchange~~ of ~~a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture).~~Contents

~~The~~Equity ~~amendments~~Compensation inPlan ~~this Update also clarify that the decrease in ownership guidance in Subtopic 810-10 does not apply to the following transactions even if they involve businesses:~~Information

1We have not adopted any equity compensation plans.

Recent Sales of inUnregistered ~~substance~~Securities; ~~real~~Use ~~estate. Entities should apply the sale~~ of ~~real~~Proceeds ~~estate~~from ~~guidance~~Registered ~~in Subtopics 360-20 (Property, Plant, and Equipment) and 976-605 (Retail/Land) to such transactions.~~Securities

2We did not sell any equity securities which were not registered under the Securities Act during the year ended December 31, 2010 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended December 31, 2010.

~~Conveyances~~Purchase of ~~oil~~Equity ~~and~~Securities ~~gas~~by ~~mineral rights. Entities should apply~~ the ~~mineral~~Issuer ~~property conveyance~~ and ~~related~~Affiliated ~~transactions guidance in Subtopic 932-360 (Oil and Gas-Property, Plant, and Equipment) to such transactions.~~Purchasers

IfWe adid ~~decrease in ownership occurs in a subsidiary that is~~ not apurchase ~~business~~any orof ~~nonprofit~~our ~~activity,~~shares ~~an entity first needs to consider whether the substance~~ of ~~the~~common ~~transaction~~stock ~~causing~~or ~~the decrease in ownership is addressed in~~ other ~~U.S.~~securities ~~GAAP,~~during ~~such~~our asfourth ~~transfers~~quarter of ~~financial~~our ~~assets,~~fiscal ~~revenue~~year ~~recognition,~~ended ~~exchanges~~December ~~of nonmonetary assets~~31, ~~sales of in substance real estate, or conveyances of oil and gas mineral rights, and apply that guidance as applicable~~2010. ~~If no other guidance exists, an entity should apply the guidance in Subtopic 810-10.~~

InItem ~~January 2010, the FASB issued the FASB Accounting Standards Update No~~6. Selected ~~2010-06~~Financial ~~“Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements”, which provides amendments to Subtopic 820-10 that require new disclosures as follows:~~ Data

1As a “smaller reporting company”, we are not required to provide the information required by this Item.

~~Transfers~~Item in7. Management’s ~~and~~Discussion ~~out of Levels 1~~ and 2.Analysis ~~A reporting entity should disclose separately the amounts~~ of ~~significant~~Financial ~~transfers~~Condition in and ~~out~~Results of ~~Level 1 and Level 2 fair value measurements and describe the reasons for the transfers.~~ Operations

-The 29following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 11 of this annual report.

2Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). Overview

~~This~~We ~~Update~~provide ~~provides~~designing, ~~amendments~~installing and testing services of security and safety systems. A majority of our revenues is derived from the provision of surveillance and safety packaged solutions which include the products, installation and after-sale service maintenance to ~~Subtopic~~our ~~820~~customers. Because the majority of our revenues are derived from installations, they are generally non-10recurring. ~~that~~Maintenance ~~clarify~~services ~~existing~~in ~~disclosures~~our aspackaged ~~follows:~~solution are included for the first year from the date of completion. Our customers may extend our maintenance program after the first year for an additional fee.

1Presently, we have a small market share in Liaoning province. Our management anticipates being able to grow our presence with our competitive advantages in quality, our strong management team and capacity expansion. Our revenue for the year ended December 31, 2010 achieved $16,494,752.

~~Level~~PLAN ofOF ~~disaggregation.~~OPERATIONS AAND ~~reporting~~CASH entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities.REQUIREMENTS

2.Liquidity and capital resources and results of operations for the years ended December 31, 2010 and 2009:

~~Disclosures~~Liquidity ~~about inputs~~ and ~~valuation~~capital techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3. resources:

~~This~~As ~~Update~~of ~~also~~December ~~includes~~31, ~~conforming~~2010, ~~amendments~~we tohad ~~the~~cash ~~guidance~~and oncash ~~employers'~~equivalents ~~disclosures~~of ~~about postretirement benefit plan assets (Subtopic 715-20)~~$2,308,713. ~~The~~We ~~conforming~~believe ~~amendments~~our toexisting ~~Subtopic~~cash ~~715-20 change the terminology from major categories of assets to classes of assets~~ and ~~provide~~cash aequivalents ~~cross~~will ~~reference~~be tosufficient ~~the guidance in Subtopic 820-10 on how~~ to ~~determine~~maintain ~~appropriate~~our ~~classes~~operations toat present ~~fair~~level ~~value disclosures. The new disclosures and clarifications of existing disclosures are effective~~ for ~~interim~~at ~~and~~least ~~annual reporting periods beginning after December 15, 2009, except for~~ the ~~disclosures~~next ~~about~~twelve ~~purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements~~months. ~~Those~~We ~~disclosures~~plan ~~are~~to ~~effective~~review ~~for~~acquisition ~~fiscal~~opportunities ~~years~~as ~~beginning~~a ~~after~~strategy ~~December 15, 2010, and~~ for ~~interim~~further ~~periods within those fiscal years~~growth.

In February 2010, the FASB issued the FASB Accounting Standards Update No. 2010-09 “Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements”, which provides amendments to Subtopic 855-10 as follows:32

1.Table of Contents

AnNet ~~entity~~cash ~~that~~provided ~~either~~by ~~(a)~~operating isactivities ~~an SEC filer or(b) is a conduit bond obligor~~ for ~~conduit~~the ~~debt~~year ~~securities~~ended ~~that~~December ~~are~~31, ~~traded~~2010 inwas ~~a public market (a domestic or foreign stock exchange or an over-the-counter market~~$3,538,123. ~~including~~This ~~local~~was orprimarily ~~regional~~due ~~markets) is required~~ to ~~evaluate subsequent events through~~ the ~~date~~net ~~that~~income ~~the~~of ~~financial~~$4,194,303, ~~statements~~adjusted ~~are~~by ~~issued.~~non-cash Ifrelated anexpenses ~~entity~~including ~~meets~~depreciation ~~neither~~and amortization of ~~those criteria~~$277,017, ~~then~~and ita ~~should~~net ~~evaluate~~increase ~~subsequent~~in ~~events~~working ~~through~~capital ~~the~~items ~~date~~of ~~the financial statements are available to be issued~~$933,197.

2Net cash provided by operating activities for the year ended December 31, 2009 was $1,010,932, This was primarily due to the net income of $1,783,955, adjusted by non-cash related expenses including depreciation and amortization of $102,997, offset by a net decrease in working capital items of $876,020.

AnNet ~~entity~~cash ~~that~~used isin aninvesting ~~SEC~~activities ~~filer~~for isthe ~~not~~year ~~required~~ended toDecember ~~disclose~~31, ~~the~~2010 ~~date~~was ~~through~~$2,386,810 ~~which~~for ~~subsequent~~purchase ~~events~~of ~~have~~property, ~~been~~plant ~~evaluated~~and equipment. ~~This~~Net ~~change~~cash ~~alleviates~~used ~~potential~~in ~~conflicts~~investing ~~between~~activities ~~Subtopic~~for ~~855-10~~the ~~and~~year ~~the~~ended ~~SEC's~~December ~~requirements~~31, 2009 was $2,953,622, which was a capital expenditure on property, plant and equipment.

3Net cash provided by financing activities for the year ended December 31, 2010 was $739,700 from new borrowing of bank loans. Net cash provided by financing activities for the year ended December 31, 2009 was $1,905,930, comprised of capital contribution from shareholder of $2,345,760 and dividend distribution of $439,830 to shareholders.

~~The~~Comparison ~~scope~~ of ~~the~~results ~~reissuance~~for ~~disclosure~~twelve ~~requirements~~months isended ~~refined~~December to31, ~~include~~2010 ~~revised~~and financial statements only. The term revised financial statements is added to the glossary of Topic 855. Revised financial statements include financial statements revised either as a result of correction of an error or retrospective application of U.S. generally accepted accounting principles.2009:

All of the amendments in this Update are effective upon issuance of the final Update, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010.Revenues:

In April 2010, the FASB issued the FASB Accounting Standards Update No. 2010-17 “Revenue Recognition — Milestone Method (Topic 605) Milestone Method of Revenue Recognition”, which provides guidance on the criteria that should be met for determining whether the milestone method of revenue recognition is appropriate. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive.

	Years ended December 31,										% of
	2010		% of revenues			2009		% of revenues			change
Maintenance service		3,529,773		21.40	%		1,711,680		27.28	%		106.22	%
Supply and installation projects		12,964,979		78.60	%		4,561,681		72.72	%		184.21	%
		16,494,752		100.00	%		6,273,361		100.00	%		162.93	%

~~Determining~~The ~~whether~~majority aof ~~milestone~~our iscompany’s ~~substantive~~revenues iscome afrom ~~matter~~two ofsegments: ~~judgment~~supply ~~made~~and atinstallation projects and maintenance service. During the ~~inception~~year ended December 31, 2010, project income increased by 184% as five new project contracts were signed and substantially completed in FY2010. And because of growth in the ~~arrangement.~~surveillance ~~The~~and ~~following~~safety ~~criteria~~market ~~must~~in beChina ~~met~~and ~~for~~increased amarket ~~milestone~~demand tofor beour ~~considered~~products, ~~substantive.~~our ~~The~~total ~~consideration~~revenues ~~earned~~increased by ~~achieving~~$10,221,391, or 163% from $6,273,361 for the ~~milestone~~year ~~should:~~ended December 31, 2009 to $16,94,752 for the year ended December 31, 2010.

1.Cost of goods sold:

Be commensurate with either of the following:

	Years ended December 31,										% of
	2010		% of revenues			2009		% of revenues			change
Cost of goods sold		9,135,317		55.38	%		3,362,139		53.60	%		171.71	%

aCost of goods sold increased by 172%, or $5,773,178, from $3,362,139 for the year ended December 31, 2009 to $9,135,317 for the year ended December 31, 2010. This increase was primarily attributable to the increase of our revenues in FY2010, as discussed above.

~~The vendor's performance to achieve the milestone~~33

b.Table of Contents

~~The~~Gross ~~enhancement of the value of the item delivered as a result of a specific outcome resulting from the vendor's performance to achieve the milestone~~ margin:

	Years ended December 31,										% of
	2010		% of revenues			2009		% of revenues			change
Maintenance service		2,500,365		15.16	%		1,205,292		19.21	%		107.45	%
Supply and installation projects		4,859,070		29.46	%		1,705,930		27.19	%		184.83	%
		7,359,435		44.62	%		2,911,222		46.40	%		152.79	%

~~Relate~~During ~~solely~~the year ended December 31, 2010, we achieved gross margin of $7,359,435, increased by 153%, or $4,448,213 compared to ~~past~~$2,911,222 ~~performance~~for the year ended December 31, 2009, which was consistent with changes in revenues and cost of goods sold.

3.Sales, marketing and other operating expenses:

Be reasonable relative to all deliverables and payment terms in the arrangement.

	Years ended December 31,										% of
	2010		% of revenues			2009		% of revenues			change
Sales, marketing and other operating expenses		519,954		3.15	%		233,517		3.72	%		122.66	%

ASales, ~~milestone~~marketing ~~should~~and beother ~~considered~~operating ~~substantive~~expenses inincreased ~~its~~by ~~entirety.~~123%, Anor ~~individual~~$286,437 ~~milestone~~to ~~may~~$519,954 ~~not~~for bethe ~~bifurcated.~~year Anended ~~arrangement~~December ~~may~~31, ~~include~~2010 ~~more~~from ~~than one milestone~~$233,517 ~~and~~for ~~each~~the ~~milestone~~year ~~should~~ended beDecember ~~evaluated~~31, ~~separately to determine whether the milestone is substantive~~2009. ~~Accordingly,~~The anincrease ~~arrangement~~was ~~may~~primarily ~~contain~~attributable ~~both~~to ~~substantive~~outdoor ~~and~~advertisement ~~nonsubstantive~~of ~~milestones~~$295,273.

-General 30and -administrative expenses:

A vendor's decision to use the milestone method of revenue recognition for transactions within the scope of the amendments in this Update is a policy election. Other proportional revenue recognition methods also may be applied as long as the application of those other methods does not result in the recognition of consideration in its entirety in the period the milestone is achieved.

	Years ended December 31,											% of
		2010		% of revenues			2009		% of revenues			change
General and administrative expenses			993,653		6.02	%		291,857		4.65	%		240.46	%

AGeneral ~~vendor~~and ~~that~~administrative isexpenses ~~affected~~increased by 240%, or $701,796 to $993,653 for the ~~amendments~~year inended ~~this~~December ~~Update~~31, is2010 ~~required~~from $291,857 for the year ended December 31, 2009. The increase was mainly due to ~~provide~~increased ~~all~~professional service fee because of ~~the~~our ~~following~~company’s ~~disclosures:~~listing plan.

1.Acquisition related cost:

AOn ~~description~~December 31, 2010, in conjunction with the reverse acquisition transaction, the Company issued a consultant a warrant to purchase 350,003 shares (68,445 pre-split) of the ~~overall~~Company’s ~~arrangement~~common stock exercisable for three years at an exercise price of $1.00 per share ($5.11 pre-split). This warrant has a fair value of $169,617, and was recorded as an acquisition related cost.

2. Net income:

AAs ~~description~~a result of ~~each~~the ~~milestone~~above, ~~and~~during ~~related~~the ~~contingent~~year ~~consideration~~ended December 31, 2010, net income was $4,194,303 compared to a net income of $1,783,955 for the year ended December 31, 2009.

3.34

ATable ~~determination~~ of ~~whether each milestone is considered substantive~~ Contents

4.Critical accounting policies:

~~The~~We ~~factors~~believe ~~that~~ the ~~entity~~following ~~considered~~critical inaccounting ~~determining~~policies, ~~whether~~among others, affect management's more significant judgments and estimates used in the ~~milestone~~preparation orof ~~milestones~~the ~~are~~consolidated ~~substantive~~financial statements:

5.Fair value measurement:

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The ~~amount~~statement ofclarifies ~~consideration~~that ~~recognized~~the ~~during~~exchange price is the ~~period~~price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the ~~milestone~~asset or ~~milestones~~liability, that is, the principal or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset.

~~The~~This ~~amendments~~standard inestablishes ~~this Update are effective on~~ a ~~prospective~~fair ~~basis~~value ~~for~~hierarchy ~~milestones~~that ~~achieved~~prioritizes inthe ~~fiscal~~inputs ~~years,~~to ~~and~~valuation ~~interim~~techniques ~~periods~~used ~~within~~to ~~those~~measure ~~years,~~fair ~~beginning on or after June 15, 2010~~value. ~~Early~~The ~~adoption~~hierarchy isgives ~~permitted.~~the Ifhighest apriority ~~vendor~~to ~~elects~~unadjusted ~~early~~quoted ~~adoption~~prices ~~and~~in ~~the~~active ~~period~~markets offor ~~adoption~~identical isassets ~~not~~or ~~the~~liabilities ~~beginning~~(Level of1 ~~the~~measurements) ~~entity's~~and ~~fiscal year,~~ the ~~entity~~lowest ~~should~~priority ~~apply~~to ~~the~~unobservable ~~amendments~~inputs ~~retrospectively~~(Level ~~from~~3 ~~the~~measurements). ~~beginning~~The ofthree ~~the~~levels ~~year~~ of ~~adoption. Additionally, a vendor electing early adoption should disclose~~ the ~~following~~fair ~~information~~value athierarchy aare ~~minimum~~described ~~for all previously reported interim periods in the fiscal year of adoption~~below:

Level 1.: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

~~Revenue~~Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the assets or liabilities; and

2.Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity)

~~Income~~At ~~before~~December ~~income~~31, ~~taxes~~2010 and 2009, our company has no financial assets or liabilities subject to recurring fair value measurements.

3Our company's financial instruments include cash and cash equivalents, accounts receivable, other receivables, due from (to) related parties, accounts payable, advances from customers and bank loans. Management estimates that the carrying amounts of the financial instruments approximate their fair values due to their short-term nature.

~~Net~~Accounts ~~income~~receivable:

4Accounts receivable are stated at cost, net of an allowance for doubtful accounts (none at December 31, 2010 and 2009). Our company establishes an allowance for doubtful accounts based on management’s assessment of the collectibility of accounts receivables. Our company makes judgments about the credit worthiness of each customer based on ongoing credit evaluations, and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customer begins to deteriorate, resulting in their inability to make payments, a larger allowance may be required.

~~Earnings per share~~Inventories:

5Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.

~~The~~When ~~effect~~inventories ofare sold, their carrying amount is charged to expense in the ~~change~~year ~~for~~in which the ~~captions~~revenue ~~presented~~is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the year the impairment or loss occurs.

~~A vendor may elect, but is not required, to adopt the amendments in this Update retrospectively for all prior periods.~~35

~~Management~~Table ~~does~~of ~~not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.~~Contents

~~NOTE~~Property, 3plant –and ~~GOING CONCERN~~equipment:

~~The~~Property, ~~accompanying~~plant ~~financial~~and ~~statements~~equipment ~~have~~are ~~been~~carried ~~prepared~~at ~~assuming~~cost ~~that~~less ~~the~~accumulated ~~Company will continue as a going concern~~depreciation. As ~~reflected~~Depreciation inis ~~the~~provided ~~accompanying~~over ~~financial statements,~~ the ~~Company~~assets’ ~~had~~estimated anuseful ~~accumulated deficit of $63~~lives,~~376~~ atusing ~~June~~the ~~30,~~straight-line ~~2010,~~method. aEstimated ~~net~~useful ~~loss~~lives of ~~$11,819 and net cash used in operating activities of $12,952 for~~ the ~~fiscal~~plant ~~year~~and ~~ended~~equipment ~~June~~are ~~30,~~as ~~2010, respectively.~~follows:

While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.

Buildings		40 years
Office equipment		5 years
Motor vehicles		10 years
Furniture and fixtures		5 years

The ~~financial~~cost ~~statements~~and dorelated ~~not~~accumulated ~~include~~depreciation of assets sold or otherwise retired are eliminated from the accounts and any ~~adjustments~~gain ~~that~~or ~~might~~loss beis ~~necessary~~included ifin the ~~Company~~statement of operations. The cost of maintenance and repairs is ~~unable~~charged to ~~continue~~the statement of operations as aincurred, ~~going~~whereas ~~concern~~significant renewals and betterments are capitalized.

~~NOTE~~Land 4use ~~– COMPUTER EQUIPMENT~~rights:

~~Computer~~According ~~equipment,~~to ~~stated~~the atlaws ~~cost~~of China, ~~less~~the ~~accumulated~~government ~~depreciation~~owns atall ~~June~~the ~~30,~~land ~~2010~~in China. Companies or individuals are authorized to possess and ~~2009~~use ~~consisted~~the land only through land use rights granted by the Chinese government. Land use rights are being amortized using the straight-line method over the lease term of the ~~following:~~rights.

	Estimated Useful Life (Years)	June 30, 2010			June 30, 2009
Computer equipment	5	$	2,788		$	2,788
			2,788			2,788
Less accumulated depreciation			(966	)		(414	)
		$	1,822		$	2,374

Our company follows the provisions of ASC 350-30-50 “Goodwill and Other Intangible Assets”. Under this guidance, finite lived intangible assets are amortized over their estimated useful lives and are reviewed for impairment if indications of possible impairment exist. Our company determined that no impairment adjustments were necessary as of December 31, 2010 and 2009.

~~Depreciation~~Accounting ~~expense~~ for the ~~fiscal~~impairment ~~year~~of ~~ended~~long-lived ~~June 30, 2010 and 2009 was $ $552 and $414, respectively.~~assets:

The long-lived 31assets -held and used by our company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

~~NOTE~~There 5was –no ~~SOFTWARE~~impairment of long-lived assets as of December 31, 2010 and 2009.

~~Software,~~Revenue ~~stated at cost, less accumulated depreciation at June 30, 2010 and 2009 consisted of the following~~recognition:

	Estimated Useful Life (Years)	June 30, 2010			June 30, 2009
Software	3	$	1,845		$	1,845
			1,845			1,845
Less accumulated amortization			(1,071	)		(459	)
		$	774		$	1,386

Our company's revenue recognition policies are in compliance with Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 104 (codified in FASB ASC Topic 605). Revenue is recognized when services have been rendered or product delivery has occurred, a formal arrangement exists, the price is fixed or determinable, no other significant obligations of our company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

~~Amortization~~Our ~~expense~~company ~~for~~derives ~~the~~its ~~fiscal~~revenue ~~year~~from ~~ended~~six ~~June~~revenue ~~30,~~streams: ~~2010~~supply and ~~2009~~installation ~~was~~project ~~$612~~service, ~~and~~maintenance ~~$459~~service, ~~respectively~~system checking service, installation service, repair service and sales of equipment.

~~NOTE~~Our 6company –derives ~~RELATED~~the ~~PARTY~~majority ~~TRANSACTIONS~~of its revenue from the supply and installation of surveillance and security equipment and systems under fixed price contracts and one-year term maintenance services.

~~Advances~~Our company recognizes revenue from ~~stockholder~~supply and installation project service based on the percentage of completion method as work on the contract progresses, in accordance with Statement of Position (SOP) 81-1 (codified in FASB ASC Topic 605-35). Our company measures progress on a contract using the input method based on the ratio of costs incurred to total estimated costs. The revenue recognized is the percentage of total estimated income that incurred costs to date bear to estimated total costs.

~~Advances from stockholder at June 30, 2010 and 2009 consisted of the following:~~36

	June 30, 2010		June 30, 2009
Advances from stockholder and chief executive officer	$	6,500	$	-
	$	6,500	$	-

Table of Contents

~~The~~Revenue ~~advances~~ from ~~stockholder~~maintenance ~~bear~~service noincome ~~interest~~is ~~and~~recognized ~~are~~based ~~due~~ on ~~demand~~a straight-line basis over the one year term of the agreement.

~~Free~~Revenue ~~office~~from ~~spaces~~system checking service, installation and repair income are recognized when the installation and or work is completed and the customer acceptance is received.

~~The~~Revenue ~~Company~~from ~~had~~sales ~~been~~of ~~provided~~equipment ~~office~~is ~~spaces~~recognized bywhen ~~its~~the ~~majority~~equipment ~~stockholder~~is atdelivered, notitle ~~cost. The~~and ~~management~~risk ~~determined that such cost~~ is ~~nominal and did not recognize rent expense in its financial statements~~transferred.

~~NOTE~~Sales 7revenue –represents ~~STOCKHOLDERS’~~the ~~EQUITY~~invoiced value of goods and services, net of value-added tax (~~DEFICIT~~VAT). Only revenue derived from repair and sales of equipment are subject to 3% VAT. Revenue from project and installation contracts is subject to a 3% business tax and revenue from maintenance and system checking service is subject to a 5% business tax in which is reflected in the cost of goods sold.

~~Common~~Most ~~stock~~of the major contracts are bundled with post-installation service for the duration of one year. There is no general right of return indicated in the contracts. If any equipment delivered does not fit the required specifications, customers are entitled to an exchange for the correct item; or if the item is not functioning properly, our company is responsible for fixing it or replacing it with a new item, which is usually covered by the manufacturer’s warranty. Customers are not entitled to a refund. Because there is no general right of return and the cost of the post-installation service of a typical contract accounts for an insignificant part of the contract, our company’s earnings process is considered completed upon completion of the project.

~~Velvet~~Cost ~~Rope Special Events, Inc., a Subchapter S corporation incorporated on August 22, 2005 under the laws~~ of ~~the~~goods State of California, was converted into a C corporation, incorporated in the State of Delaware on June 17, 2008, in a transaction in which the newly-formed corporation issued an aggregate of 3,920,000 shares of common stock to the former stockholder of the S corporation for all of the issued and outstanding shares of the Company. All shares were held by and all shares of common stock were issued to the Company’s President and Chief Executive Officer. No cash consideration was paid. No value was given to the shares issued by the newly formed corporation. Therefore, the shares were recorded to reflect the $.0001 par value and additional paid-in capital was recorded as a negative amount ($392). The Company applied Topic 4B of the Staff Accounting Bulletins (“SAB”) issued by the United States Securities and Exchange Commission, by reclassifying all of the Company’s undistributed earnings and losses to additional paid-in capital as of June 17, 2008.sold:

OnCost ~~June~~of ~~18,~~goods ~~2008,~~sold ~~the~~consists ~~Company~~primarily ~~issued 80,000 shares~~ of ~~its~~material ~~common~~costs, ~~stock~~labor ~~for~~costs, ~~service~~and ~~rendered~~related ~~valued~~overhead atwhich ~~$20,000~~are ~~(the~~directly ~~estimated~~attributable ~~fair~~to ~~value on~~ the ~~date~~production of ~~grant)~~the service.

~~For the period from August 21, 2008 through September 11, 2008, the Company sold 140,000 shares of its common stock at $0.25 per share to thirty-five (35) individuals for $35,000.~~Warranties:

~~NOTE~~Our 8company –offers ~~INCOME~~a ~~TAXES~~warranty to its customers on its products for a one year term. Our company accrues for warranty costs based on estimates of the costs that may be incurred under its warranty obligations. The warranty expense and related accrual is included in our company’s sales, marketing and other operating expenses and other current liabilities respectively, and is recorded at the time revenue is recognized. Factors that affect our company’s warranty liability include the number of sold equipments, its estimates of anticipated rates of warranty claims, costs per claim and estimated support labor costs and the associated overhead. Our company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Our company’s warranty expense was immaterial for the years ended December 31, 2010 and 2009.

~~Deferred~~Income ~~tax assets~~taxes:

-Our 32company -uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax asset and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases and tax loss carry forwards. Deferred tax asset and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

AtOur ~~June~~company ~~30,~~files ~~2010, the Company had net operating loss (“NOL”) carry–forwards for Federal~~ income tax ~~purposes~~returns ~~of $63,376 that may be offset against future taxable income through 2030. No tax benefit has been reported~~ with ~~respect~~the torelevant ~~these~~government ~~net~~authorities ~~operating loss carry-forwards~~ in the ~~accompanying~~PRC. ~~financial~~Our ~~statements~~company ~~because~~is ~~the~~not ~~Company~~subject ~~believes~~to ~~that~~examination ~~the~~for ~~realization~~years ofbefore ~~the~~2007. ~~Company’s~~Our ~~net~~company ~~deferred~~does ~~tax assets of approximately $21,548 was~~ not ~~considered~~believe ~~more~~there ~~likely~~will ~~than~~be ~~not~~any ~~and~~material ~~accordingly,~~changes ~~the~~in ~~potential~~its unrecognized tax ~~benefits~~positions ofover the ~~net~~next ~~loss~~12 ~~carry-forwards are fully offset by a valuation allowance of $21,548~~months.

~~Deferred~~Contractual tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability. The valuation allowance increased approximately $4,019 and $6,235 for the year ended June 30, 2010 and 2009, respectively.Obligations

~~Components~~As ofa ~~deferred~~“smaller ~~tax~~reporting ~~assets~~company”, atwe ~~June~~are ~~30,~~not ~~2010~~required ~~and~~to ~~2009~~provide ~~are~~tabular asdisclosure ~~follows:~~obligations.

	June 30, 2010			June 30, 2009
Net deferred tax assets – Non-current:
Expected income tax benefit from NOL carry-forwards	$	21,548			17,529
Less valuation allowance		(21,548	)		(17,529	)
Deferred tax assets, net of valuation allowance	$	-		$	-

~~Income~~Table ~~taxes in the statements~~ of ~~operations~~Contents

AOff-Balance ~~reconciliation~~Sheet ~~of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:~~Arrangements

	For the Fiscal Year Ended June 30, 2010			For the Fiscal Year Ended June 30, 2009
Federal statutory income tax rate		34.0	%		34.0	%
Change in valuation allowance on net operating loss carry-forwards		(34.0	)%		(34.0	)
Effective income tax rate		0.0	%		0.0	%

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

~~NOTE~~Critical 9Accounting ~~– CONCENTRATIONS AND CREDIT RISK~~Policies

~~Customer~~The ~~concentrations~~discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

~~Three~~Basis ~~(3) customers accounted for 85.6%~~ of total net revenues for the fiscal year ended June 30, 2010 and four (4) customers accounted for 77.4% of net sales for the fiscal year ended June 30, 2009, respectively. A reduction in sales from or loss of such customers would have a material adverse effect on the Company’s results of operations and financial condition.consolidation:

~~NOTE~~The 10consolidated –financial ~~SUBSEQUENT~~statements ~~EVENTS~~include the accounts of ESPSI and its wholly owned subsidiaries CCDL, LNHX and SYHX (collectively, “our company”) and are prepared in accordance with accounting principles generally accepted in the United States of America. All material inter-company accounts and transactions have been eliminated in consolidation. Reclassification of amount due from related parties is being made to the comparative number to conform with current presentation.

~~The~~Concentration ~~Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management~~ of ~~the~~credit ~~Company determined that there were no reportable subsequent events to be disclosed.~~risk:

-Financial 33instruments -that potentially subject our company to credit risk consist primarily of accounts receivable and other receivables. Our company does not require collateral or other security to support these receivables. Our company conducts periodic reviews of its clients’ financial condition and customer payment practices to minimize collection risk on accounts receivable.

~~Item~~The 9operations of our company are located in the People’s Republic of China (“PRC”). ~~CHANGES~~Accordingly, INour ~~AND~~company’s ~~DISAGREEMENTS~~business, ~~WITH~~financial ~~ACCOUNTANTS~~condition ONand ~~ACCOUNTING~~results ~~AND~~of ~~FINANCIAL~~operations ~~DISCLOSURE~~may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy.

~~None.~~Statement of cash flows:

~~Item~~In 9Aaccordance with SFAS No. ~~CONTROLS~~95, ~~AND~~“Statement ~~PROCEDURES~~of Cash Flows,” codified in FASB ASC Topic 230, cash flows from our company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

~~Our~~Foreign ~~Management,~~currency with the participation of our Chief Executive Officer (our principal executive officer, principal financial officer and our principal accounting officer), has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer (our principal executive officer, principal financial officer and our principal accounting officer)have concluded that, as of the end of such period, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act istranslation: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms; and (ii) accumulated and communicated to Management, including our Chief Executive Officer (our principal executive officer, principal financial officer and our principal accounting officer), as appropriate to allow timely decisions regarding required disclosure.

~~There~~Our ~~have~~company’s ~~not~~reporting ~~been~~currency ~~any~~is ~~changes~~the inU.S. ~~our~~dollar. ~~internal~~The ~~control~~functional ~~over~~currency ~~financial~~of ~~reporting~~substantially ~~(as~~all ~~such~~of ~~term~~the isoperations ~~defined~~of inour ~~Rules~~company ~~13a-15~~is the Renminbi (f“RMB”), the national currency of the PRC. All assets and ~~15d-15(f)~~liabilities ~~under~~are translated at exchange rates at the ~~Exchange~~balance ~~Act)~~sheet ~~that~~dates ~~occurred~~and ~~during~~revenue and expenses are translated at the ~~period~~average ~~covered~~exchange byrates ~~this~~and ~~report~~equity ~~that~~is ~~have~~translated ~~materially~~at ~~affected,~~historical orexchange rates. Any translation adjustments are ~~reasonably~~not ~~likely~~included in determining net income but are included in foreign exchange adjustment to ~~materially~~other ~~affect~~comprehensive income, ~~our~~a ~~internal~~component ~~controls~~of ~~over~~equity. ~~financial~~The ~~reporting.~~exchange rates adopted are as follows:

Item 9B. OTHER INFORMATION

	2010		2009
Year end RMB exchange rate		6.6118		6.8166
Average yearly RMB exchange rate		6.7788		6.8208

~~None.~~ 38

-Table 34of -Contents

~~PART~~Fair ~~III~~value measurement:

~~Item~~Accounting 10Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ~~DIRECTORS~~The statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, ~~EXECUTIVE~~that ~~OFFICERS~~is, ~~AND~~the ~~CORPORATE~~principal ~~GOVERNANCE~~or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset.

~~The~~This ~~following~~standard ~~table~~establishes ~~sets~~a ~~forth~~fair value hierarchy that prioritizes the ~~names,~~inputs ~~ages~~to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and ~~positions~~the lowest priority to unobservable inputs (Level 3 measurements). The three levels of ~~our~~the ~~directors~~fair ~~and~~value ~~executive~~hierarchy ~~officers~~are described below:

Name		Age		Position
Maneeja Noory		29		President, Chief Executive Officer

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

~~Maneeja~~Level ~~Noory~~2: ~~has~~Quoted ~~been~~prices ~~Chief~~in ~~Executive~~markets ~~Officer~~that ~~and~~are anot ~~Director~~active, or inputs that are observable, either directly or indirectly, for substantially the full term of the ~~Company~~assets ~~since~~or ~~its~~liabilities; ~~inception.~~and

~~Prior~~Level to3: ~~the~~Prices ~~Company’s~~or ~~inception~~valuation intechniques ~~2005~~that ~~and~~require ~~from~~inputs ~~2004~~that toare ~~2005,~~both ~~Ms.~~significant ~~Noory was the Event Planner for Bon Appetite at the J. Paul Getty Museum planning events from intimate gatherings~~ to ~~corporate galas within~~ the ~~walls~~fair ofvalue ~~the~~measurement historical structure. Ms. Noory received a nomination for the Event Solutions 2008 prestigious Spotlight Awards as a “Rising Star”. A nomination was also awarded to Velvet Rope Special Events for “Event Planning Company of the Year”. Ms. Noory graduated from the University of California, Irvine in 2004 with a BA in English and ~~Comparative~~unobservable ~~Literature~~(supported ~~with~~by alittle ~~minor~~or inno ~~Film~~market ~~and Video Production.~~activity)

~~Committees~~At ofDecember ~~the~~31, ~~Board~~2010 ofand ~~Directors~~2009, our company has no financial assets or liabilities subject to recurring fair value measurements.

Our ~~board~~company's offinancial ~~directors~~instruments ~~has~~include ancash ~~audit committee~~ and acash ~~compensation~~equivalents, ~~committee.~~accounts ~~The~~receivable, ~~audit~~other ~~committee~~receivables, ~~reviews~~due ~~the~~from ~~scope~~(to) ~~and~~related ~~results~~parties, ofaccounts ~~the~~payable, ~~audit~~advances ~~and~~from ~~other~~customers ~~services provided by our independent accountants~~ and ~~our~~bank ~~internal controls~~loans. ~~The~~Management ~~compensation~~estimates ~~committee~~that ~~is responsible for~~ the ~~approval~~carrying amounts of ~~compensation arrangements for our officers and~~ the ~~review~~financial ofinstruments ~~our~~approximate ~~compensation~~their ~~plans~~fair ~~and~~values ~~policies.~~due ~~Each~~to ~~committee~~their isshort-term ~~comprised of Ms~~nature. ~~Noory.~~

~~Audit Committee Matters~~ Inventories:

~~Under~~Inventories ~~its~~are ~~charter,~~stated at the ~~audit~~lower ~~committee must pre-approve all engagements~~ of ~~our~~cost, ~~independent~~determined ~~auditor~~on ~~unless~~a anfirst-in, ~~exception to such pre~~first-~~approval~~out ~~exists~~basis, ~~under the Exchange Act~~ or ~~the~~net ~~rules~~realizable ~~of the Securities and Exchange Commission (SEC)~~value. ~~Each~~Net ~~year,~~realizable ~~the~~value ~~independent auditor's retention to audit our financial statements, including the associated fee,~~ is ~~approved by~~ the ~~committee~~estimated ~~before~~selling ~~the~~price ~~filing~~in of the ~~preceding~~ordinary ~~year's~~course ~~annual report on Form 10-K. At the beginning~~ of ~~the~~business ~~fiscal~~less ~~year,~~ the ~~audit~~estimated ~~committee~~cost ~~will evaluate other known potential engagements~~ of ~~the~~completion ~~independent~~and ~~auditor, including~~ the ~~scope~~estimated ofcosts ~~the~~necessary ~~work proposed~~ to bemake ~~performed and~~ the ~~proposed~~sale. When ~~fees,~~inventories ~~and~~are ~~approve or reject each service~~sold, ~~taking~~their ~~into~~carrying ~~account~~amount ~~whether~~is ~~the~~charged ~~services~~to ~~are~~expense ~~permissible~~in ~~under applicable law and~~ the ~~possible~~year ~~impact~~in ofwhich ~~each non-audit service on~~ the ~~independent~~revenue ~~auditor's~~is ~~independence from Management~~recognized. AtWrite-downs ~~each~~for ~~subsequent~~declines ~~committee~~in ~~meeting,~~net ~~the~~realizable ~~committee~~value ~~will~~or ~~receive updates on the services actually provided by the independent auditor, and Management may present additional services~~ for ~~approval.~~losses ~~Typically,~~of ~~these~~inventories ~~would~~are berecognized ~~services such~~ as ~~due diligence for~~ an ~~acquisition~~expense ~~that~~in ~~would~~the ~~not~~year ~~have been known at~~ the ~~beginning~~impairment ofor ~~the~~loss ~~year~~occurs.

~~Since the May 6~~Property, ~~2003~~plant effective date of the SEC rules stating that an auditor is not independent of an audit client if the services it provides to the client are not appropriately approved, each new engagement of Li & Company, PC was approved in advance by the audit committee, and ~~none of those engagements made use of the de minimus exception to pre-approval contained in the SEC's rules.~~ equipment:

~~Section~~Property, ~~16(a)~~plant ~~beneficial~~and ~~ownership~~equipment ~~reporting~~are ~~compliance~~carried at cost less accumulated depreciation. Depreciation is provided over the assets’ estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:

We are not yet subject to 16(a) as we are registered under section 15(d) of the Exchange Act rather than Section 13.

Buildings		40 years
Office equipment		5 years
Motor vehicles		10 years
Furniture and fixtures		5 years

~~Item~~The 11cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of operations. ~~EXECUTIVE~~The ~~COMPENSATION~~cost of maintenance and repairs is charged to the statement of operations as incurred, whereas significant renewals and betterments are capitalized.

~~Summary Compensation Table~~ 39

~~The~~Table ~~following~~of table sets forth certain information with respect to compensation for the year ended June 30, 2010 earned by or paid to our president and chief executive officer in 2010 (the "named executive officers").Contents

Name and Principal Position	Year	Salary ($)	Bonus ($)	Total ($)
Maneeja Noory,	2010	$0	$0	$0
President and Chief Executive Officer

Land use rights:

-According 35to the laws of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights are being amortized using the straight-line method over the lease term of the rights.

~~Indemnification~~Our ~~Arrangements~~company follows the provisions of ASC 350-30-50 “Goodwill and Other Intangible Assets”. Under this guidance, finite lived intangible assets are amortized over their estimated useful lives and are reviewed for impairment if indications of possible impairment exist. Our company determined that no impairment adjustments were necessary as of December 31, 2010 and 2009.

~~Our~~Revenue Certificate of Incorporation provides that we indemnify and hold harmless each of our directors and officers to the fullest extent authorized by the Delaware General Corporation Law, against all expense, liability and loss (including attorney's fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith.recognition:

Our ~~Certificate~~company's ofrevenue ~~Incorporation~~recognition ~~also~~policies ~~provides~~are ~~that~~in acompliance ~~director~~with ~~will~~Securities ~~not~~and beExchange ~~personally~~Commission ~~liable~~(SEC) toStaff usAccounting orBulletin to(SAB) ~~our~~104 ~~stockholders~~(codified ~~for~~in ~~monetary~~Financial ~~damages~~Accounting ~~for~~Standards ~~breach~~Board of“FASB” ~~the~~ASC ~~fiduciary~~Topic ~~duty~~605). ofRevenue ~~care~~is asrecognized when services have been rendered or product delivery has occurred, a ~~director.~~formal ~~This~~arrangement ~~provision~~exists, ~~does~~the ~~not~~price ~~eliminate~~is fixed or ~~limit~~determinable, ~~the~~no ~~liability~~other significant obligations of aour ~~director:~~company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

●Our ~~for~~company ~~breach~~derives ofits ~~his~~revenue orfrom ~~her~~six ~~duty~~revenue ofstreams: ~~loyalty~~supply toand usinstallation orproject toservice, ~~our~~maintenance ~~stockholders;~~service, system checking service, installation service, repair service and sales of equipment.

●Our ~~for~~company ~~acts~~derives orthe ~~omissions~~majority ~~not~~of inits ~~good~~revenue ~~faith~~from orthe ~~which~~supply ~~involve~~and ~~intentional~~installation ~~misconduct~~of orsurveillance aand ~~knowing~~security ~~violation~~equipment ofand ~~law;~~systems under fixed price contracts and one-year term maintenance services.

●Our ~~under~~company ~~Section~~recognizes ~~174~~revenue from supply and installation project service based on the percentage of completion method as work on the ~~Delaware~~contract ~~General~~progresses, ~~Corporation~~in ~~Law~~accordance with Statement of Position (~~relating~~SOP) 81-1 (codified in FASB ASC Topic 605-35). Our company measures progress on a contract using the input method based on the ratio of costs incurred to ~~unlawful~~total ~~payments~~estimated orcosts. ~~dividends~~The orrevenue ~~unlawful~~recognized ~~stock~~is ~~repurchases~~the orpercentage ~~redemptions);~~of ortotal estimated income that incurred costs to date bear to estimated total costs.

●Revenue ~~for~~from ~~any~~maintenance ~~improper~~service ~~benefit.~~income is recognized based on a straight-line basis over the one year term of the agreement.

~~Compensation~~Revenue offrom ~~Directors~~system checking service, installation and repair income are recognized when the installation and or work is completed and the customer acceptance is received.

WeRevenue dofrom ~~not~~sales ~~pay~~of ~~any~~equipment ~~directors'~~is ~~fees.~~recognized ~~Directors~~when ~~are reimbursed for~~ the ~~costs~~equipment ~~relating~~is todelivered, ~~attending~~title ~~board~~ and ~~committee~~risk ~~meetings.~~is transferred.

~~Item~~Sales 12revenue represents the invoiced value of goods and services, net of value-added tax (VAT). Only ~~SECURITY~~revenue ~~OWNERSHIP~~derived OFfrom ~~CERTAIN~~repair ~~BENEFICIAL~~and ~~OWNERS~~sales ~~AND~~of ~~MANAGEMENT~~equipment ~~AND~~are ~~RELATED~~subject ~~STOCKHOLDER~~to ~~MATTERS~~3% VAT. Revenue from project and installation contracts is subject to a 3% business tax and revenue from maintenance and system checking service is subject to a 5% business tax in which is reflected in the cost of goods sold.

~~The~~Most ~~following~~of ~~table,~~the ~~together~~major contracts are bundled with post-installation service for the ~~accompanying~~duration ~~footnotes,~~of ~~sets~~one ~~forth~~year. ~~information,~~There asis no general right of ~~June~~return ~~30,~~indicated ~~2010,~~in ~~regarding~~the ~~stock~~contracts. ~~ownership~~If ofany ~~all~~equipment ~~persons~~delivered ~~known~~does bynot usfit the required specifications, customers are entitled to ~~own~~an ~~beneficially~~exchange 5%for the correct item; or ~~more~~if ofthe ~~our~~item ~~outstanding~~is ~~common~~not ~~stock~~functioning properly, ~~all~~our ~~directors~~company is responsible for fixing it or replacing it with a new item, ~~named~~which ~~executive~~is ~~officers~~usually ~~and~~covered ~~all~~by ~~directors~~the manufacturer’s warranty. Customers are not entitled to a refund. Because there is no general right of return and ~~executive~~the ~~officers~~cost asof the post-installation service of a ~~group~~typical contract accounts for an insignificant part of the contract, our company’s earnings process is considered completed upon completion of the project.

We determined beneficial ownership in accordance with rules promulgated by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise indicated, we believe that the persons or entities named in the following table have sole voting and investment power with respect to all shares of common stock as beneficially owned by them, subject to community property laws where applicable. All information with respect to beneficial ownership has been furnished to us by the respective stockholder.Warranties:

Name of	Shares of Common Stock	Percentage
Beneficial Owner	Beneficially Owned	Of Ownership
Directors and Executive Officers
Maneeja Noory	3,920,000	94.7%

Our company offers a warranty to its customers on its products for a one year term. Our company accrues for warranty costs based on estimates of the costs that may be incurred under its warranty obligations. The warranty expense and related accrual is included in our company’s sales, marketing and other operating expenses and other current liabilities respectively, and is recorded at the time revenue is recognized. Factors that affect our company’s

~~Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE~~40

~~Except~~Table ~~as disclosed herein, there have been no transactions or proposed transactions in which the amount involved exceeds the lesser~~ of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years in which any of our directors, executive officers or beneficial holders of more than 5% of the outstanding shares of our common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. Contents

~~The~~warranty ~~promoters~~liability include the number of ~~our~~sold equipments, its estimates of anticipated rates of warranty claims, costs per claim and estimated support labor costs and the associated overhead. Our company ~~are~~periodically ~~our~~assesses ~~directors~~the adequacy of its recorded warranty liabilities and ~~officers~~adjusts the amounts as necessary. Our company’s warranty expense was immaterial for the years ended December 31, 2010 and 2009.

~~Item~~Income ~~14. PRINCIPAL ACCOUNTING FEES AND SERVICES~~taxes:

~~The~~Our ~~aggregate~~company ~~fees~~uses ~~billed~~the byasset ~~our~~and ~~principal~~liability method of accounting ~~firm~~for income taxes. Under the asset and liability method, deferred tax asset and liabilities are recognized for the ~~fiscal~~future ~~years~~tax ~~ended~~consequences ~~June~~attributable ~~30,~~to ~~2009~~temporary differences between the financial statements carrying amounts of existing assets and ~~2008~~liabilities and their respective tax bases and tax loss carry forwards. Deferred tax asset and liabilities are asmeasured ~~follows:~~using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

-Our 36company -files income tax returns with the relevant government authorities in the PRC. Our company is not subject to examination for years before 2007. Our company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.

	2010	2009
Audit fees	$13,500	$13,500
Audit related fees	--	--
Tax fees	--	--
All other fees	--	--
Total fees	$13,500	$13,500

Basic and diluted net income per share:

~~The~~Basic ~~Board~~earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of ~~Directors~~common ~~has~~shares ~~reviewed~~outstanding for the ~~audit~~period. ~~fees~~Diluted EPS is similarly computed, except that the ~~Company~~denominator ~~has~~is ~~paid~~increased to include the ~~independent~~number ~~registered~~of ~~public~~additional ~~accounting~~common ~~firm~~shares ~~for~~that ~~purposes~~would ofhave ~~considering~~been ~~whether~~outstanding ~~such~~if ~~fees~~the potential common shares had been issued and if the additional common shares were dilutive. Diluted net earnings per share are ~~compatible~~based ~~with~~on ~~maintaining~~the assumption that all dilutive convertible shares and stock options were converted or existed. Dilution is computed by applying the ~~auditor’s~~treasury ~~independence~~stock method. ~~The~~Under ~~policy~~this method, options and warrants are assumed to have been exercised at the beginning of the ~~Board~~period (or at the time of ~~Directors~~issuance, isif later), and as if funds obtained thereby were used to ~~pre-approve~~purchase ~~all~~common ~~audit~~stock ~~services~~at ~~performed~~the byaverage ~~its~~market ~~independent~~price ~~public~~during ~~accountants~~the ~~before~~period. At December 31, 2010, the ~~services~~Company has outstanding warrants with an anti-dilutive feature; therefore, the basic and diluted EPS are ~~performed~~the same.

-Comprehensive ~~37 -~~income:

~~PART~~Our IVcompany follows FASB ASC 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

~~Item~~Recent ~~15.~~Accounting ~~EXHIBITS AND FINANCIAL STATEMENT SCHEDULES~~Pronouncements

In January 2010, FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (aTopic 820): ~~The~~Improving ~~following~~Disclosures ~~documents~~about ~~are~~Fair ~~filed~~Value asMeasurements. ~~part~~This update provides amendments to ASC Topic 820 that will provide more robust disclosures about (1) the different classes of ~~this~~assets ~~report:~~and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3. This standard is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. This standard is not currently applicable to our company.

In January 2010, FASB issued ASU No. 2010-05, Compensation – Stock Compensation (1Topic 718): ~~Financial~~Escrowed ~~Statements~~Share -Arrangements ~~See~~and the ~~Index~~Presumption toof ~~the~~Compensation. ~~consolidated~~This ~~financial~~update ~~statements~~codifies onEmerging ~~page~~Issues FTask Force D-1110. This standard is not currently applicable to our company.

In January 2010, FASB issued ASU N0. 2010-01, Equity (bTopic 505): ~~Exhibits~~Accounting for Distributions to Shareholders with Components of Stock and Cash. The update clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected prospectively in

No. 3.1		Certificate of Incorporation of the Company, as amended. (Incorporated by
		reference to Exhibit 3.1 to Registration Statement on Form S-1 number
		333-154422 filed by the Company [the “Registration Statement”])
No. 3.2		By-Laws of the Company. (Incorporated by reference to Exhibit 3.2 to the
		Registration Statement on Form S-1 number 333-154422 filed by the
		Company [the “Registration Statement”])
No. 4.1		Specimen Stock Certificate. (Incorporated by reference to exhibit 4.1 to the
		Registration Statement on Form S-1 number 333-154422 filed by the
		Company [the “Registration Statement”])
No. 31.1		Certification Pursuant
		to Section 302 of the Sarbanes-Oxley Act of 2002.
No. 32.1		Certification Pursuant
		to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the
		Sarbanes-Oxley Act of 2002.

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~~SIGNATURES~~earnings per share and is not considered a stock dividend for purposes of ASC Topic 505 and Topic 260, Earnings Per Share. This standard is effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. This standard is not currently applicable to our company.

~~Pursuant~~Recently toissued ~~the~~accounting ~~requirements~~pronouncements ofnot ~~Section~~yet ~~13 or 15(d), the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on September 29, 2010 on its behalf by the undersigned, thereunto duly authorized.~~adopted:

~~Velvet~~In ~~Rope~~October ~~Special~~2009, ~~Events~~the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2009-13 on ASC 605, ~~Inc~~Revenue Recognition – Multiple Deliverable Revenue Arrangement – a consensus of the FASB Emerging Issues Task Force (ASU 2009-13). ASU 2009-13 amended guidance related to multiple-element arrangements which requires an entity to allocate arrangement consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices. The consensus eliminates the use of the residual method of allocation and requires the relative-selling-price method in all circumstances. All entities must adopt the guidance no later than the beginning of their first fiscal year beginning on or after June 15, 2010. Entities may elect to adopt the guidance through either prospective application for revenue arrangements entered into, or materially modified, after the effective date or through retrospective application to all revenue arrangements for all periods presented. Our company is currently evaluating the impact, if any, of ASU 2009-13 on its financial position and results of operations.

~~By:~~In ~~/s/~~October ~~Maneeja~~2009, ~~Noory~~the ~~Maneeja~~FASB ~~Noory~~issued ~~President~~ASU ~~and~~No. ~~Chief~~2009-14 ~~Executive~~on ~~Officer~~ASC 985, Certain Revenue Arrangements That Include Software Elements (~~Principal~~ASU ~~Executive~~2009-14). ~~Officer~~ASU 2009-14 amended guidance that is expected to significantly affect how entities account for revenue arrangements that contain both hardware and ~~Principal~~software elements. As a result, many tangible products that rely on software will be accounted for under the revised multiple-element arrangements revenue recognition guidance, rather than the software revenue recognition guidance. The revised guidance must be adopted by all entities no later than fiscal years beginning on or after June 15, 2010. An entity must select the same transition method and same period for the adoption of both this guidance and the revisions to the multiple-element arrangements guidance noted above. Our company is currently evaluating the impact, if any, of ASU 2009-14 on its financial ~~Officer)~~position and results of operations.

~~Pursuant~~In toApril 2010 the ~~requirements~~FASB issued Accounting Standards Update (ASU) No. 2010-13, Compensation – Stock Compensation (Topic 718): Effect of Denominating the ~~Securities~~Exercise ~~Exchange~~Price ~~Act~~of a Share-Based Payment Award in the Currency of ~~1934~~the Market in Which the Underlying Equity Security Trades. This Update provides amendments to Accounting Standards Codification (ASC) Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this ~~Report~~Update ~~has~~are ~~been~~effective ~~signed~~for ~~below~~fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the ~~following~~opening ~~persons~~balance onof ~~behalf~~retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the ~~registrant~~beginning ~~and~~of the fiscal year in which the ~~capacities~~amendments ~~indicated~~are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted. This standard is not currently applicable to our company.

/s/ Maneeja Noory		September 29, 2010
Maneeja Noory	President, Chief Executive Officer
	and Chairman of the Board
	(Principal Executive Officer and
	Principal financial Officer)

In December 2010, FASB issued ASU No. 2010-28, Intangibles – Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The amendments in this Update affect all entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing Step 1 of the goodwill impairment test is zero or negative. The amendments in this Update modify Step 1 so that for those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

~~- 39 -~~42

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For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted.

Upon adoption of the amendments, any resulting goodwill impairment should be recorded as a cumulative-effect adjustment to beginning retained earnings in the period of an adoption. Any goodwill impairments occurring after the initial adoption of the amendments should be included in earnings. This standard is not currently applicable to our company.

In December 2010, FASB issued ASU No. 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations. The amendments in this Update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments in this Update are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Our company intends to adopt the disclosure requirements for any business combinations in 2011.

As of December 31, 2010, there are no other recently issued accounting standards not yet adopted which would have a material effect on our company’s financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 8. Financial Statements and Supplementary Data

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Eastern Security & Protection Services, Inc.

We have audited the accompanying consolidated balance sheets of Eastern Security & Protection Services, Inc. and Subsidiaries (“the Company”) as of December 31, 2010 and 2009, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the years then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

/s/ Morison Cogen LLP

Bala Cynwyd, Pennsylvania

March 31, 2011

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EASTERN SECURITY & PROTECTION SERVICES, INC.

(formerly VELVET ROPE SPECIAL EVENTS, INC.)

CONSOLIDATED BALANCE SHEETS

(Amounts in US dollar)

	As of December 31,
	2010		2009
Assets
Current assets
Cash and cash equivalents		2,308,713		356,176
Accounts receivable		4,341,365		868,186
Inventories		313,389		47,465
Retention receivable		147,414		298,574
Other receivables		1,214,525		2,393,548
Prepayment and deposits		317,952		173,260
Advance to suppliers		238,337		90,151
Due from related parties		-		84,923
Total current assets		8,881,695		4,312,283
Property, plant and equipment, net		1,531,025		1,512,445
Land use rights, net		2,161,725		2,145,488
Prepayment and deposits, net of current portion		2,427,200		-
Total assets		15,001,645		7,970,216

Liabilities and stockholders’ equity
Current liabilities
Accounts payable		89,601		468,485
Dividend payable		2,427,200		2,347,200
Accrued expenses		124,463		15,166
Deferred maintenance revenue		3,993,240		2,046,824
Taxes payable		651,376		105,570
Due to related parties		1,277		407,040
Bank loans		758,500		-
Other current liabilities		9,810		192,957
Total liabilities		8,055,467		5,583,242

Stockholders’ equity
Preferred stock at $0.0001 par value: 5,000,000 shares authorized, -0- shares issued and outstanding in 2010 and 2009	-		-
COMMON STOCK, par value at $0.0001 per share, 7,123,322 and 5,998,300 shares authorized, issued and outstanding as of December 31, 2010 and 2009		713		600
Additional paid in capital		170,194		690
Statutory reserve		462,933		241,023
Retained earnings unappropriated		6,104,543		2,132,150
Accumulated other comprehensive income		207,795		12,511
Total stockholders’ equity		6,946,178		2,386,974
Total liabilities and stockholders’ equity		15,001,645		7,970,216

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

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EASTERN SECURITY & PROTECTION SERVICES, INC.

(formerly VELVET ROPE SPECIAL EVENTS, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in US dollar)

	Years ended December 31,
	2010			2009

Revenues		16,494,752			6,273,361
Cost of goods sold		(9,135,317	)		(3,362,139	)
Gross margin		7,359,435			2,911,222
Sales, marketing and other operating expenses		(519,954	)		(233,517	)
General and administrative expenses		(993,653	)		(291,857	)
Income from operations		5,845,828			2,385,848

Acquisition related cost		(169,617	)		-
Interest expense and bank charges		(36,960	)		(86	)
Interest income		3,110			3,902
Other income (expense), net		73,537			(71	)

Income from operations before income tax		5,715,898			2,389,593

Income tax expense		(1,521,595	)		(605,638	)

Net income		4,194,303			1,783,955

Basic and diluted weighted average shares outstanding	7,123,322		7,123,322

Basic and diluted net income per share		0.5888		0.2504

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

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EASTERN SECURITY & PROTECTION SERVICES, INC.

(formerly VELVET ROPE SPECIAL EVENTS, INC.)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in US dollar)

	Years ended December 31,
	2010		2009

Net income		4,194,303		1,783,955

Other comprehensive income
Foreign currency translation adjustment		195,284		(27,702	)
Comprehensive income		4,389,587		1,756,253

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

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EASTERN SECURITY & PROTECTION SERVICES, INC.

(formerly VELVET ROPE SPECIAL EVENTS, INC.)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Amounts in US dollar)

	Common stock				Additional paid			Statutory		Retained earnings			Accumulated other comprehensive
	Number of shares		Amount		in capital			reserve		unappropriated			income			Total
Balance, January 1, 2009		5,998,300		600		410,700			59,344		529,874			40,213			1,040,731
Capital injection		-		-		2,934,000			-		-			-			2,934,000
Dividend distribution		-		-		(3,344,010	)		-		-			-			(3,344,010	)
Appropriation to statutory reserve		-		-		-			181,679		(181,679	)		-			-
Net income		-		-		-			-		1,783,955			-			1,783,955
Foreign currency translation adjustment		-		-		-			-		-			(27,702	)		(27,702	)
Balance, December 31, 2009		5,998,300		600		690			241,023		2,132,150			12,511			2,386,974
Recapitalization upon acquisition of CCDL		1,125,022		113		(113	)		-		-			-			-
Issuance of warrants for consulting expenses		-		-		169,617			-		-			-			169,617
Appropriation to statutory reserve		-		-		-			221,910		(221,910	)		-			-
Net income		-		-		-			-		4,194,303			-			4,194,303
Foreign currency translation adjustment		-		-		-			-		-			195,284			195,284
Balance, December 31, 2010		7,123,322		713		170,194			462,933		6,104,543			207,795			6,946,178

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

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EASTERN SECURITY & PROTECTION SERVICES, INC.

(formerly VELVET ROPE SPECIAL EVENTS, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in US dollar)

	Years ended December 31,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		4,194,303			1,783,955
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property, plant and equipment		51,691			48,018
Amortization of prepaid land lease		55,478			54,979
Loss on disposal of property, plant and equipment		231			-
Warrants issued for consulting services		169,617			-
(Increase) decrease in assets
Accounts receivable		(3,358,237	)		330,697
Inventories		(257,756	)		658,808
Retention receivable		157,337			(291,831	)
Other receivables		1,229,359			(2,041,674	)
Prepayment and deposits		(136,741	)		(166,962	)
Advance to suppliers		(141,517	)		(65,172	)
Due from related parties		85,641			(5,201	)
Increase (decrease) in liabilities
Accounts payable		(385,064	)		(933,360	)
Accruals and other payables		(276,720	)		135,256
Deferred maintenance revenue		1,830,140			1,544,529
Taxes payable		529,877			(133,521	)
Due to related parties		(209,516	)		94,411
Net cash provided by operating activities		3,538,123			1,010,932

CASH FLOWS FROM INVESTING ACTIVITIES
Prepayment and purchase of property, plant and equipment		(2,386,810	)		(2,953,622	)
Net cash used in investing activities		(2,386,810	)		(2,953,622	)

CASH FLOWS FROM FINANCING ACTIVITIES
Bank loans		739,700			-
Capital contribution		-			2,345,760
Dividend paid		-			(439,830	)
Net cash provided by financing activities		739,700			1,905,930

EFFECTS OF EXCHANGE RATE CHANGE ON CASH		61,524			(23	)

NET INCREASE IN CASH & CASH EQUIVALENT		1,952,537			(36,783	)

CASH & CASH EQUIVALENT - BEGINNING OF YEAR		356,176			392,959

CASH & CASH EQUIVALENT - END OF YEAR		2,308,713			356,176

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid	1,031,361	690,792
Interest paid	10,921	-

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SUPPLEMENTAL DISCLOSURE OF NON CASH FINANCING AND INVESTING ACTIVITIES

Due from related party for capital contribution	-	586,800

Dividend payable	-	2,347,200

Due from related party offset against dividend payable	606,800	586,800

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

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EASTERN SECURITY & PROTECTION SERVICES, INC.

(formerly VELVET ROPE SPECIAL EVENTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN US DOLLAR UNLESS OTHERWISE SPECIFIED)

1. Description of business and summary of significant accounting policies:

Organization and nature of business:

Eastern Security & Protection Services, Inc. (“ESPSI”), formerly known as Velvet Rope Special Events, Inc., was originally organized under the laws of the State of California on August 22, 2005, and became a Delaware Corporation on June 17, 2008. From ESPSI’s inception, it was engaged in various business endeavors including full-service corporate and social event planning for organizations and individuals. Recently, ESPSI redirects its business focus towards identifying and pursuing options regarding the acquisition of operating businesses.

On December 31, 2010, ESPSI completed a reverse acquisition transaction with China Currency Development Limited (“CCDL”), Maneeja Noory (ESPSI’s former controlling shareholder and former officer and director), and ACE Strategy Holdings Limited (“ACE”), the sole shareholder of CCDL, pursuant to which ESPSI acquired 100% of the issued and outstanding capital stock of CCDL in exchange for 5,998,300 (1,173,000 pre-split) shares of ESPSI’s common stock, par value $0.0001.

Under accounting principles generally accepted in the United States of America (“GAAP”), the above share exchange transaction is considered to be a capital transaction in substance, rather than a business combination. That is, the share exchange is equivalent to the issuance of stock by CCDL for the net monetary assets of ESPSI, accompanied by a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the share exchange will be identical to that resulting from a reverse acquisition, except no goodwill will be recorded. Under reverse takeover accounting, the post reverse acquisition comparative historical financial statements of the legal acquirer, ESPSI, are those of the legal acquiree, CCDL, which is considered to be the accounting acquirer. Share and per share amounts stated have been retroactively adjusted to reflect the merger.

Shenyang Huaxun Jiuding Venture Technology Co., Ltd (“SYHX”) was incorporated on March 26, 2006 under the laws of the People’s Republic of China (“PRC”) with an initial contribution of RMB 3 million (approximately US$ 411,300). It provides designing, installation and testing services of security and safety systems, which integrates development, consulting, distributing, marketing, and maintenance of digital video surveillance and network communication.

Liaoning Huaxun Security Service Operation Co., Ltd (“LNHX”) was incorporated on July 13, 2009 under the laws of the PRC with an initial contribution of RMB 20 million (approximately US$ 2,934,000). It was established for general management of the operating activities of SYHX.

China Currency Development Limited (“CCDL”) was incorporated on March 12, 2009 under the laws of Hong Kong as the holding company of LNHX.

On July 13 2009, the 10 individual shareholders of SYHX entered into a transfer agreement with LYHX to transfer its ownership in SYHX to LNHX, the consideration for the acquisition was RMB 3 million ($411,300) and paid in cash which was recorded as dividend distribution to the original shareholders of SYHX. Since SYHX and LNHX are under common control, the transaction was deemed to be a merger of commonly controlled entities. The transaction was accounted for in a manner similar to the pooling of interest method, whereby the historical carrying amounts of the assets and liabilities of SYHX and LNHX have been included in these consolidated financial statements for all periods presented.

On July 18, 2009, the 8 individual shareholders of LNHX entered into a transfer agreement with CCDL to transfer its ownership in LNHX to CCDL, the consideration for the acquisition was RMB 20 million ($2,934,000) which was recorded as dividend distribution to the original shareholders of LNHX, but no cash has been paid so far. LNHX's business license has been updated to reflect CCDL as shareholder for LNHX. Since CCDL and LNHX are under

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common control, the transaction was deemed to be a merger of commonly controlled entities. The transaction was accounted for in a manner similar to the pooling of interest method, whereby the historical carrying amounts of the assets and liabilities of CCDL and LNHX have been included in these consolidated financial statements for all periods presented.

On March 21, 2011, the registrant changed its name to Eastern Security & Protection Services, Inc.

Basis of consolidation:

The consolidated financial statements include the accounts of ESPSI and its wholly owned subsidiaries CCDL, LNHX and SYHX (collectively, “the Company”) and are prepared in accordance with accounting principles generally accepted in the United States of America. All material inter-company accounts and transactions have been eliminated in consolidation. Reclassification of amount due from related parties is being made to the comparative number to conform with current presentation.

Use of estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

Advertising and promotion costs:

Costs incurred in direct-response advertising are capitalized and amortized on a straight-line basis over the duration of the advertising campaign. As of December 31, 2010 and 2009, there was no capitalized direct-response advertising. All other advertising costs are expensed as incurred. Advertising costs amounted to $295,273 and $1,173 for the years ended December 31, 2010 and 2009.

Research and development costs:

Research and developments costs amounted to $24,349 and $- for the years ended December 31, 2010 and 2009, and are included in general and administrative expenses.

Concentration of credit risk:

Financial instruments that potentially subject the Company to credit risk consist primarily of accounts receivable and other receivables. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its clients’ financial condition and customer payment practices to minimize collection risk on accounts receivable.

The operations of the Company are located in the People’s Republic of China (“PRC”). Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy.

Statement of cash flows:

In accordance with SFAS No. 95, “Statement of Cash Flows,” codified in FASB ASC Topic 230, cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

Foreign currency translation:

The Company’s reporting currency is the U.S. dollar. The functional currency of substantially all of the operations of the Company is the Renminbi (“RMB”), the national currency of the PRC. All assets and liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated

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at the average exchange rates and equity is translated at historical exchange rates. Any translation adjustments are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of equity. The exchange rates adopted are as follows:

	2010		2009
Year end RMB exchange rate		6.6118		6.8166
Average yearly RMB exchange rate		6.7788		6.8208

Fair value measurement:

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset.

This standard establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the assets or liabilities; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity)

At December 31, 2010 and 2009, the Company has no financial assets or liabilities subject to recurring fair value measurements.

The Company's financial instruments include cash and cash equivalents, accounts receivable, other receivables, due from (to) related parties, accounts payable, advances from customers and bank loans. Management estimates that the carrying amounts of the financial instruments approximate their fair values due to their short-term nature.

Cash and cash equivalents:

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Accounts receivable:

Accounts receivable are stated at cost, net of an allowance for doubtful accounts (none at December 31, 2010 and 2009). The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectibility of accounts receivables. The Company makes judgments about the credit worthiness of each customer based on ongoing credit evaluations, and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customer begins to deteriorate, resulting in their inability to make payments, a larger allowance may be required.

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Inventories:

Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.

When inventories are sold, their carrying amount is charged to expense in the year in which the revenue is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the year the impairment or loss occurs.

Property, plant and equipment:

Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the assets’ estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:

Buildings	40 years
Office equipment	5 years
Motor vehicles	10 years
Furniture and fixtures	5 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of operations. The cost of maintenance and repairs is charged to the statement of operations as incurred, whereas significant renewals and betterments are capitalized.

Land use rights:

According to the laws of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights are being amortized using the straight-line method over the lease term of the rights.

The Company follows the provisions of ASC 350-30-50 “Goodwill and Other Intangible Assets”. Under this guidance, finite lived intangible assets are amortized over their estimated useful lives and are reviewed for impairment if indications of possible impairment exist. The Company determined that no impairment adjustments were necessary as of December 31, 2010 and 2009.

Accounting for the impairment of long-lived assets:

The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

There was no impairment of long-lived assets as of December 31, 2010 and 2009.

Revenue recognition:

The Company's revenue recognition policies are in compliance with Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 104 (codified in Financial Accounting Standards Board “FASB” ASC Topic 605). Revenue is recognized when services have been rendered or product delivery has occurred, a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

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The Company derives its revenue from six revenue streams: supply and installation project service, maintenance service, system checking service, installation service, repair service and sales of equipment.

The Company derives the majority of its revenue from the supply and installation of surveillance and security equipment and systems under fixed price contracts and one-year term maintenance services.

The Company recognizes revenue from supply and installation project service based on the percentage of completion method as work on the contract progresses, in accordance with Statement of Position (SOP) 81-1 (codified in FASB ASC Topic 605-35). The Company measures progress on a contract using the input method based on the ratio of costs incurred to total estimated costs. The revenue recognized is the percentage of total estimated income that incurred costs to date bear to estimated total costs.

Revenue from maintenance service income is recognized based on a straight-line basis over the one year term of the agreement.

Revenue from system checking service, installation and repair income are recognized when the installation and or work is completed and the customer acceptance is received.

Revenue from sales of equipment is recognized when the equipment is delivered, title and risk is transferred.

Sales revenue represents the invoiced value of goods and services, net of value-added tax (VAT). Only revenue derived from repair and sales of equipment are subject to 3% VAT. Revenue from project and installation contracts is subject to a 3% business tax and revenue from maintenance and system checking service is subject to a 5% business tax in which is reflected in the cost of goods sold.

Most of the major contracts are bundled with post-installation service for the duration of one year. There is no general right of return indicated in the contracts. If any equipment delivered does not fit the required specifications, customers are entitled to an exchange for the correct item; or if the item is not functioning properly, the Company is responsible for fixing it or replacing it with a new item, which is usually covered by the manufacturer’s warranty. Customers are not entitled to a refund. Because there is no general right of return and the cost of the post-installation service of a typical contract accounts for an insignificant part of the contract, the Company’s earnings process is considered completed upon completion of the project.

Cost of goods sold:

Cost of goods sold consists primarily of material costs, labor costs, and related overhead which are directly attributable to the production of the service.

Warranties:

The Company offers a warranty to its customers on its products for a one year term. The Company accrues for warranty costs based on estimates of the costs that may be incurred under its warranty obligations. The warranty expense and related accrual is included in the Company’s sales, marketing and other operating expenses and other current liabilities respectively, and is recorded at the time revenue is recognized. Factors that affect the Company’s warranty liability include the number of sold equipments, its estimates of anticipated rates of warranty claims, costs per claim and estimated support labor costs and the associated overhead. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. The Company’s warranty expense was immaterial for the years ended December 31, 2010 and 2009.

Retirement benefits:

Pursuant to the relevant laws and regulations in the PRC, the Company participates in a defined contribution retirement plan for its employees arranged by a governmental organization. The Company makes contributions to the retirement scheme at the applicable rate based on the employees’ salaries. The required contributions

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under the retirement plans are charged to the consolidated statements of operations on an accrual basis. The Company’s contributions totaled $4,962 and $1, 374 for the years ended December 31, 2010 and 2009, respectively.

Income taxes:

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax asset and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases and tax loss carry forwards. Deferred tax asset and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Company files income tax returns with the relevant government authorities in the PRC. The Company is not subject to examination for years before 2007. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.

Basic and diluted net income per share:

Basic earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is similarly computed, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted net earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or existed. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to have been exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. At December 31, 2010, the Company has outstanding warrants with an anti-dilutive feature; therefore, the basic and diluted EPS are the same.

Comprehensive income:

The Company follows FASB ASC 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

Recently adopted accounting pronouncements:

In January 2010, FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This update provides amendments to ASC Topic 820 that will provide more robust disclosures about (1) the different classes of assets and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3. This standard is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. This standard is not currently applicable to the Company.

In January 2010, FASB issued ASU No. 2010-05, Compensation – Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation. This update codifies Emerging Issues Task Force D-110. This standard is not currently applicable to the Company.

In January 2010, FASB issued ASU N0. 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash. The update clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected prospectively in earnings per share and is not considered a stock dividend for purposes of ASC Topic 505 and Topic 260, Earnings Per Share. This standard is effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. This standard is not currently applicable to the Company.

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Recently issued accounting pronouncements not yet adopted:

In October 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2009-13 on ASC 605, Revenue Recognition – Multiple Deliverable Revenue Arrangement – a consensus of the FASB Emerging Issues Task Force (ASU 2009-13). ASU 2009-13 amended guidance related to multiple-element arrangements which requires an entity to allocate arrangement consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices. The consensus eliminates the use of the residual method of allocation and requires the relative-selling-price method in all circumstances. All entities must adopt the guidance no later than the beginning of their first fiscal year beginning on or after June 15, 2010. Entities may elect to adopt the guidance through either prospective application for revenue arrangements entered into, or materially modified, after the effective date or through retrospective application to all revenue arrangements for all periods presented. The Company is currently evaluating the impact, if any, of ASU 2009-13 on its financial position and results of operations.

In October 2009, the FASB issued ASU No. 2009-14 on ASC 985, Certain Revenue Arrangements That Include Software Elements (ASU 2009-14). ASU 2009-14 amended guidance that is expected to significantly affect how entities account for revenue arrangements that contain both hardware and software elements. As a result, many tangible products that rely on software will be accounted for under the revised multiple-element arrangements revenue recognition guidance, rather than the software revenue recognition guidance. The revised guidance must be adopted by all entities no later than fiscal years beginning on or after June 15, 2010. An entity must select the same transition method and same period for the adoption of both this guidance and the revisions to the multiple-element arrangements guidance noted above. The Company is currently evaluating the impact, if any, of ASU 2009-14 on its financial position and results of operations.

In April 2010 the FASB issued Accounting Standards Update (ASU) No. 2010-13, Compensation – Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. This Update provides amendments to Accounting Standards Codification (ASC) Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted. This standard is not currently applicable to the Company.

For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted.

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In December 2010, FASB issued ASU No. 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations. The amendments in this Update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments in this Update are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company intends to adopt the disclosure requirements for any business combinations in 2011.

As of December 31, 2010, there are no other recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

2. Inventories:

Inventories consist of:

	As of December 31,
	2010		2009
Raw materials		5,101		8,845
Finished goods		213,336		32,532
Consumable stock		-		6,088
Project cost-deferred		94,952		-
		313,389		47,465

The project cost-deferred represents inventories sent to the customer site but not installed as of December 31, 2010.

3. Other receivables:

Other receivables consist of the following:

	As of December 31,
	2010		2009
Due from Shenyang Tianhong Telecommunication Network Co., Ltd		-		1,907,403
Due from employees		267		4,845
Due from former shareholders		531		-
Other		1,213,727		481,300
		1,214,525		2,393,548

Amount due from Shenyang Tianhong Telecommunication Network Co.,Ltd is unsecured, interest free and with no fixed terms of payment. The borrowing was settled on December 30, 2010.

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During the year ended December 31, 2010, the Company advanced $1,213,600 to three potential customers in order to develop a working relationship.

4. Retention receivable:

At December 31, 2010, the Company had retention receivable for product quality assurance of $147,414. At December 31, 2009, the Company had retention receivable of $298,574. The retention rate varies from 5% to 10% of the contract price, with variable terms from six months to one year.

5. Prepayment and deposits:

Prepayments and deposits consist of the following:

	As of December 31,
	2010		2009
Consultancy fees		238,337		-
Legal fees		-		94,133
Business taxes		79,615		73,517
Others		-		5,610
Land use rights and buildings (Note 16)		2,427,200		-
		2,745,152		173,260
Less: non-current portion		2,427,200		-
Current portion		317,952		173,260

6. Property, plant and equipment:

	As of December 31,
	2010			2009
At cost:
Buildings		1,547,341			1,496,340
Leasehold improvement		2,808			2,715
Office equipment		38,400			36,139
Motor vehicles		72,361			58,680
Furniture and fixtures		3,221			400
Total		1,664,131			1,594,274

Less: accumulated depreciation		(133,106	)		(81,829	)
Net book value		1,531,025			1,512,445

During the year ended December 31, 2010 and 2009, depreciation expense was $51,691 and $48,018, respectively.

In January 2008, the Company purchased the building from Mr. Rui Tan, who is a stockholder, Chairman, and the Chief Executive Officer of the Company for a consideration of US$723,840, with the last payment made in April 2010. In January 2009, the Company purchased a building from Mr. Tieyu Wang, who is a stockholder of the Company for a consideration of US$732,500, with the last payment made in June 2010. The above buildings were put into use upon purchase and recognized as property, plant and equipment. The building purchased in January 2008 and January 2009 are used for general office and training facility, respectively.

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The Company submitted the documents of title transfer to local authority in October 2010. The local authority is still in the process of reviewing documents. The Company expects to have the title transfer completed during the second quarter of 2011.

7. Land use rights:

Land use rights as of December 31, 2010 and 2009 were as follows:

	As of December 31,
	2010			2009
Cost-land use rights		2,275,500			2,200,500
Less: accumulated amortization		(113,775	)		(55,012	)
Land use rights, net		2,161,725			2,145,488

The amortization expense for the years ended December 31, 2010 and 2009 were $55,478 and $54,979, respectively.

Estimated amortization expense of land use rights for the next five years and thereafter is as follows:

	Amount
2011		56,888
2012		56,888
2013		56,888
2014		56,888
2015		56,888
Thereafter		1,877,285
Total		2,161,725

In January 2009, the Company entered into an agreement with Shenyang Jicheng Livestock Center which is substantially owned by Mr. Tieyu Wang, a stockholder of the Company, to lease land from it for a period of 40 years for a consideration of $2,200,500. The land was put into use upon the signing of the agreement.

The Company paid the last installment in June 2010 and submitted the documents of title transfer to local authority in October 2010. The local authority is still in the process of reviewing documents, the Company expects to have the title transfer completed during the second quarter of 2011.

8. Related party transactions:

Amount due from related parties consists of the following:

	As of December 31,
	2010		2009
Due from shareholders		-		84,923

Balances due from these related parties are unsecured, non-interest bearing and due on demand.

Amount due to related parties consists of the following:

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	As of December 31,
	2010		2009
Rui Tan		1,277		208,995
Tieyu Wang		-		198,045
		1,277		407,040

Rui Tan is the Chairman of the Company, Tieyu Wang is a major stockholder of the Company. Balances due to these related parties are unsecured, non-interest bearing and due on demand.

9. Advance to suppliers:

The Company has made payments to unrelated suppliers in advance of receiving merchandize. The advance payments are meant to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $238,337 and $90,151 as of December 31, 2010 and 2009, respectively.

10. Deferred maintenance revenue:

The amounts of deferred maintenance revenue totaled $3,993,240 and $2,046,824 as of December 31, 2010 and 2009, respectively. The maintenance revenue is recognized on a straight line basis over the one year term.

11. Bank loans:

The bank loan of $758,500 is unsecured and due in September 2011 with interest rate of 5.84% per annum.

12. Statutory reserve:

Under the PRC rules and regulations, the Company’s PRC subsidiaries, LNHX and SYHX are required to transfer 10% of the net income, as determined in accordance with the relevant PRC laws and regulations, to a statutory reserve until the reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of dividends to shareholders can be made. The statutory reserve is non-distributable other than in liquidation, and may be converted into share capital by issuance of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by the shareholders, provided that the balance after such issuance is not less than 25% of the registered capital.

For the year ended December 31, 2010, SYHX transferred to the statutory reserve $221,910. The accumulated balance of the statutory reserve maintained at SYHX as of December 31, 2010 was $462,933. The statutory reserve as of December 31, 2010 for SYHX was 50% of its registered capital. LNHX has not transferred any statutory reserve for the year ended December 31, 2010 as no income was earned.

13. Dividend payable:

In conjunction with the 2009 merger of LNHX, the consideration for the acquisition of RMB 20,000,000 ($3,034,000) was recorded as dividend distribution to the original shareholders of LNHX. As of December 31, 2010 and 2009, Mr. Rui Tan, who was an original shareholder of LNHX, owed capital contribution of RMB 4,000,000 ($606,800 and $586,800) to LNHX. Mr. Tan agreed to offset the amount due from him against dividend payable due to him. Thus, at December 31, 2010 and 2009, dividend payable was $2,427,200 and $2,347,200. The dividend payable was fully settled as of March 29, 2011.

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14. Income taxes:

Corporation Income Tax (“CIT”):

Eastern Security & Protection Services, Inc. is subject to the United States of America Tax law at tax rate of 34%. No provision for the US federal income taxes has been made as the Company had no US taxable income for the years ended December 31, 2010 and 2009.

China Currency Development Limited was incorporated in Hong Kong and is subject to Hong Kong profits tax. The Company is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. No provision for profits tax has been made as the Company has no taxable income subject to the Hong Kong profits tax for the years ended December 31, 2010 and 2009.

The applicable statutory tax rates for the years ended December 31, 2010 and 2009 are 16.5%.

The Company’s operating subsidiaries are governed by the Income Tax Law of the PRC concerning PRC Enterprises and various local income tax laws (“the Income Tax Laws”). Beginning January 1, 2008, the new Enterprise Income Tax (“EIT”) law replaced the old laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises (“FIEs”). The key changes were:

a. The new standard EIT rate of 25% replaces the 33% rate applicable to both DES and FIEs, except for High-Tech companies that pay a reduced rate of 15%;

b. Companies established before March 16, 2007 continue to enjoy tax holiday treatment approved by local governments for a grace period of either the next 5 years, or until the tax holiday term is completed, whichever is sooner.

The reconciliation of income taxes computed at the PRC federal and local statutory tax rate applicable to the PRC, to income tax expense are as follows:

	Years ended December 31,
	2010			2009
Consolidated income before income tax		5,715,898			2,389,593
PRC state and local statutory tax rate		25	%		25	%
Computed expected expense		1,428,975			597,398
Non-deductible items and other		92,620			8,240
Income tax expense		1,521,595			605,638

There were no tax benefits that, if recognized, would reduce the Company’s annual effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. There was no accrued interest and penalties associated with uncertain tax positions as of December 31, 2010 and 2009.

Value Added Tax (“VAT”):

In accordance with the relevant taxation laws in the PRC, the normal VAT rate for domestic sales is 17%, which is levied on the invoiced value of sales and is payable by the purchaser. The Company is required to remit the VAT it collects to the tax authority. A credit is available whereby VAT paid on the purchases can be used to offset the VAT due on the sales. Net VAT payable was $36,759 and $93 at December 31, 2010 and 2009, respectively, and was included in taxes payable.

Revenues, expenses and assets are recognized net of the amount of VAT except:

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a.	where the VAT incurred on the purchase of assets or services is not recoverable from the taxation authority, in which case the VAT is recognized as part of the cost of acquisition of the assets or as part of the expense item as applicable; and

b.	receivables and payables are stated with the amount of VAT included.

15. Stockholders’ equity:

Stock Split:

The consolidated balance sheets, statements of changes in stockholders’ equity, and related notes to consolidated financial statements have been adjusted to reflect a 5.113634 for 1 stock split that was effective March 21, 2011.

Warrants:

On December 31, 2010, in conjunction with the reverse acquisition transaction, the Company issued a consultant a warrant to purchase 350,003 shares (68,445 pre-split) of the Company’s common stock exercisable for three years at an exercise price of $1.00 per share ($5.11 pre-split)..

The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrant with the following assumptions: no dividend yield, expected volatility of 77.14%, and a risk-free interest rate of 0.98%.. Since the Company has a limited stock trading history, the Company based its estimate of expected volatility on the average of the volatility of shares prices of three comparable public entities. This warrant is considered to be indexed to the Company’s own stock in accordance with FASB ASC 815-40. This warrant has a fair value of $169,617 which was recorded as an acquisition related cost

Stock warrants activities during the years ended December 31, 2010 and 2009 are as follows:

	Warrant shares		Exercise Price Range		Weighted average exercise price
Outstanding as of December 31, 2009		-		-		-
Granted		350,003		1.00		1.00
Outstanding as of December 31, 2010		350,003

Filing Compare · EASTERN SECURITY & PROTECTION SERVICES, INC.