ThZeal - The Zeal

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 1, 2010

G2 VENTURES, INC.

(Exact name of registrant as specified in its charter)

Texas		333-108715		98-0221494
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

16th Floor, Tianjin Global Zhiye Square, 309 Nanjing Road, Nankai District, Tianjin, PRC		300100
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 86-22-58896888

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Item No.	Description of Item	Page No.

Item 1.01	Entry Into a Material Definitive Agreement	5
Item 2.01	Completion of Acquisition or Disposition of Assets	6
Item 3.02	Unregistered Sales of Equity Securities	68
Item 4.01	Changes in Registrant’s Certifying Accountant	68
Item 5.06	Change in Shell Company Status	68
Item 9.01	Financial Statements and Exhibits	69

CONVENTIONS THAT APPLY TO THIS CURRENT REPORT ON FORM 8-K

Except where the context otherwise requires and for purposes of this Current Report on Form 8-K only:

“we,” “us,” “our company,” “our,” “the Company” and “G2 Ventures” refer to G2 Ventures, Inc., its consolidated subsidiaries, namely Dynamic Elite International Limited, a British Virgin Islands limited liability company (“Dynamic Elite”), Tianjin Junhe Enterprise Management Consulting Co., Ltd., a PRC incorporated company (“Junhe Consulting”), and its operating entities, namely Tianjin JowayShengshi Group Co., Ltd. (“Joway Group”), Liaoning Joway Technology Engineering Co., Ltd. (“Joway Technology”), Tianjin Joway Decoration Engineering Co., Ltd. (“Joway Decoration”) and Tianjin Oriental Shengtang Import & Export Trading Co., Ltd.(“Shengtang Trading”), four PRC companies.

references to the “Bulletin Board,” the “OTC Bulletin Board” are to the Over-the-Counter Bulletin Board, a securities quotation service, which is accessible at the website www.otcbb.com.

references to PRC Operating Entities’ “registered capital” are to the equity of PRC Operating Entities, which under PRC law is measured not in terms of shares owned but in terms of the amount of capital that has been contributed to a company by a particular shareholder or all shareholders. The portion of a limited liability company’s total capital contributed by a particular shareholder represents that shareholder’s ownership of the company, and the total amount of capital contributed by all shareholders is the company’s total equity. Capital contributions are made to a company by deposits into a dedicated account in the company’s name, which the company may access in order to meet its financial needs. When a company’s accountant certifies to PRC authorities that a capital contribution has been made and the company has received the necessary government permission to increase its contributed capital, the capital contribution is registered with regulatory authorities and becomes a part of the company’s “registered capital.”

“China” or “PRC” refers to the People’s Republic of China, excluding Taiwan and the Special Administrative Regions of Hong Kong and Macau;

all references to “Renminbi” or “RMB” are to the legal currency of China; and

all references to “U.S. dollars,” “dollars,” or “$” are to the legal currency of the United States.

Amounts may not always add to the totals due to rounding.

Unless otherwise noted, all translations from Renminbi to U.S. dollars usingthe exchange rate refers to the exchange rate quoted on http://www.xe.com on October 6, 2010, being $1.00=RMB 6.6928. We make no representation that the RMB amounts referred to in this Current Report on Form 8-K could have been or could be converted into U.S. dollars at any particular rate or at all.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K or Form 8-K and other reports filed by us from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. When used in the filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to us or our management identify forward looking statements. Such statements reflect the current view of our management with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this report entitled “Risk Factors”) as they relate to our industry, our operations and results of operations, and any businesses that we may acquire. Should one or more of the events described in these risk factors materialize, or should our underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the U.S. federal securities laws, we do not intend to update any of the forward-looking statements to conform them to actual results. The following discussion should be read in conjunction with our pro forma financial statements and the related notes that will be filed herein.

Item 1.01. Entry into a Material Definitive Agreement

On October 1, 2010, we entered into and consummated a Share Exchange Agreement with Crystal Globe Limited (“Crystal Globe”), the sole shareholder of Dynamic Elite International Limited (“Dynamic Elite”) and Dynamic Elite to acquire all the issued and outstanding capital stock of Dynamic Elite, a British Virgin Islands company, in exchange for the issuance to Crystal Globe 15,215,426 restricted shares of our common stock (the “Reverse Merger”).

Immediately after the closing of the Reverse Merger, we have a total of 20,000,000 issued and outstanding shares of common stock. As a result of the Reverse Merger, Dynamic Elite is now our wholly-owned subsidiary. Dynamic Elite is the holding company of all the equity interest of Tianjin Junhe Management Consulting Co., Ltd. (“Junhe Consulting”), a PRC incorporated company.

On September 16, 2010, prior to the Reverse Merger, Junhe Consulting and Tianjin JowayShengshi Group Co., Ltd. (“Joway Group”), a PRC company, entered into a series of agreements known as variable interest agreements (the “VIE Agreements”) pursuant to which Joway Group became Junhe Consulting’s contractually controlled affiliate.

Through Junhe Consulting, we effectively and substantially control Joway Group and its three wholly owned subsidiaries, namely Liaoning Joway Technology Engineering Co., Ltd. (“Joway Technology”), Tianjin Oriental Shengtang Import & Export Trading Co., Ltd.(“Shengtang Trading”) and Tianjin Joway Decoration Engineering Co., Ltd.(“Joway Decoration”)

See “Our PRC Operating Entities” under Item 2.01 for further information on Joway Group and its subsidiaries.

The VIE Agreements are a common structure used to control PRC corporations in certain circumstances, particularly when it is not feasible to use cash to acquire such companies. The VIE Agreements include:

a Consulting Services Agreement through which Junhe Consulting has the right to advise, consult, manage and operate Joway Group and collect and own all of the net profits of Joway Group;

an Operating Agreement through which Junhe Consulting has the right to recommend director candidates and appoint the senior executives of Joway Group, approve any transactions that may materially affect the assets, liabilities, rights or operations of Joway Group, and guarantee the contractual performance by Joway Group of any agreements with third parties, in exchange for a pledge by Joway Group of its accounts receivable and assets;

a Proxy Agreement under which the two owners of Joway Group have vested their collective voting control over Joway Group to Junhe Consulting and will only transfer their respective equity interests in Joway Group to Junhe Consulting or its designee(s);

an Option Agreement under which the owners of Joway Group have granted to Junhe Consulting the irrevocable right and option to acquire all of their equity interests in Joway Group; and

an Equity Pledge Agreement under which the owners of Joway Group have pledged all of their rights, titles and interests in Joway Group to Junhe Consulting to guarantee Joway Group’s performance of its obligations under the Consulting Services Agreement.

Because of the common control between Dynamic Elite, Junhe Consulting, Joway Group and its wholly owned subsidiaries, for accounting purposes, the acquisition of these entities has been treated as a recapitalization with no adjustment to the historical basis of their assets and liabilities. The restructuring has been accounted for using the “as if” pooling method of accounting and the operations were consolidated as if the restructuring had occurred as of the beginning of the earliest period presented in our consolidated financial statements and the current corporate structure had been in existence throughout the periods covered by our consolidated financial statements.

As a result of the VIE Agreements and the Reverse Merger, Dynamic Elite, our wholly owned subsidiary, owns 100% of the equity of Junhe Consulting, which in turn, through the VIE Agreements, effectively and substantially controls Joway Group and its subsidiaries. As a result of the Reverse Merger, we are now engaged in the manufacture and sale of tourmaline-related healthcare products through Joway Group and its subsidiaries (collectively, the “PRC Operating Entities”).

We claim an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) for the private placement of the shares of our common stock to Crystal Globe pursuant to Section 4(2) of the Act and/or Regulation D promulgated thereunder since, among other things, the transaction did not involve a public offering, the recipient is an accredited investor and had access to information about our company and their investment, the recipient took the securities for investment and not resale, and our company took appropriate measures to restrict the transfer of the securities.

Item 2.01 Completion of Acquisition or Disposition of Assets

As described in Item 1.01 above, on October 1, 2010, we acquired all the issued and outstanding shares of Dynamic Elite pursuant to the Share Exchange Agreement and Dynamic Elite became our wholly owned subsidiary. The acquisition was accounted for as a recapitalization effected by a share exchange, wherein Dynamic Elite is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of Dynamic Elite have been brought forward at their book value and no goodwill has been recognized.

FORM 10 DISCLOSURE

As disclosed elsewhere in this report, on October 1, 2010, we acquired Dynamic Elite in a Reverse Merger acquisition transaction. Item 2.01(f) of Form 8-K states that if the registrant were a shell company as we were immediately before the Reverse Merger transaction disclosed under Item 2.01, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities under the Exchange Act on Form 10.

Accordingly, we are providing below the information that would be included in a Form 10 registration statement. Please note that the information provided below relates to the combined enterprises after the acquisition of Dynamic Elite, except that information relating to periods prior to the date of the Reverse Merger only relate to Dynamic Elite and its subsidiaries unless otherwise specifically indicated.

CORPORATE STRUCTURE AND HISTORY

Corporate Structure

We are a Texasholding company for our direct and indirect subsidiaries in the BVI and the PRC. We own all of the issued and outstanding capital stock of Dynamic Elite, a BVI corporation. Dynamic Elite is a holding company that owns 100% of the outstanding capital stock of Junhe Consulting, a PRC company.

Because it was not feasible for us to acquire PRC companies for cash pursuant to PRC laws and regulations, we, through Junhe Consulting entered into VIE Agreements on September 16, 2010 with Joway Group pursuant to which Joway Group became Junhe Consulting’s contractually controlled affiliate.

Joway Group has three wholly owned subsidiaries, namely Joway Technology,Shengtang Trading and Joway Decoration, involved in the tourmaline-related healthcare products business, We control Joway Group, Joway Technology,Shengtang Trading and Joway Decoration (collectively referred to as the “PRC Operating Entities”) through the VIE Agreements.These contracts are summarized below. Please also refer to the full text of the contracts, which are filed as exhibits to this report.

These VIE Agreements include:

a Consulting Services Agreement through which Junhe Consulting has the right to advise, consult, manage and operate Joway Group and collect and own all of the net profits of Joway Group;

an Option Agreement under which the owners of Joway Group have granted to Junhe Consulting the irrevocable right and option to acquire all of their equity interests in Joway Group; and

We believe that the terms of these agreements are no less favorable than the terms that we could obtain from disinterested third parties. According to our PRC counsel, AllbrightLaw Offices, our conduct of business through these agreements complies with existing PRC laws, rules and regulations.

As a result of these contractual arrangements, Joway Group became our controlled VIE. A variable interest represents a contractual or ownership interest in another entity that causes the holder to absorb the changes in fair value of the other entity’s net assets. Potential variable interests include: holding economic interests, voting rights, or obligations to an entity; issuing guarantees on behalf of an entity; transferring assets to an entity; managing the assets of an entity; leasing assets from an entity; and providing financing to an entity. In such cases consolidation of the VIE is required by the enterprise that controls the economic risks and rewards of the entity, regardless of ownership. We have consolidated the PRC Operating Entities’ historical financial results in our financial statements as a variable interest entity pursuant to U.S. GAAP.

All of our business operations are conducted through our PRC Operating Entities. The chart below sets forth our corporate structure.

Our Corporate History and Background

We were formed as a Texas corporation on March 21, 2003 to acquire most of the assets and certain liabilities of and succeed the business of G2 Companies, Inc., (formerly Hartland Investment, Inc.), as an independent recording company and artist management company.

On April 1, 2003, we acquired the business, most of the assets and assumed liabilities of G2 Companies, Inc., a music recording and production company. At the time of such acquisition, Gust Kepler, our principal shareholder, sole officer, director and employee, also served as an officer, director and was the sole shareholder of G2 Companies, Inc., the seller. The acquisition of assets and the assumption of liabilities from G2 Companies, Inc. were not conducted at “arm’s length” due to Mr. Kepler’s interest in both companies.

On May 13, 2008, through a registered offering, we offered up to 1,500,000 shares of our common stock on a self-underwritten basis at a price of $0.10 per share with a minimum offering of 1,200,000 shares and a maximum offering of 1,500,000 shares (the “Offering”). The shares were offered and sold by the Company throughour previous Chief Executive Officer, Mr. Gust C. Kepler through December 3, 2008, when we terminated the Offering after subscribing 1,284,574 shares and raising an aggregate of $128,457, before costs of the Offering.

Our common stock began trading on the Over-the-Counter Bulletin Board (“OTCBB”) under the symbol “GTVI” on September 11, 2009.

Prior to the Reverse Merger, we were a development stage music recording, production and artist management company that had limited operations, primarily due to our inability to raise sufficient capital.

On September 21, 2010, Mr. Kepler entered into a Stock Purchase Agreement to sell to Crystal Globe Limited, a British Virgin Islands company (“Crystal Globe”) all his 3,300,000 shares of common stock in the Company, representing approximately 68.97% of the issued and outstanding capital stock of the Company. The transaction closed on September 28, 2010. In connection with the sale, Mr. Kepler resigned as our sole officer and director and appointed Crystal Globe’s nominees, Mr. Jinghe Zhang as our new President ,Chief Executive Officer and sole director and Mr. Yuan Huang as our new Chief Financial Officer, Secretary and Treasurer on that date. As a result, on September 28, 2010, there was a change in control of the Company.

Acquisition of Dynamic Elite

On October 1, 2010, we entered into and consummated a Share Exchange Agreement with Crystal Globe, the sole shareholder of Dynamic Elite and Dynamic Elite to acquire all the issued and outstanding capital stock of Dynamic Elite, a British Virgin Islands company, in exchange for the issuance to Crystal Globe of 15,215,426 restricted shares of our common stock. As of result of this Reverse Merger, Crystal Globe owns a total of 18,515,426 shares of our common stock or approximately 92.58% of our total and issued shares of common stock and is our single largest shareholder.

As described above, because of our acquisition of Dynamic Elite, we now control, through Junhe Consulting, the PRC Operating Entities under the VIE Agreements and are now involved in the manufacture and sale of tourmaline-related healthcare products.

Tianjin Junhe Enterprise Management Consulting Co., Ltd.

Junhe Consulting was established in the PRC on September 15, 2010. Dynamic Elite currently owns 100% of Junhe Consulting. On September 9, 2010, the local government of the PRC issued a certificate of approval regarding the foreign ownership of Junhe Consulting by Dynamic Elite, a British Virgin Islands entity. Jinghe Zhang serves as the executive director of Junhe Consulting.

Our PRC Operating Entities

Joway Group, our primary operating entity, was incorporated on May 17, 2007 in the PRC as a limited liability company under the name of “Tianjin Joway Textile Co., Ltd.” It changed its name to Tianjin Joway Shengshi Group Co., Ltd. on November 24, 2009. Its original registered capital was RMB 5,000,000, which was increased to RMB 50,000,000 on March 16, 2009.Its term of operation is from May 17, 2007 to May 16, 2022. Mr. Jinghe Zhang serves as the Executive Directors and General Manager of Joway Group and owns 99% of the equity interest in Joway Group. Baogang Song owns the remaining 1% of the equity interest of Joway Group. Joway Group owns 100% equity interest in each of Joway Technology, Joway Decoration, and Shengtang Trading.

Joway Technology was incorporated under the PRC laws on March 28, 2007, with a registered capital of RMB 1,100,000. Its term of operation is from March 28, 2007 to March 27, 2017. Its business scope is intelligent engineering design and construction; development and sales of electronics, water filters, sales of groceries and decoration project.

Joway Decoration was incorporated under the PRC laws on April 22, 2009, with a registered capital of RMB 2,000,000. Its term of operation is from April 22, 2009 to April 21, 2019. Its business scope is decoration projects, intelligent electric heating project design and construction, development and sales of electronics technology, sales of groceries, water filters, manufacture and sales of wood products.

Shengtang Trading was incorporated under the PRC laws on September 18, 2009, with a registered capital of RMB 2,000,000. Its term of operation is from September 18, 2009 to September 17, 2029. Its scope of business is the import and export of merchandise and technology; knitwear, groceries, biochemistry (excluding toxic chemicals and drugs that are easily manufactured), and wholesale and retail of hardware.

DESCRIPTION OF OUR BUSINESS

Overview

We are through our PRC Operating Entities, engaged in the manufacture and sales of tourmaline-related healthcare products.

As of October 6, 2010, we have approximately 128 employees.

Our principal executive offices are located at16th Floor, Tianjin Global Zhiye Square, 309 Nanjing Road, Nankai District, Tianjin, PRC 300100.

Introduction to Tourmaline

Tourmaline is the most important raw material we use in the manufacture of our healthcare products. It is a crystalsilicate mineral compounded with elements such as aluminum, iron, magnesium, sodium, lithium, or potassium. Tourmaline is classified as a semi-precious stone and the gem comes in a wide variety of colors. (Source: http://en.wikipedia.org/wiki/Tourmaline)

Tourmaline hasthe ability to become its own source of electric charge, as it is both pyroelectric, as well as piezoelectric. When it is put under greater amounts of pressure or when it is dramatically heated or cooled, tourmaline creates an electrical charge capable of emitting far infrared rays (“FIR”) and negative ions. (Source: http://www.globalhealingcenter.com/tourmaline.html)

FIRs are invisible waves of energy capable of penetrating deep into the human body, where they gently elevate the body's surface temperature and activate major bodily functions. Negative ions are atoms that have a negative electric charge. It is believed that FIRs and negative ions gently heal, soothe, stimulate and detox the physical body, as well as the mind. (Source: http://www.globalhealingcenter.com/tourmaline.html)

Because it is a permanent source of FIRs and negative ions, tourmaline is believed to have the advantage of improving human body circulation, relieving stress, increasing mental alertness and strengthening the immune system function (Source: Niwa Institute for Immunology, Japan. Int J. Biometeorol 1993 Sep; 37(3) 133-8). In view of its powerful health benefits, tourmaline has been used to manufacture a wide range of healthcare products, including apparel, bedding, water purifiers, sauna rooms, and personal care products.

We purchase liquid tourmaline from domestic companies which, in turn, import it from South Korea. Liquid tourmaline is readily available and its price has remained relatively stable. We have not experienced any shortage in tourmaline but as a precaution, we closely monitor its price and have several back-up suppliers.

Manufacture Process

In order to take advantage of Tourmaline’s health benefits, we coat or infuse liquid tourmaline or granular tourmaline into our products using the following methods:

The Spray Method

We use special high-pressure nozzle to spray liquid tourmaline onto the surface of the products. Through this process, the tourmaline particles attach onto the surface of the product. We then use a high-temperature ironing machine to embed the tourmaline particles into the fibresof the product so that the powdered tourmaline will not fall off. This method is used in the manufacture of single large piece of textile products, such as mattresses.

The Dip Method

We completely immerse fabrics into liquid tourmaline. We then stir the fabrics in the liquid tourmaline to ensure the tourmaline particles attach to the surface of the fabrics. Finally, we embed the tourmaline particles into the fibres of our products by applying heat with our special high-temperature ironing machine. This method is used in the manufacture of smaller products, such as underwear, scarves, and shirts.

The Filling Method

We fill the tourmaline particles directly into components of our products. This method is used to make activated water machine and other water treatment products.

The three methods mentioned above are key to our manufacturing process. We protect our manufacturing methods via confidentiality agreements entered into between us and our employees.Pursuant to the confidentiality agreement, the employee is prohibited from unlawfully revealing and using our confidential technology during his term of employment and ten years after the termination of employment. We also plan to submit patent application for the dipmethod in the PRC.

Our Products and Services

We primarily manufacture the following three series of tourmaline-related healthcare products:

1.	Healthcare Knit Goods Series

For the fiscal years ended December 31, 2008 and 2009, our healthcare knit goods series products accounted for approximately 3.5% and 55.4% of our annual sales revenue, respectively. This series comprises tourmaline treated mattress, bed linen, underwear, and shirt products. We use either the spray or dip method to embed tourmaline particles into the fabric of this series of products. The tourmaline-treated apparel and bedding provide an electrical stimulus to the wearer's or user’s body and improve their health.

Set forth below is a list of products in the Healthcare Knit Goods Series, the trademarks or marks under which they are marketed and the manufacturing method employed:

No.	Products	Trademark/Mark	Manufacturing Method
1	Golden Mattress		Spray Method
2	Tourmaline Mattress		Spray Method
3	Tourmaline Undergarment		Dip Method
4	Tourmaline Bed Linens		Spray Method
5	Tourmaline Male Shirts		Dip Method

2.	Daily Healthcare and Personal Care Series

For the fiscal years ended December 31, 2008 and 2009, our daily healthcare and personal care series products accounted for approximately 0% and 16% of our annual sales revenue, respectively. This series comprises tourmaline-treated wrist protectors,knee protector, scarves, shampoo and soap products. We use the spray or dip or filling methods to embed the tourmaline particles into the products in this series. We believe these tourmaline-treated daily healthcare products and personal care products produce FIRs and negative ions which stimulate blood circulation in capillary vessels and deliver incredible benefits to users both physically and mentally.

Set forth below is a list of our products in the Daily Healthcare and Personal Care Series, the trademarks or marks under which they are marketed and the manufacturing method employed:

No.	Products	Trademark/Mark	Manufacture Method
1	Tourmaline Wrist Protector		Spray Method
2	Tourmaline Knee Protector		Spray Method
3	Tourmaline Scarves		Dip Method
4	Tourmaline Shampoo		Filling Method
5	Tourmaline Soap		Filling Method
6	Tourmaline Socks		Dip Method

3.	Wellness House and Activated Water Machine

For the years ended December 31, 2008 and 2009, our wellness house and activated water machine series products accounted for approximately 96.5% and 28.5% of our annual sales revenue, respectively. This series mainly includes tourmaline wellness houses, tourmaline wellness house materials, tourmaline activated water machines and drinking mugs. Our tourmaline wellness house resembles a regular sauna room in which users experience heat sessions. However, the inner layer of our wellness house is coated with tourmaline, which emits FIRs and negative icons when heated. Tourmaline wellness housesare currently employed for the purpose of stimulating perspiration of users to improve their health.It is believed that the user will feel more rejuvenated after using our tourmaline wellness house.We mainly manufacture two types of wellness houses: one for family use, which is designed to be installed in the corner of a room and can seat one to eight people depending on its size; the other is customized and constructed on site for commercial bathrooms or spas in according to their specifications.

Below is a list of different models of our Wellness House for family use:

Model	Trademark/Mark	Material	Dimension	Capacity	Manufacturing Method
Classic Mini Wellness House		Hemlock	1.0mX1.0mX1.9m	1-2 persons	Spray Method
Classic Twin Wellness House I		Hemlock	1.2mX1.05MX1.9m	2-3 persons	Spray Method
Classic Twin Wellness House II		Snow Pine	1.2mX1.05mX1.9m	2-3 persons	Spray Method
Elegant Multi-Person Wellness House		Hemlock	1.5mX0.53mX1.37mX1.9m	4-5 persons	Spray Method
Classic Multi-Person Wellness House		Hemlock	1.75mX1.6mX1.9m	6-7 persons	Spray Method

Our tourmaline water machines or water mugs purify, mineralize and activate the water in them because we infuse tourmaline particles into the filter of the water machine or water mug. It is believed that the purified, mineralized and activated water will promote the drinker’s metabolism and prevent oxidation.

Below is a list of our water treatment products:

No.	Products	Trademark/Mark	Manufacturing Method
1	Tourmaline Water Machine		Filling Method
2	Tourmaline Water Mug		Filling Method

Return policy

We accept returns of defective products (excluding wellness houses) within seven days of purchase and exchanges of defective products within 15 days of purchase. Customers may also request a free repair of defective products within 15 days of purchase. For products purchased more than 15 days ago, we will charge a service fee of 110% of the cost of repaired or replaced parts.

Services: Wellness House Maintenance

Our wellness house products generally carry a one-year warranty. When the warranty expires, we provide our customers the option to engage us to service and maintain their wellness houses for a fee equal to 200% of the cost of the repaired or replaced parts.

Except for the fiscal year 2007 where the maintenance contributed to 62.8% of our then annual revenue, there has been very little demand of our wellness house maintenance services.

Manufacturing Facilities

Our manufacturing facilities are located in Baodi District, Tianjin, PRC, with an area of approximately 2,500 square meters. The major equipment we use in the manufacture our products include three ironing machines, three driers, three washing machines, three cutting machines, 43 sewing machines, six chainsaws, six impact drills and six air nailers. We have 33 employees engaged in the manufacture as of October 6, 2010. We have our own design team comprising four designers who are responsible for designing new styles for our products every quarter. They are also responsible for the product packaging design.

Customers and Suppliers

Customers

Below is a list of our top ten customers for the years 2007, 2008 and 2009, respectively.

Top Ten Customers in 2007
No.	Name	Amount (RMB)		Amount (US$)		Products Sold	Percentage of Sales
1	Shenyang Xike Quartz Co., Ltd.		26,047		3,836	Wellness House maintenance		62.8	%
2	Fengrong Bo		7,115		1,048	Wellness House materials		17.2	%
3	Xinhua Insurance Company		4,089		602	Wellness House materials		9.9	%
4	Anshan City Tiedong District Aiming Law Firm		3,438		506	Wellness House materials		8.3	%
5	Beijing Luhang Machinery Factory		763		112	Wellness House materials		1.8	%
Total			41,453		6,104			100.0	%

Top Ten Customers in 2008
No.	Name	Amount (RMB)		Amount (US$)		Products Sold	Percentage of Sales
1	ShenyangNew CityRiversideHealthCenter		270,419		39,826	Wellness House		6.80	%
2	Chenghong Wei		168,600		24,831	Wellness House		6.48	%
3	Xiaoyun Zhu		165,000		24,300	Wellness House		6.40	%
4	Yanmei Feng		165,000		24,300	Wellness House		6.19	%
5	Youfeng Lu		162,620		23,950	Wellness House		5.30	%
6	Shenyang Shifa Special Rubber Co., Ltd.		157,000		23,122	Wellness House		5.06	%
7	Weichun Zhou		156,000		22,975	Wellness House		4.83	%
8	Lijuan Gu		140,000		20,619	Wellness House		2.12	%
9	Xudong Wang		137,500		20,250	Wellness House		1.20	%
10	Runmei Zhang		133,430		19,651	Wellness House		1.09	%
Total			1,656,139		243,824			45.47	%

Top Ten Customers in 2009
No.	Name	Amount (RMB)		Amount (US$)		Products Sold	Percentage of Sales
1	Shandong Jingbo Holdings Development Co., Ltd.		523,223		77,058	Wellness House materials		2.5	%
2	Beijing No. 9 Urban Construction Engineering Company Limited		397,087		58,481	Wellness House materials		1.9	%
3	Baocong Yang Joining Franchise Store		380,788		56,080	Tourmaline mattress and underwear		1.8	%
4	Jinbao Liu Joining Franchise Store		369,461		54,412	Tourmaline mattress, pillowcases and soap		1.7	%
5	Xiuchun Jia Joining Franchise Store		357,615		52,668	Tourmaline mattress, mugs and scarves		1.7	%
6	Fengqi Wu		349,628		51,492	Tourmaline Wellness House		1.6	%
7	Zhuoguan Joining Franchise Store		330,795		48,718	Tourmaline mattress, pillowcases and soap		1.6	%
8	Zhengyi Qiao Joining Franchise Store		290,334		42,759	Tourmaline mattress, pillowcases and soap		1.4	%
9	Ning Fang Joining Franchise Store		289,004		42,563	Tourmaline mattress, pillowcases and soap		1.4	%
10	Liang Ping Joining Franchise Store		288,362		42,469	Tourmaline mattress, pillowcases and soap		1.4	%
Total			3,576,308		526,700			16.8	%

Our main customers are franchise stores that are authorized to sell our products exclusively. Two customers made up more than 10% of our sales in 2007. However, none of our customers have accounted for more than 10% of our annual sales revenue for the fiscal years 2008 and 2009.

In the past three fiscal years, our products have been primarily sold to the northeasternpart of China, which includes Liaoning province, Jilin province and Heilongjiang province. Set forth below is a geographical breakdown of our sales for the fiscal years 2008 and 2009 and six months ended June 30, 2010:

Region		Percentage of Sale
Northeast China (Liaoning, Jilin, Heilongjiang)		40%
North China(Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia)		23%
East China (Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi)		20%
Central China (Henan, Hubei, Hunan)		6%
Southwest China (Chongqing, Sichuan, Guizhou, Yunnan, Tibet)		6%
South China (Guangdong, Hainan, Guangxi)		5%

Suppliers

Below is a list of our top ten suppliers for the years 2008 and 2009, respectively.

Top Ten Suppliers in 2008
No.	Name	Amount (RMB)		Amount (US$)		Product Purchased	Percentage of Purchase
1	Shenyang Joway Industrial Development Co., Ltd.		784,990		115,609	Water machine, bedding, underwear, waist protector and kneepad		31.3	%
2	Liaoning Jiadebao Home Building Materials Supermarket Co., Ltd.		445,568		65,621	Wellness House materials		17.8	%
3	Tianjin Daxing Import & Export Trading Co., Ltd.		245,020		36,086	Silk cloth and mugs		9.8	%
4	Guangdong Hongjie Underwear Industrial Co., Ltd.		235,842		34,734	Underwear		9.4	%
5	Daekjeng Medicare		100,000		14,727	Tourmaline		3.84	%
6	Shenyang Hongguangyuan Wood Co., Ltd.		52,171		7,684	Wellness House materials		2.1	%
7	Shenyang Yuzhi Foam Factory		43,040		6,339	Wellness House materials		1.7	%
8	Shenyang Heyi Polyurethane Co., Ltd.		39,600		5,832	Wellness House materials		1.6	%
9	Shenyang Hongyu Villa		33,623		4,952	Wellness House materials		1.3	%
10	Shenyang Xinxin Taiyang Electronic Technology Co., Ltd.		30,248		4,455	Wellness House materials		1.2	%
Total			1,940,071		285,726			80.04	%

Top Ten Suppliers in 2009
No.	Name	Amount (RMB)		Amount (US$)		Product Purchased	Percentage of Purchase
1	Tianjin Daxing Import & Export Trade Co., Ltd.		2,278,539		335,573	Cloth, cotton, fabrics and underwear		18.2	%
2	Shenyang Joway Industrial Development Co., Ltd.		2,227,718		328,088	Cloth, cotton, underpants and hats		17.8	%
3	Haining Futianrun Silk Co., Ltd.		604,125		88,973	Cloth and Cotton,		4.8	%
4	Hangzhou Chufan Textile Co., Ltd.		603,752		88,918	Cloth, cotton and mattress		4.8	%
5	Beijing Quanfu Wood Products Co., Ltd.		598,560		88,153	Wellness House materials		4.8	%
6	Shenyang Hongguangyuan Wood Co., Ltd.		413,318		60,871	Wellness House materials		3.3	%
7	Shenzhen Maskcare Biological Technology Co., Ltd.		354,265		52,174	Soap, shampoo and shower gel		2.8	%
8	Tianjin Tielingjiacai Wood Co., Ltd.		347,849		51,230	Wellness House		2.8	%
9	Beijing Chenjiehao Paint Debug Ltd.		331,250		48,785	Wellness House materials		2.6	%
10	Tianjin Sunflower Packaging and Printing Co., Ltd.		238,035		35,057	Packaging materials and product manuals		1.9	%
Total			7,997,411		1,088,849			63.8	%

We had two major suppliers that accounted for 18.2% and 17.8% of our annual purchase of raw materials in 2009 and two major suppliers that accounted for 31.3% and 17.8% of our annual purchase of raw materials in 2008.We do not have long term contracts with any of our suppliers since the materials we use in our manufacture are readily available on the market and their prices are generally stable.

Franchise Stores

Approximately 72% of our annual sales were made through the operation of franchise stores in 2009. For the six months ended June 30, 2010, approximately 86.78% of our sales were made through franchise stores.

As of the date of this Report, there are approximately 219 franchise stores across the PRC that are authorized to sell our products exclusively. Set forth below is a geographical breakdown of the franchise stores:

Region		Number of Franchise Stores
Northeastern China (Liaoning, Jilin, Heilongjiang)		52
Northern China (Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia)		48
Eastern China (Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi)		31
Southern China (Guangdong, Hainan, Guangxi)		27
Central China (Henan, Hubei, Hunan)		30
Southwestern China (Chongqing, Sichuan, Guizhou, Yunnan, Tibet)		31
Total		219

We use multiple criteria to select our franchise stores, including reviewing each potential franchisee’s financial conditions, sales network, sales personnel, and faculties. Generally the potential franchise store submits an application to become our franchise store; we will review the overall conditions of the applicant and authorize the applicant to sell our products if the applicant meets the minimum working capital requirement of RMB 40,000 and has the requisite business facilities.

We typically enter into a standard franchising agreement with the applicant. Pursuant to the agreement, the franchisee is authorized to sell our products exclusively at a predetermined retail price. In exchange we provide them with productsat a discounted price, geographical exclusivity, and marketing, training and technological support. The franchisee is also required to adhere to certain standards of product merchandising, promotion and presentment. No initial franchise fees are required from the franchisee, nor does the franchisee need to pay any continuing royalties. The agreement is generally for a term of three years and is renewable at the mutual agreement of both parties.

Compared with the large volume of sales from franchise stores, sales to individual consumers are relatively small. Sales to individual consumers accounted for approximately 28% of our annual sales in 2009. For the six months ended June 30, 2010, sales to individual consumers only accounted for 13.22%. The individual consumers typically make orders at product meetings or via telephone and we deliver the products upon receipt of the payment. We ship for free if the purchase per order exceeds RMB 80,000 (approximately $11, 764.71).

Marketing and Sales

The success of our business largely depends on our marketing and sales efforts.

We market and advertise our products primarily in two ways. First, we organize, along with the franchise stores, product seminars and meetings where our franchise stores familiarize themselves with our products. The franchise stores are responsible for the cost of organizing the seminars and meetings and we are responsible for the travelling expenses of our employees who will travel to these meetings and seminars to explain and promote our various product lines. There are on average 15 such seminars and meetings each month nationwide and we have budgeted travelling expenses of approximately RMB30,000 (approximately $4,400) each month. Generally, we choose the venue for the product seminars and meetings based on market prospects, sales volume and the extent of meeting preparation. As of October 6, 2010, we have held product seminars and meetings in approximately 105 cities in the PRC.

We also organize an annual conference to promote our products and brand names. While the product meeting is often regional and held very frequently throughout the year, the annual conference is nationwide, has more participants and it also serves as a celebration and reward ceremony. The primary participants for the annual conference are our franchise stores. Generally we are responsible for the cost of annual conferencesand the cost of the annual conference for 2008 and 2009 was approximately RMB1,000,000 (approximately $147,000) and RMB 7,096,147 (approximately $ 1,043,551.03), respectively.

Below is a breakdown of our marketing expenses in the fiscal years 2008 and 2009.

	2008				2009
Expenses	RMB		US$ (approx.)		RMB		US$ (approx.)
Promotion		325,588.00		46,764.77		7,065,743.60		1,032,870.57
Printing		0.00		0.00		268,808.51		39,294.43
Travelling		9,788.60		1,405.95		353,189.20		51,629.21
Training		31,416.48		4,512.40		137,145.80		20,047.98
Salaries		8,820.00		1,266.83		272,740.00		39,869.14
Total		375,613.08		53,949.96		8,097,627.11		1,183,711.32

In 2009, we spent RMB 7.1 million on the annual conference and had revenue of approximately RMB 6.0 million from ticket sales. The net expense was contained in selling expenses in consolidated operation statements.

For the fiscal year 2010, we have a marketing and sales budget of RMB 4,500,000 (approximately, $662,000), among which, approximately RMB2,600,000 (approximately $382, 352.94) will be spent on our annual conference, RMB 1,000,000 (approximately $147,058.82) on salaries of sales personnel, RMB 400,000 (approximately $58,823.53) on training, RMB 200,000 (approximately $29,411.76) on travelling and RMB 300,000 (approximately $ 44,117.65) on daily operation of the marketing and sales department.

DYNAMIC ELITE INTERNATIONAL LIMITED AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Financial Statements:

Consolidated Balance Sheets
As of June 30, 2010 (unaudited) and,
As of December 31, 2009 and 2008(audited)	F-2

Consolidated Statements of Operations and Comprehensive Income (Loss)
For the Six Months Ended June 30, 2010 and 2009 (unaudited) and,
For the Years Ended December 31, 2009 and 2008 (audited)	F-3

Consolidated Statement of Changes in Stockholders’ Equity
For the Six Months Ended June 30, 2010 (unaudited) and,
For the Years Ended December 31, 2009 and 2008(audited)	F-4

Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2010 and 2009 (unaudited) and,
For the Years Ended December 31, 2009 and 2008 (audited)	F-5

Notes to Consolidated Financial Statements	F-6

F-1

Consolidated Financial Statements

DYNAMIC ELITE INTERNATIONAL LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of June 30,			As of December 31,
	2010			2009		2008
	(Unaudited)			(Audited)		(Audited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalent	$	659,316		$	935,719	$	98,039
Accounts receivable, net		16,318			57,532		18,589
Other receivables		395,339			389,712		21,184
Due from related parties		1,468,730			1,462,587		9,484
Inventories		1,053,688			593,805		215,742
Advances to suppliers		149,580			192,733		854,814
Prepaid expense		-			118,123		11,634
Total current assets		3,742,971			3,750,211		1,229,486

PROPERTY, PLANT AND EQUIPMENT, net		5,718,852			3,191,180		158,289

OTHER ASSETS:
Construction in progress		-			2,215,567		3,681,034
Intangible assets, net		587,879			581,054		587,483
Total other assets		587,879			2,796,621		4,268,517

Total assets	$	10,049,702		$	9,738,012	$	5,656,292

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	426,293		$	141,683	$	-
Advances from customers		126,759			361,993		198,213
Taxes payable		216,519			55,091		324
Other payables		108,974			16,197		10,884
Due to related parties		583,873			1,299,258		4,715,086
Total current liabilities		1,462,418			1,874,222		4,924,507

COMMITMENTS		-			-		-

STOCKHOLDERS' EQUITY:
Common stock - $1 par value; 50,000 shares authorized; 10,000 shares issued and outstandings at June 30, 2010		10,000			-		-
Additional paid-in-capital		7,272,954			7,272,954		788,327
Statutory reserves		49,788			49,788		1,600
Retained earnings (deficit)		1,133,561			445,776		(156,571	)
Accumulated other comprehensive income		130,981			95,272		98,429
Subscription receivable		(10,000	)		-		-
Total stockholders' equity		8,587,284			7,863,790		731,785
Total liabilities and stockholders' equity	$	10,049,702		$	9,738,012	$	5,656,292

The accompanying notes are an integral part of these financial statements

F-2

DYNAMIC ELITE INTERNATIONAL LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

	For six months ended June 30,					For the year ended December 31,
	2010			2009		2009			2008
	(Unaudited)			(Unaudited)		(Audited)			(Audited)
REVENUES	$	2,323,841		$	984,456	$	3,109,059		$	422,612

COST OF REVENUES		639,488			448,437		1,164,683			303,854

GROSS PROFIT		1,684,353			536,019		1,944,376			118,758

Selling expenses		235,670			1,806		165,994			30,741
General and administrative expenses		525,825			399,755		967,255			228,791
OPERATING EXPENSES		761,495			401,561		1,133,249			259,532

INCOME (LOSS) FROM OPERATIONS		922,858			134,458		811,127			(140,774	)

Interest income		1,175			450		1,952			121
Other income		1,092			2,876		2,902			-
Other expenses		(26,107	)		-		(24,198	)		(1,252	)
OTHER (EXPENSE) INCOME, NET		(23,840	)		3,326		(19,344	)		(1,131	)

INCOME BEFORE INCOME TAXES		899,018			137,784		791,783			(141,905	)

INCOME TAXES		211,233			34,592		141,248			5,083

NET INCOME (LOSS)		687,785			103,192		650,535			(146,988	)

OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments		35,709			5,256		(3,157	)		53,080

COMPREHENSIVE INCOME (LOSS)	$	723,494		$	108,448	$	647,378		$	(93,908	)

The accompanying notes are an integral part of these financial statements

F-3

DYNAMIC ELITE INTERNATIONAL LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

													Accumulated
										Retained			other
	Number		Common		Additional			Statutory		earnings			comprehensive			Subsription
	of shares		stock		paid-in capital			reserves		(deficit)			income			receivable			Total equity
BALANCE, January 1, 2008			$		$	788,327		$		$	(7,983	)	$	45,349		$	-		$	825,693

Net Loss											(146,988	)								(146,988	)
Appropriation to statutory reserves									1,600		(1,600	)								-
Foreign currency translation gain														53,080			-			53,080

BALANCE, December 31, 2008		-		-		788,327			1,600		(156,571	)		98,429			-			731,785

Net Income											650,535									650,535
Appropriation to statutory reserves									48,188		(48,188	)								-
Capital contribution						6,876,914														6,876,914
Capital distribution						(392,287	)													(392,287	)
Foreign currency translation loss														(3,157	)					(3,157	)

BALANCE, December 31, 2009		-		-		7,272,954			49,788		445,776			95,272			-			7,863,790

Net Income (Unaudited)											687,785									687,785
Issuance of Common Stock (Unaudited)		10,000		10,000													(10,000	)		-
Foreign currency translation gain (Unaudited)														35,709						35,709

BALANCE, June 30, 2010 (Unaudited)		10,000	$	10,000	$	7,272,954		$	49,788	$	1,133,561		$	130,981		$	(10,000	)	$	8,587,284

The accompanying notes are an integral part of these financial statements

F-4

DYNAMIC ELITE INTERNATIONAL LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For six months ended June 30,						For the year ended December 31,
	2010			2009			2009			2008
	(Unaudited)			(Unaudited)			(Audited)			(Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	687,785		$	103,192		$	650,535		$	(146,988	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation		145,649			65,173			158,248			11,366
Amortization		6,255			456			12,812			11,858
Changes in current assets and liabilities
Accounts receivable, trade		41,298			(84,456	)		(38,943	)		(18,300	)
Other receivables		(3,974	)		(145,786	)		(368,528	)		(20,855	)
Due from related parties		(4,281	)		67,066			65,152			85,700
Inventories		(455,605	)		(305,014	)		(378,063	)		(209,909	)
Advances to suppliers		(97,539	)		80,072			158,465			(103,303	)
Prepaid expense		-			(323	)		106,489			-
Accounts payable		94,397			128,164			141,683			-
Advance from customers		(235,849	)		(163,783	)		163,780			147,738
Other payable		17,967			10,203			(4,573	)		2,459
Salary and welfare payable		33,970			(2,592	)		(2,874	)		-
Income tax payable		92,033			30,914			54,767			-
Other taxes payable		186,712			(85,953	)		(102,101	)		5,682
Accrued expenses		40,419			-			12,730			(16,984	)
Net cash provided by (used in) operating activities		549,237			(302,667	)		629,579			(251,536	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property plant and equipment		(104,073	)		(637,697	)		(1,052,106	)		(110,249	)
Increase in construction in progress		-			-			-			(3,489,565	)
Investment in trust		-			(1,461,298	)		(1,607,980	)		-
Decrease in long-term prepaid expenses		-			-			-			(578	)
Purchase of intangible assets		(10,621	)		(4,925	)		(4,926	)		(269	)
Net cash used in investing activities		(114,694	)		(2,103,920	)		(2,665,012	)		(3,600,661	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contribution		-			6,868,140			6,876,914			-
Capital Distribution		-			-			(392,287	)		-
Due to related parties		(713,804	)		(4,132,150	)		(3,639,155	)		3,508,862
Net cash provided (used) by financing activities		(713,804	)		2,735,990			2,845,472			3,508,862

EFFECT OF EXCHANGE RATE CHANGES ON CASH		2,858			59			27,641			28,591

NET INCREASE (DECREASE) IN CASH		(276,403	)		329,462			837,680			(314,744	)

CASH, beginning balance		935,719			98,039			98,039			412,783

CASH, ending balance	$	659,316		$	427,501		$	935,719		$	98,039

SUPPLEMENTAL DISCLOSURES:

Income taxes paid	$	119,200		$	7,062		$	94,981		$	-
Interest paid	$	-		$	-		$	-		$	-

The accompanying notes are an integral part of these financial statements

F-5

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

NOTE 1– ORGANIZATION

The consolidated financial statements include the financial statements of Dynamic Elite International Limited (referred to herein as “Dynamic Elite”), its subsidiary, and variable interest entities (“VIEs”) where Dynamic Elite is deemed the primary beneficiary. Dynamic Elite, its subsidiary and VIEs are collectively referred to herein as the “Company”, “we” and “us”.

Dynamic Elite was incorporated under the laws of the British Virgin Islands on June 2, 2010 as a limited liability company (a BVI company). Dynamic Elite engages in manufacturing and distributing tourmaline products in China. Its wholly owned subsidiary, Tianjin Junhe Enterprise Management Consulting Co., Ltd. (referred to herein as “Junhe”) was incorporated on September 15, 2010 in Tianjin, People Republic of China (“PRC”). Other than the equity interest in Junhe, Dynamic Elite does not own any assets or conducts any operations.

Junhe conducts its business through Tianjin Joway Shengshi Group Co., Ltd. (“Shengshi Group”) that is consolidated as a variable interest entity.

Shengshi Group was incorporated in PRC on May 17, 2007. Shengshi Group is currently owned 99% by Jinghe Zhang, the Company’s current CEO and President and 1% by Song Baogang. Shengshi Group engages in manufacturing and distributing tourmaline products in China. Liaoning Joway Technology Engineering Co., Ltd. (“Joway Technology”), Tianjin Joyway Decoration Engineering Co., Ltd. (“Joyway Decoration”) and Tianjin Oriental Shengtang Import & Export Trading Co., Ltd. (“Shengtang”) are subsidiaries of Shengshi Group.

Joway Technology was incorporated on March 28, 2007 in PRC. It engages in the distribution of Tourmaline Activated Water Machines and the construction of Tourmaline Wellness Houses. Prior to July 25, 2010, Shengshi Group owned 90.91% of Joway Technology. Shengshi Group entered into a share acquisition agreement with Chen Jingyun, another stockholder of Joway Technology on July 25, 2010 to acquire the remaining 9.09% of the share of Joway Technology. As a result of the share acquisition, Joway Technology became a wholly-owned subsidiary of Shengshi Group.

Joway Decoration was incorporated on April 22, 2009 in PRC. It engages in the distribution of Tourmaline Activated Water Machines and Tourmaline Wellness House materials. Prior to July 9, 2010, Shengshi Group owned 90% of Joway Decoration. Shengshi Group entered into a share acquisition agreement with Chen Jingyun, another stockholder of Joway Decoration on July 9, 2010 to acquire the remaining 10% of the shares of Joway Decoration. As a result of the share acquisition, Joway Decoration became a wholly-owned subsidiary of Shengshi Group.

F-6

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

Shengtang was incorporated on September 18, 2009 in the PRC. It engages in purchasing raw materials which it sells to other companies of the group. Prior to July 28, 2010, Shengshi Group owned 95% of Shengtang. Shengshi Group entered into a share acquisition agreement with Wang Aiying, another stockholder of Shengtang on July 28, 2010 to acquire the remaining 5% of the shares of Shengtang. As a result of the share acquisition, Shengtang became a wholly-owned subsidiary of Shengshi Group.

Name	Domicile and Date of Incorporation	Paid in Capital	Percentage of Effective Ownership	Principal Activities
Dynamic Elite International Limited	June 2, 2010, British Virgin Islands	0	100% owned by Crystal Globe Limited	Investment Holding
Tianjin Junhe Enterprise Management Consulting Co., Ltd.	September 15, 2010, PRC	USD 20,000	100% owned by Dynamic Elite International Limited	Advisory
Tianjin Joway Shengshi Group Co.,Ltd	May 17, 2007, PRC	USD 7,216,140.72	99% owned by Jinghe Zhang, and 1% owned by Song Baogang	Production and distribution of tourmaline products
Liaoning Joway Technology Engineering Co., Ltd.	March 28, 2007, PRC	USD 142,072.97	100% owned by Tianjin Joway Shengshi Group Co., Ltd	Distribution of Tourmaline Activated Water Machine and construction of Tourmaline Wellness House
Tianjin Joyway Decoration Engineering Co., Ltd.	April 22, 2009, PRC	USD 292,367.74	100% owned by Tianjin Joway Shengshi Group Co., Ltd	Distribution of Tourmaline Activated Water Machine and Tourmaline Wellness House materials
Tianjin Oriental Shengtang Import & Export Trading Co., Ltd.	September 18, 2009, PRC	USD 292,463.75	100% owned by Tianjin Joway Shengshi Group Co., Ltd	Distribution of tourmaline products

F-7

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

On September 16, 2010, Junhe entered into a series of contractual agreements (the “Contractual Agreements”) with Shengshi Group and Shengshi Group’s owners. The following is a brief description of the Contractual Agreements entered between Junhe and Shengshi Group or Shengshi Group’s owners：

1. Consulting Services Agreement. Pursuant to the consulting services agreement between Junhe and Shengshi Group, Junhe has the right to advise, consult, manage and operate Shengshi Group, and collect and own all of the net profits of the Operating Entities.

2. Operating Agreement. Under the operating agreement between Junhe and Shengshi Group, Junhe has the right to recommend director candidates and appoint the senior executives of Shengshi Group, approve any transactions that may materially affect the assets, liabilities, rights or operations of Shengshi Group, and guarantee the contractual performance by Shengshi Group of any agreements with third parties, in exchange for a pledge by Shengshi Group of its accounts receivable and assets.

3. Voting Rights Proxy Agreement. Under the voting rights proxy agreement between Shengshi Group’s owners and Junhe, the owners of Shengshi Group have vested their collective voting control over Shengshi Group to Junhe and will only transfer their respective equity interests in Shengshi Group to Junhe or its designee.

4. Option Agreement. Under the option agreement between Shengshi Group’s owners and Junhe, the owners of Shengshi Group have granted Junhe the irrevocable right and option to acquire all of their equity interests in Shengshi Group.

5. Equity Pledge Agreement. Under the equity pledge agreement between Shengshi Group’s owners and Junhe, the owners of Shengshi Group have pledged all of their rights, titles and interests in Shengshi Group to Junhe to guarantee Shengshi Group’s performance of its obligations under the Consulting Services Agreement.

As a result of the Contractual Agreements, Shengshi Group is effectively a variable interest entity of Junhe. Accordingly, Dynamic Elite through its wholly-owned subsidiary Junhe consolidates Shengshi Group’s results of operation, assets and liabilities in its financial statements. Hereafter, Dynamic Elite, Junhe, Shengshi Group and its subsidiaries are collectively referred to as the “Company” unless specific reference is made to an individual entity.

F-8

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). The Company’s functional currency is the Chinese Renminbi (“RMB”); however the accompanying consolidated financial statements have been translated and presented in United States Dollars (“USD”). All significant inter-company transactions and balances have been eliminated. The consolidated financial statements include all adjustments that, in the opinion of management, are necessary to make the financial statements not misleading.

Unaudited Financial Statements

The accompanying consolidated financial statements as of June 30, 2010 and for six months ended June 30, 2010 and 2009 are unaudited. In the opinion of management, all necessary adjustments (which include only normal recurring adjustments) have been made to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the year ended December 31, 2009 and 2008 financial statements. The results of operations for the six month period ended June 30, 2010 and 2009 are not necessarily indicative of the operating results to be expected for the full year ended December 31, 2010, or that have been achieved in the year ended December 31, 2009.

Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States of America which require 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. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from those estimates.

Basis of Consolidation

The accompanying consolidated financial statements include the Company and its wholly owned subsidiary and controlled VIEs. All significant inter-company accounts and transactions have been eliminated in the consolidation.

Pursuant to Accounting Standards Codification Topic 810, “Consolidation”, Shengshi Group, as a VIE of Junhe, have been consolidated in the Company’s financial statements. Shengshi Group’s sales are included in the Company’s total sales, its income from operations is consolidated with the Company’s, and the Company’s net income includes all of Shengshi Group’s net income.

F-9

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

Based on the various Contractual Agreements, the Company is able to exercise control over the VIEs, and to obtain in full the economic benefits. Accordingly, the non–controlling interests have no economic interest in the VIEs.

Foreign Currency Translation

The accompanying consolidated financial statements are presented in USD. The functional currency of the Company is RMB. The consolidated financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Equity accounts are translated at their historical exchange rates when the equity transactions occurred. The resulting transaction adjustments are recorded as a component of stockholders’ equity. Gains and losses from foreign currency transactions are included in net income.

	June 30,				December 31,
	2010		2009		2009		2008
Year ended RMB: USD Exchange rate		6.8086		6.8448		6.8372		6.8542
Average yearly RMB: USD Exchange rate		6.83474		6.84323		6.84088		6.96225

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

For the years ended December 31, 2009 and 2008, foreign currency translation adjustments of $ (3,157) and $53,080, respectively, have been reported as comprehensive (loss) or income in the consolidated financial statements. For the six months ended June 30, 2010 and 2009, foreign currency translation adjustments of $35,709 and $5,256, respectively, have been reported as comprehensive income (unaudited) in the consolidated financial statements.

Other Comprehensive Income

Other comprehensive income is defined as the change in equity during the year from transactions and other events, excluding the changes resulting from investments by owners and distributions to owners, and is not included in the computation of income tax expense or benefit. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments.

F-10

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

Concentrations of Credit Risk

The Company's operations are carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC's economy. The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is maintained with state-owned banks within the PRC, and no deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 (formerly Statement of Financial Accounting Standard (“SFAS”) No. 157 Fair Value Measurements) establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

• Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

• Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying amounts reported in the balance sheets for cash, accounts receivable, other receivable, accounts payable, other payable, and amounts due from related parties generally approximate their fair market values based on the short-term maturity of these instruments. The Company has not identified any assets or liabilities that are required to be presented at fair value in these financial statements.

ASC 825-10 “ Financial Instruments ” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

Cash and Cash Equivalents

For financial reporting purposes, the Company considers all highly liquid investments purchased with original maturity of six months or less to be cash equivalents. Balances at financial institutions or state-owned banks within the PRC are not covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

F-11

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

Accounts Receivable

Accounts receivable are carried at net realizable value. The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of the accounts receivable and analyzes historical bad debts, customer concentrations, customers credit worthiness, currents economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of June 30, 2010 (unaudited), December 31, 2009 and December 31, 2008, respectively, the Company has no allowance for doubtful accounts.

Inventories

Inventories are stated at the lower of cost, as determined by the specific identification method on contract level (for each individual contract, inventories cost flow are determined by weighted-average method), or the net realizable value, which is determined on selling prices less any further costs expected to be incurred for completion and disposal. The Company regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine whether valuation allowance is required. As of June 30, 2010 (unaudited), December 31, 2009 and December 31, 2008, respectively, the Company has no reserves for inventories.

Advances to suppliers

Advances to suppliers represent the cash paid in advance for inventory items or construction in progress. The advance payments are meant to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $192,733 and $854,814 as of December 31, 2009 and 2008, respectively. The amounts advanced under such arrangements totaled $149,580 as of June 30, 2010 (unaudited).

Property, Plant, and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation, and include expenditures that substantially increase the useful lives of existing assets.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Estimated useful lives are as follows:

Building		20 years
Operating Equipment		10 years
Office furniture and equipment		3 or 5 years
Vehicles		10 years

F-12

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

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 consolidated statements of operations. Maintenance, repairs and minor renewals are charged directly to expenses as incurred. Significant renewals and betterment to buildings and equipment are capitalized. Leasehold improvements are depreciated over the lesser of the useful life or the life of the lease.

Construction in progress

Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company's plant facilities. No depreciation is provided for construction in progress until such time as the related assets are completed and are ready for their intended use.

Intangible assets

Intangible assets mainly consist of land use rights. All land located in the PRC is owned by the government and cannot be sold to any individual or company. The land use rights granted to the Company are being amortized using the straight-line method over the lease term of 50 years. Other intangible assets are software programs that are amortized over their estimated useful life of 10 years.

Impairment of Long-Lived Assets

Long-lived assets of the Company are reviewed annually as to whether their carrying value has become impaired, pursuant to the guidelines established in FASB ASC 360 (formerly SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets). The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from the related operations. The Company also re-evaluates the periods of depreciation and amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. The Company did not record any impairment loss for the years ended December 31, 2009 and 2008, and the six months ended June 30, 2010 and 2009.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured.

The Company’s sales to customers are recorded when the product is shipped. The Company does not sell product to customers with the right of return. Sales are presented net of value added tax (VAT).

F-13

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

For Tourmaline Wellness House sales, the Company uses the completed contract method. A contract is considered complete when all significant costs have been incurred and the project has been accepted by the customer. Contract costs consist primarily of materials and labor costs. The construction of wellness house generally does not exceed a period of five days.

Shipping expense

Shipping costs are included in selling expenses and totaled $19,573 and $606 for the years ended December 31, 2009 and 2008, respectively, and $17,273 and $2,509 for the six months (unaudited) ended June 30, 2010 and 2009, respectively.

Income Taxes

The Company is governed by the Income Tax Law and associated legislations of the PRC. The Company accounts for income taxes in accordance with FASB ASC 740 “Income Taxes” (formerly SFAS No. 109 Accounting for Income Taxes), which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets is dependent upon future earnings, if any, of which the timing and amount are uncertain.

According to ASC 740, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.

Recently Issued Accounting Pronouncements

In June 2009, the FASB issued Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10 (formerly Statement of Financial Accounting Standards (“SFAS”) No. 168, the FASB ASC and Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162). ASC 105-10 establishes the FASB ASC as the source of authoritative accounting principles recognized by the FASB to be applied in preparation of financial statements in conformity with generally accepted accounting principles in the United States of America. The adoption of this topic has no impact on the Company’s consolidated financial statements. However, references to specific accounting standards have been changed to refer to appropriate sections of the ASC. Subsequent revisions to GAAP by the FASB will be incorporated into the ASC through issuance of Accounting Standards Updates (“ASU”).

F-14

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

In August 2009, the FASB issued FASB ASU 2009-05, “Measuring Liabilities at Fair Value”, which provides amendments to FASB ASC 820, “Fair Value Measurements”. Specifically, FASB ASU 2009-05 clarifies that the quoted price for an identical liability should be used. However, if such information is not available, an entity may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). This ASU also indicates that when estimating the fair value of a liability, a reporting entity is not required to adjust to include inputs relating to the existence of transfer restrictions on that liability. This ASU is effective October 1, 2009. The adoption of this topic has no material impact on the Company’s consolidated financial statements.

In October 2009, the FASB issued FASB ASU 2009-13, “Multiple-deliverable Revenue Arrangements”. FASB ASU 2009-13 provides amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of accounting. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The amendments in this ASU also establish a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. This ASU is effective prospectively for revenue arrangements entered into or materially modified in the fiscal years beginning on or after June 15, 2010. The adoption of this topic has no material impact on the Company’s consolidated financial statements.

In October 2009, the FASB issued ASU 2009-14, “Certain Revenue Arrangements That Include Software Elements.” FASB ASU 2009-14 changes the accounting model for revenue arrangements that include both tangible products and software elements that are “essential to the functionality,” and scopes these products out of current software revenue guidance. Under the amendments, the following components would be excluded from the scope of software revenue recognition guidance: the tangible element of the product, software products bundled with tangible products where the software components and non-software components function together to deliver the product’s essential functionality, and undelivered components that relate to software that is essential to the tangible product’s functionality. This ASU also provides guidance on how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). This amendment will be effective prospectively for revenue arrangements entered into or materially modified in the fiscal years beginning on or after January 1, 2011. The Company is currently evaluating the impact that this topic will have on its consolidated financial statements.

F-15

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

In January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about Fair Value Measurements”, which amends FASB ASC 820, “Fair Value Measures and Disclosures.” FASB ASU 2010-06 require companies to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value hierarchies and information on purchases, sales, issuance and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. This ASU is effective prospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2009. The adoption of this topic will not have a material impact on the Company’s consolidated financial statements.

In February 2010, the FASB issued ASU 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”, which amends FASB ASC 855, “Subsequent Events”. The update provides that SEC filers, as defined in ASU 2010-09, are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The update also requires SEC filers to evaluate subsequent events through the date the financial statements are issued rather than the date the financial statements are available to be issued. The Company adopted ASU 2010-09 upon issuance. The adoption of this topic has no material impact on the Company’s consolidated financial statements.

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

	June 30,		December 31,
	2010		2009		2008
	(Unaudited)		(Audited)		(Audited)
Accounts receivable	$	16,318	$	57,532	$	18,589
Less: Allowance for bad debt		-		-		-
Accounts receivable	$	16,318	$	57,532	$	18,589

NOTE 4 – OTHER RECEIVABLES

Other receivables are primarily comprised of payments made by the Company under a cooperative technology development contract with Tianjin Zhong’ao Biology Technology Co., Ltd. (“Zhong’ao”). The Company entered into this contract in 2009. Pursuant to this agreement, Zhong’ao was to develop a tourmaline solution suitable for human consumption. The agreement provided that Zhong’ao would provide research and development services on the product for a period of five years commencing in January 2009 and ending in December 2014, The fee for these services was to be RMB 3,000,000 (approximately $441,176). The Company prepaid RMB 2,600,000 (approximately $382,352) during 2009, and the remaining balance of RMB 400,000 was to be paid by December 31, 2014. Due to technical problems encountered by Zhong’ao, the Company and Zhong’ao have agreed to terminate the contract. The Company has been in negotiations with Zhong’ao and expects the return of all, or most, of the prepaid fees in October 2010.

F-16

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

NOTE 5 – INVENTORIES

Inventories consisted of the following:

	June 30,		December 31,
	2010		2009		2008
	(Unaudited)		(Audited)		(Audited)
Raw materials	$	293,606	$	176,042	$	114,537
Packages		11,659		13,297		-
Finished goods		680,109		389,573		92,894
Goods shipped in transit		19,103		-		-
Consigned processing material		31,485		-		-
Low value consumables		17,726		14,893		8,311
Total	$	1,053,688	$	593,805	$	215,742

Goods shipped in transit represent goods on the way from the suppliers to the Company.Consigned processing material represent the materials assigned to the processing factory by the Company. Low value consumables represent low priced and easily worn articles and are amortized on equal-split amortization method. Pursuant to this method, half value of the low value consumable should be amortized once used and the remaining half value should be amortized when disposed.

F-17

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

	June 30,			December 31,
	2010			2009			2008
	(Unaudited)			(Audited)			(Audited)
Building	$	5,095,033		$	2,514,807		$	-
Operating Equipment		318,530			298,543			77,592
Office furniture and equipment		186,803			170,192			24,016
Vehicles		223,671			165,900			68,226
Leasehold improvements		211,644			211,644			-
Total		6,035,681			3,361,086			169,834
Less:accumulated depreciation		(316,829	)		(169,906	)		(11,545	)
Property, plant and equipment, net	$	5,718,852		$	3,191,180		$	158,289

Depreciation expense for the years ended December 31, 2009 and 2008 amounted to $158,248 and $11,366, respectively.

Depreciation expense for the six months (unaudited) ended June 30, 2010 and 2009 amounted to $145,649 and $65,173, respectively.

NOTE 7 - CONSTRUCTION IN PROGRESS

During 2007, the Company began to construct manufacturing and logistic facilities as well as administrative offices located in Baodi, Tianjin, PRC, a total of nine buildings. Several of the buildings were completed and occupied during 2009, and the remaining buildings were completed and occupied in 2010. As of December 31, 2009 and 2008, construction in progress of this project was $2,215,567 and $3,681,034, respectively.

NOTE 8 – INTANGIBLE ASSETS

Intangible assets consisted of the following:

	June 30,			December 31,
	2010			2009			2008
	(Unaudited)			(Audited)			(Audited)
Land use rights	$	606,302		$	603,764		$	602,267
Other intangible assets		15,887			5,203			273
Total		622,189			608,967			602,540
Less : accumulated amortization		(34,310	)		(27,913	)		(15,057	)
Intangible assets, net	$	587,879		$	581,054		$	587,483

F-18

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

Amortization expense of intangible assets for the years ended December 31, 2009 and 2008 was $12,812 and $11,858, respectively.

Amortization expense of intangible assets for the six months (unaudited) ended June, 2010 and 2009 was $6,255 and $456, respectively.

The estimated amortization expense for the next five years is as follows:

Estimated amortization expense for
the year ending December 31,	Amount
2010	$	13,662
2011	$	13,662
2012	$	13,662
2013	$	13,662
2014	$	13,662
Thereafter	$	512,744

NOTE 9 – RELATED PARTY TRANSACTIONS

Due from related parties consists of the following:

	June 30,		December 31,
	2010		2009		2008
	(Unaudited)		(Audited)		(Audited)
Si Chang Long	$	1,468,730	$	1,462,587	$	-
Shenyang Joway Zhiye Co.,Ltd		-		-		9,484
Total	$	1,468,730	$	1,462,587	$	9,484

Shenyang Joway Zhiye Co.,Ltd is controlled by Jinghe Zhang, the largest stockholder and CEO of Shengshi Group.

Mr. Si Changlong is the cashier (treasurer) of Shengshi Group and was appointed to purchase a CITIC trust investment on behalf of the Company. This financial product which is available for purchase by individuals only has a higher interest rate than the standard bank interest rate. The amount invested was $ 1,465,620 ( RMB 10 million) from February 25, 2009 to August 25, 2010. Both the principal of RMB 10 million and interest on the investment of RMB 408,000 were paid off on August 26, 2010 from Mr. Si Changlong.

F-19

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

Due to related parties consists of the following:

	June 30,		December 31,
	2010		2009		2008
	(Unaudited)		(Audited)		(Audited)
Shenyang Joway Industrial Development Co., Ltd.	$	138,093	$	694,458	$	77,689
Jinghe Zhang		445,780		604,800		4,637,397
Total	$	583,873	$	1,299,258	$	4,715,086

Shenyang Joway Industrial Development Co., Ltd (“Shenyang Joway”) is controlled by Jinghe Zhang, the largest stockholder and CEO of the Company. The Company purchased inventory of $115,619 and $328,088 from Shenyang Joway in 2008 and 2009 respectively.

From 2007 through 2009, the Company was advanced $694,458 by Shenyang Joway. The advances were non-interest bearing and had no specified repayment terms. The Company repaid $556,365 of these advances during the period January 1, 2010 through June 30, 2010.

On December 1, 2009, we entered into a license agreement with Jinghe Zhang. Pursuant to the license agreement, we are authorized to use for free the trademark “Joway” for a term of nine years and five patents from December 1, 2009 till the expiration dates of the patents.

On May 10, 2007, Shengshi Group entered into a cash advance agreement with Jinghe Zhang. Pursuant to the agreement, Jinghe Zhang agrees to lend money as daily operation capital to Shengshi Group. The advances are interest free and unsecured. The agreement is valid throughout Shengshi Group’s term of operation. During the period beginning May 17, 2007 (inception of Shengshi Group) through June 30, 2010, Shengshi Group received cash operating advances in the aggregate principal amount of $4,637,397 from Jinghe Zhang and $4,184,273 has been paid off by Shengshi Group. As of June 30, 2010, the total unpaid principal balance due Jinghe Zhang for advances was $453,124.

On May 10, 2007, Joway Technology entered into a loan agreement with Jinghe Zhang. Pursuant to the loan agreement, Jinghe Zhang agrees to lend money as daily operation capital to Joway Technology. The loan is interest free and unsecured. The loan agreement is valid throughout Joway Technology’s term of operation. During the period beginning March 28, 2007 (inception of Joway Technology) through June 30, 2010, Joway Technology received cash operating advances in the aggregate principal amount of $22,031 from Jinghe Zhang and $22,031 has been paid off by Joway Technology. As of June 30, 2010 , the total unpaid principal balance due Jinghe Zhang for advances was $0.

The amount due to and from related parties are non-interest bearing and have no specified repayment terms.

F-20

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

NOTE 10 – INCOME TAXES

The Company operates mainly in the People’s Republic of China and is governed by the Income Tax Law of the People’s Republic of China. Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) is at a statutory rate of 25% beginning January 2008, on income as reported in their statutory financial statements after appropriate tax adjustments.

Provisions for income taxes consisted entirely of current income tax expense and for the years ended December, 2009 and 2008 amounted to $141,248 and $5,083, respectively. For the six months ended June 30, 2010 and 2009, income taxes were $211,233 and $34,592, respectively.

NOTE 11 - STATUTORY RESERVES

Pursuant to the laws and regulations of the PRC, annual income of the subsidiaries of the Company are required to be partly allocated to the statutory reserves funds after the payment of the PRC income taxes. The allocation to the statutory reserves funds should be at least 10% of income after tax until the reserve reaches 50% of the entities’ registered capital or members’ equity. The reserve funds are not transferable to the Company in the form of cash dividends, loans or advances. Thus the reserve funds are not available for distribution except in liquidation. For the years ended December 31, 2009 and 2008, the Company had allocated $48,188 and $1,600, respectively. The Company made no allocation to the reserve funds for the six months ended June 30, 2010 and 2009.

NOTE 12 – COMMITMENTS

The Company entered into two agreements to lease its headquarters office for 5 years starting from November 2009. The future minimum obligations under the aforementioned agreements are as follows:

Fiscal Year	Minimum Lease fees
2010	$	89,189
2011		152,895
2012		152,895
2013		152,895
2014		127,413
Total	$	675,287

Rent expense for the year ended December 31, 2009 was $12,730. Rent expense for the six months (unaudited) ended June 30, 2010 was $38,224.

F-21

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

NOTE 13 – SEGMENTS

For the year of 2010, 2009 and 2008, the Company operated in three reportable business segments - (1) Healthcare Knitgoods Series, (2) Daily Healthcare and Personal Care Series and (3) Wellness House and Activated Water Machine Series. The Company's reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations. Information with respect to these reportable business segments is as follows:

For the six months ended June 30, 2010 (unaudited)

	Sales		COGS		Gross profit		Income from operations			Depreciation and amortization		Assets
Healthcare Knitgoods Series	$	1,440,617	$	305,383	$	1,135,234	$	648,495		$	94,164	$	424,443
Daily Healthcare and Personal Care Series		478,320		140,370		337,950		176,341			31,257		242,046
Wellness House Activated Water Machine Series		404,904		193,735		211,169		98,022			26,483		443,890
Segment Totals	$	2,323,841	$	639,488	$	1,684,353		922,858		$	151,904		1,110,378
Other Expense								(23,840	)
Income Tax								(211,233	)
Unallocated Assets													8,939,324
Net Income							$	687,785
Total Assets												$	10,049,702

For the six months ended June 30, 2009 (unaudited)

	Sales		COGS		Gross profit		Income (loss) from operations			Depreciation and amortization		Assets
Healthcare Knitgoods Series	$	446,112	$	123,487	$	322,625	$	96,025		$	29,747	$	183,370
Daily Healthcare and Personal Care Series		250,409		82,463		167,946		40,753			16,674		33,838
Wellness House Activated Water Machine Series		287,935		242,487		45,448		(2,320	)		19,208		307,721
Segment Totals	$	984,456	$	448,437	$	536,019		134,458		$	65,629		524,929
Other Income								3,326
Income Tax								(34,592	)
Unallocated Assets													8,099,340
Net Income							$	103,192
Total Assets												$	8,624,269

F-22

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

For the year ended December 31, 2009

	Sales		COGS		Gross profit		Income from operations			Depreciation and amortization		Assets
Healthcare Knitgoods Series	$	1,723,846	$	428,004	$	1,295,842	$	586,357		$	94,856	$	272,284
Daily Healthcare and Personal Care Series		498,341		122,891		375,450		170,348			27,400		105,213
Wellness House Activated Water Machine Series		886,872		613,788		273,084		54,422			48,804		214,458
Segment Totals	$	3,109,059	$	1,164,683	$	1,944,376		811,127		$	171,060		591,955
Other Expense								(19,344	)
Income Tax								(141,248	)
Unallocated Assets													9,146,057
Net Income							$	650,535
Total Assets												$	9,738,012

For the year ended December 31, 2008

	Sales		COGS		Gross profit		Income (loss) from operations			Depreciation and amortization		Assets
Healthcare Knitgoods Series	$	14,761	$	1,793	$	12,968	$	(124,199	)	$	824	$	50,188
Daily Healthcare and Personal Care Series		144		17		127		(1,211	)		-		68,715
Wellness House Activated Water Machine Series		407,707		302,044		105,663		(15,364	)		22,400		274,840
Segment Totals	$	422,612	$	303,854	$	118,758		(140,774	)	$	23,224		393,743
Other Expense								(1,131	)
Income Tax								(5,083	)
Unallocated Assets													5,262,549
Net Loss							$	(146,988	)
Total Assets												$	5,656,292

NOTE 14 - FRANCHISE REVENUES

The Company enters into franchising agreements to develop retail outlets for the Company's products. The agreements provide that franchisees will sell Company products exclusively. In exchange the Company provides them with geographic exclusivity, discounted product, training and support. The agreements also require franchisees to adhere to certain standards of product merchandising, promotion and presentment. The agreements do not require any initial franchise fees from the franchisees, nor do they require the franchisees to pay continuing royalties. The agreements are generally for terms of three years and are renewable at the mutual agreement of both parties. The Agreements are cancelable at the Company’s discretion if franchisees do not purchase a certain minimum level of product annually.

F-23

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

The following is a breakdown of revenue between franchise and non-franchise customers:

	Six Months ended June 30,					Year ended December 31,
	2010			2009		2009			2008
	(Unaudited)			(Unaudited)
Sales to franchise customers	$	2,016,731		$	622,592	$	2,238,586		$	-
Sales to non-franchise customers		307,110			361,864		870,473			422,612

Total sales	$	2,323,841		$	984,456	$	3,109,059		$	422,612

Change in franchise outlets:

Number of franchise outlets open at beginning of period		175			-		-			-
Number of franchise outlets opened during the period		58			69		182			-
Number of franchise outlets closed during the period		(14	)		-		(7	)		-

Number of franchise outlets open at the end of the period		219			69		175			-

NOTE 15 – SUBSEQUENT EVENTS

On July 9, 2010, Shengshi Group entered into a share acquisition agreement with Chen Jingyun, one of the stockholders of Joway Decoration. Joway Decoration became a wholly-owned subsidiary of Shengshi Group.

On July 25, 2010, Shengshi Group entered into a share acquisition agreement with Chen Jingyun, one of the stockholders of Joway Technology. Joway Technology became a wholly-owned subsidiary of Shengshi Group.

On July 28, 2010, Shengshi Group entered into a share acquisition agreement with Wang Aiying, one of the stockholders of Shengtang. Shengtang became a wholly-owned subsidiary of Shengshi Group.

On October 1, 2010, G2 Ventures, Inc., (“G2 Ventures”) a company incorporated in Texas, entered into a Share Exchange Agreement (the “Exchange Agreement”) with Dynamic Elite. Pursuant to the terms of the Exchange Agreement, Crystal Globe Limited (“Crystal Globe”), the sole stockholder of Dynamic Elite transferred to G2 Ventures all of the Dynamic Elite shares in exchange for the issuance of 15,215,426 shares (the “Shares”) of G2 Ventures common stock (the “Share Exchange”). As a result of the Share Exchange, Dynamic Elite became a wholly-owned subsidiary of G2 Ventures and the stockholders of Dynamic Elite acquired approximately 76.08% of the issued and outstanding stock of G2 Ventures.

F-24

Dynamic Elite International Limited and Subsidiaries

Notes to consolidated Financial Statements

June 30, 2010 and 2009 (Unaudited) and December 31,2009 and 2008 (Audited)

The effect of the share Exchange is such that effectively a reorganization of the entities has occurred for accounting purposes that is deemed to be a reverse acquisition. Subsequent to the share Exchange, the financial statements presented will be those of a combined Dynamic Elite and its subsidiary and controlled VIEs, as if the share Exchange had been in effect retroactively for all periods presented. As previously noted the “Company” for financial statement purposes was the consolidation of Dynamic Elite and its subsidiary, Junhe and its controlled VIEs. Subsequent to the Share Exchange the “Company” is referred to as the consolidation of Dynamic Elite, its subsidiary and controlled VIEs and G2 Ventures, with G2 Ventures as the legal acquirer in Share Exchange, and subsequent to the Share Exchange the parent company of the consolidated entity.

F-25

	2008				2009				2010 (Budget)				2011 (Budget)
Item	RMB		US$ (approx.)		RMB		US$ (approx.)		RMB		US$ (approx.)		RMB		US$ (approx.)
R & D Equipment		1,300		186.72		11,865.05		1,734.43		30,000		4,389		100,000		14,631
R & D Sample		0		0		12,110.10		1,770.25		15,000		2,195		80,000		11,705
TravelExpense		0		0		4,235		619.07		8,000		1,170		50,000		7,316
Salary		6,500		933.61		30,800		4,502.34		155,000		22,678		180,000		26,336
Inspection Fee		0		0		0		0		18,000		2,634		60,000		8,779
Total		7,800		1,120.33		59,010.15		8,626.09		226,000		33,066		470,000		68,767

Mark	Registration /Application No.	Class	Effective Date	Expiration Date	Owner/ Applicant
	6104256	Class 3: Cosmetics and Cleaning Preparations. Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices.	March 21, 2010	March 20, 2020	Shenyang Joway Industrial Development Co., Ltd.
	6104253	Class 11: Environmental control apparatus. Apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply and sanitary purposes.	February 14, 2010	February 13, 2020	Shenyang Joway Industrial Development Co., Ltd.
	4794111	Class 24: Fabrics. Textiles and textile goods, not included in other classes; bed and table covers.	February 21, 2009	February 20, 2019	Jinghe Zhang
	8467175	Class 30:Staple foods.Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces (condiments); spices; ice.	Registration Application Accepted on July 9, 2010		Tianjin Joway Group Co., Ltd.
	8236587	Class 5:Pharmaceuticals. Pharmaceutical, veterinary and sanitary preparations; dietetic substances adapted for medical use, food for babies; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides.	Registration Application Accepted on April 23, 2010
	8236524	Class 24: Fabrics. Textiles and textile goods, not included in other classes; bed and table covers.	Registration Application Accepted on April 23, 2010

8029074	Class 11:Environmental control apparatus.
	Apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply and sanitary purposes.
8029052	Class 5:Pharmaceuticals. Pharmaceutical, veterinary and sanitary preparations; dietetic substances adapted for medical use, food for babies; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides.	Registration Application Accepted on January 27, 2010
8029009	CLASS 2: Paints Paints, varnishes, lacquers; preservatives against rust and against deterioration of wood; colorants; mordants; raw natural resins; metals in foil and powder form for painters, decorators, printers and artists.

8236733	Class 30: Staple foods. Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces (condiments); spices; ice.	Registration Application Accepted on April 23, 2010
8236706	Class 25:Clothing. Clothing, footwear, headgear.
8236538	Class 24: Fabrics. Textiles and textile goods, not included in other classes; bed and tablecovers.
8236684	Class 11:Environmental control apparatus. Apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply and sanitary purposes.
8236608	Class 5:Pharmaceuticals. Pharmaceutical, veterinary and sanitary preparations; dietetic substances adapted for medical use, food for babies; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides.
8236641	Class 3:Cosmetics and Cleaning Preparations. Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices.

Agency		Functions

State Food and Drug Administration (“SFDA”)		Supervise the entire process from research and development, manufacturing, and distribution to utilization of drugs; supervise and coordinate the safety management of food, health food and cosmetics and organize investigations of serious accidents.

National Development and Reform Commission (“NDRC”)		Make strategic and mid- to long-term plans for the PRC healthcare industry; regulate drug prices; manage disaster relief funds and carry out healthcare development projects sponsored by the government.

Ministry of Commerce (“MOFCOM”)		Formulate regulations and policies on foreign trade, foreign direct investments, consumer protection, and market competition; negotiate bilateral and multilateral trade agreements.

Departments		Number of Employees
Management		8
Sales		13
Distribution		13
Design		4
Production		33
Research and development		6
Franchising		15
Finance		7
Project		2

Ministry of Science and Technology (“MST”)		Lay out science and technology development plans and policies; draft relevant regulations and rules and guarantee implementation of regulations and rules

General Administration of Quality Supervision, Inspection and Quarantine (“AQSIQ”)		Manage national quality, metrology, entry-exit commodity inspection, entry-exit health quarantine, entry-exit animal and plant quarantine, import-export food safety, certification, accreditation, and standardization, as well as enforce administrative laws

State Administration of Taxation (“SAT”)		Draft tax regulations and implementation rules and propose tax policies.

State Administration of Foreign Exchange (“SAFE”)		Make regulations and policies governing foreign exchange market activities and manage state foreign exchange reserves.

	For the six months ended June 30,						For the year ended December 31,
		2010			2009		2009			2008
		(Unaudited)			(Unaudited)		(Audited)			(Audited)
REVENUES		$	2,323,841		$	984,456	$	3,109,059		$	422,612
COGS			639,488			448,437		1,164,683			303,854
GROSS PROFIT			1,684,353			536,019		1,944,376			118,758
OPERATING EXPENSES			761,495			401,561		1,133,249			259,532
INCOME (LOSS) FROM OPERATIONS			922,858			134,458		811,127			(140,774	)
OTHER (EXPENSE) INCOME, NET			(23,840	)		3,326		(19,344	)		(1,131	)
INCOME (LOSS) BEFORE INCOME TAXES			899,018			137,784		791,783			(141,905	)
INCOME TAXES			211,233			34,592		141,248			5,083
NET INCOME (LOSS)		$	687,785		$	103,192	$	650,535		$	(146,988	)

	Healthcare Knitgoods Series			% of Total			Daily Healthcare and Personal Care Series			% of Total			Wellness House and Activated Water Machine Series			% of Total			Total
REVENUES	$	1,440,617			62.0	%	$	478,320			20.6	%	$	404,904			17.4	%	$	2,323,841
COGS		305,383			47.8	%		140,370			22.0	%		193,735			30.3	%		639,488
GROSS PROFIT		1,135,234			67.4	%		337,950			20.1	%		211,169			12.5	%		1,684,353
GROSS MARGIN		78.8	%					70.7	%					52.2	%					72.5	%
OPERATING EXPENSES		486,739			63.9	%		161,609			21.2	%		113,147			14.9	%		761,495
INCOME FROM OPERATIONS	$	648,495			70.3	%	$	176,341			19.1	%	$	98,022			10.6	%	$	922,858

Land No.	1201150240000790000 Zi D-4-7-039
Land Use Right Certificate No.	124031002677
User of Land	Tianjin Joway Shengshi Group Co.,Ltd
Location	Baodi District, Tianjin, PRC
Usage	Industrial
Area (Square Meters)	27,520.4
Form of Acquisition	Grant from related Land Management Authority
Expiration Date	October 10, 2057

	Building 1	Building 2	Building 3	Building 4
Certificate No.	124031002677
Owner	Tianjin Joway Shengshi Group Co.,Ltd
Location	Baodi District, Tianjin, PRC
Category	Private
Area (Square Meters)	5,585.31	3,389.48	2,999.28	1,186.79
Usage of Design	Nonresidential
Structure	Mixture

	Building 5	Building 6	Building 8&9	Building 7
Certificate No.	124031002677
Owner	Tianjin Joway Shengshi Group Co.,Ltd
Location	Baodi District, Tianjin, PRC
Category	Private
Area (Square Meters)	95.64	202.69	4,470.56	4,043.91
Usage of Design	Nonresidential			Residential
Structure	Mixture

Lessor	Lessee	Location	Term	Rent Per Year
Aiying Wang	Tianjin Joway Shengshi Group Co.,Ltd.	Rooms 1601-1603, 16th floor, Tianjin Global Zhiye Square, 309 Nanjing Road, Nankai District, Tianjin, PRC	November 1, 2009 – October 31, 2014	RMB 216,000 (approximately $31,764.71) for the first year and RMB 432,000 (approximately $63,529.41) per year thereafter.
Guifen Feng	Tianjin Joway Shengshi Group Co., Ltd.	Rooms 1604-1606, 16th floor, Tianjin Global Zhiye Square, 309 Nanjing Road, Nankai District, Tianjin, PRC	November 1, 2009 – October 31, 2014	RMB 306,500 (approximately $ 45,073.53) for the first year and RMB 613,000 (approximately $90,147.06) per year thereafter.

Name and Address	Number of Shares of Common Stock Beneficially Owned(1)		Percentage Ownership of Shares of Common Stock

Owner of More than 5% of Class

Crystal Globe Limited (4) P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands		18,515,426		92.58	%

Directors and Executive Officers

Gust C. Kepler (2) 1810 ThreeGalleriaTower 13155 Noel Road, Dallas, TX75240		—		—

Jinghe Zhang(3) 16th Floor, 309 Nanjing Road, Nankai District, Tianjin, PRC		—		—

Yuan Huang(3) 16th Floor, 309 Nanjing Road, Nankai District, Tianjin, PRC		—		—

All directors and executive officers (2 persons)

Name	Age	Position
Jinghe Zhang	45	President, Chief Executive Officer, and sole director
Yuan Huang	39	Chief Financial Officer, Secretary and Treasurer

Name	Age	Position
Jingyun Chen	46	General Manager
Yuan Huang	39	Financial Manager

Name	Age	Position
Yanli Feng	38	General Manager
Yuan Huang	39	Financial Manager

	Annual Compensation					Long Term Compensation
Name and Principal Position	Fiscal Year End	Salary ($)		Bonus ($)		All other and annual Compensa- tion and LTIP Payouts ($)		Securities under Options/ SARS Granted (#)		Restricted Shares or Restricted Share Units (#)

Gust Kepler	2009		0		0		0		0		0
President, Chief Executive Officer,	2008		0		0		0		0		0
Chief Financial Officer, Secretary, and Sole Director	2007		0		0		0		0		0

Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)

Jinghe Zhang	2008		12,352.94		0		0		0		0		0		0		12,352.94
General Manager	2009		12,352.94		0		0		0		0		0		0		12,352.94

Yuan Huang	2008		0		0		0		0		0		0		0		0
Finance Manager	2009		735.29		0		0		0		0		0		0		735.29

Pro Forma Consolidated Financial Statements:

Pro Forma Consolidated Balance Sheets As of June 30, 2010 (unaudited)	F-2

Pro Forma Consolidated Statement of Operations for the Six Months Ended June 30, 2010	F-3

Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2009	F-4

Notes to Pro Forma Consolidated Financial Statements	F-5

	Dynamic Elite International Ltd.			G2 VENTURES, INC.			Pro Forma Adjustments			Pro Forma Combined Total
ASSETS

CURRENT ASSETS:
Cash and cash equivalent	$	659,316		$	1,446		$			$	660,762
Accounts receivable, net		16,318			-			-			16,318
Other receivables		395,339			-			-			395,339
Due from related party		1,468,730			-			-			1,468,730
Inventories		1,053,688			-			-			1,053,688
Advances to suppliers		149,580			-			-			149,580
Prepaid other tax		-			-			-			-
Total current assets		3,742,971			1,446			-			3,744,417

PROPERTY, PLANT AND EQUIPMENT, net		5,718,852			-			-			5,718,852

OTHER ASSETS:
Intangible assets, net		587,879			-			-			587,879
Total other assets		587,879			-			-			587,879
		-
Total assets	$	10,049,702		$	1,446		$	-		$	10,051,148

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Accounts payable	$	426,293		$	13,758		$	-		$	440,051
Advances from customers		126,759			-			-			126,759
Taxes payable		216,519			-			-			216,519
Other payables		108,974			-			-			108,974
Due to related parties		583,873			-			-			583,873
Stockholder advances		-			127,649			-			127,649
Total liabilities		1,462,418			141,407			-			1,603,825

STOCKHOLDERS' EQUITY:
Preferred stock of G2 Ventures, Inc. - par value $0.001; 1,000,000 shares authorized; no shares issued and outstanding		-			-			-			-
Common stock of G2 Ventures, Inc. - par value $0.001; 200,000,000 shares authorized; 4,784,574 shares issued and outstanding; 20,000,000 shares outstanding on pro forma		-			4,785			15,215	(a)		20,000
Common stock of Dynamic Elite International Limited - par value $1; 50,000 shares authorized; 10,000 shares issued and outstanding		10,000			-			(10,000	)(b)		-
Additional paid-in-capital		7,272,954			167,811			(327,772	)(a,b)		7,112,993
Statutory reserves		49,788			-			-			49,788
Retained earnings (deficit)		1,133,561			(312,557	)		312,557	(b)		1,133,561
Accumulated other comprehensive income		130,981			-			-			130,981
Subscription receivable		(10,000	)		-			10,000	(b)		-
Total stockholders' equity		8,587,284			(139,961	)		-			8,447,323
Total liabilities and stockholders' equity	$	10,049,702		$	1,446		$	-		$	10,051,148

	Dynamic Elite International Ltd.			G2 VENTURES, INC.			Pro Forma Adjustments			Pro Forma Combined Total

REVENUES	$	2,323,841		$	-			-		$	2,323,841

COST OF REVENUES		639,488			-			-			639,488

GROSS PROFIT		1,684,353			-			-			1,684,353

Selling expenses		235,670			-			-			235,670
General and administrative expenses		525,825			18,674			-			544,499
OPERATING EXPENSES		761,495			18,674			-			780,169

INCOME FROM OPERATIONS		922,858			(18,674	)		-			904,184

Interest income		1,175			-			-			1,175
Other (expense) income		1,092			-			-			1,092
Non operating Income (expenses)		(26,107	)		-			-			(26,107	)
OTHER (EXPENSE) INCOME, NET		(23,840	)		-			-			(23,840	)

INCOME BEFORE INCOME TAXES		899,018			(18,674	)		-			880,344

INCOME TAXES		211,233			-			-			211,233

NET INCOME (LOSS)		687,785			(18,674	)		-			669,111

OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments		35,709			-			-			35,709

COMPREHENSIVE INCOME (LOSS)	$	723,494		$	(18,674	)		-		$	704,820

NET INCOME PER COMMON SHARE, BASIC AND DILUTED				$	-					$	0.04

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED					4,784,574			15,215,426	(c)		20,000,000

Description of Pro Forma Adjustments	Dr		Cr

a - Stock Issuance in reverse merger
Additional paid in capital		15,215
Common shares				15,215

b - To eliminate retained deficit of G2 VENTURES, INC.
Additional paid in capital		312,557
Common Stock		10,000
Retained Deficit				312,557
Subscription receivable				10,000

c - To give effect to 15,215,426 common shares issued with Exchange Agreement

Exhibit Number		Description
3.1		Articles of Incorporation *

3.2		Bylaws *

3.3		Specimen of Common Stock Certificate*

10.1		Share Exchange Agreement, dated October 1, 2010, by and among G2 Ventures, Crystal Globe and Dynamic Elite

10.2		Consulting Services Agreement, dated September 16, 2010, by and between Junhe Consulting and Joway Group

10.3		Operating Agreement, dated September 16, 2010, by and between Junhe Consulting and Joway Group

10.4		Option Agreement, dated September 16, 2010, by and between Junhe Consulting and Joway Group

10.5		Proxy Agreement, dated September 16, 2010, by and between Junhe Consulting and Joway Group

10.6		Equity Pledge Agreement, dated September 16, 2010, by and between Junhe Consulting and Joway Group

10.7		Cash Advance Agreement, dated May 10, 2007, by and between Jinghe Zhang and Joway Technology

10.8		Cash Advance Agreement, dated May 10, 2007, by and between Jinghe Zhang and Joway Group

10.9		Property Lease Agreement, dated June 25, 2009, by and between Joway Group and Aiying Wang

10.10		Property Lease Agreement, dated June 25, 2009, by and between Joway Group and Guifen Feng

10.11		Supply Agreement, dated October 1, 2008, by and between Tianjin Daxing Import & Export Trade Co., Ltd. and Joway Technology

10.12		Supply Agreement, dated October 9, 2008, by and between Tianjin Daxing Import & Export Trade Co., Ltd. and Joway Group

10.13		Supply Agreements, by and between Shenyang Joway and Joway Group

10.14		Trademark & Patent License Agreement, dated December 1, 2009, by and between Joway Group and Jinghe Zhang

10.15		Trademark License Agreement, dated December 1, 2009, by and between Joway Group and Shenyang Joway.

10.16		Employment Agreement, dated September 28 , 2010, by and between G2 Ventures and Jinghe Zhang

10.17		Employment Agreement, dated September 28, 2010, by and between G2 Ventures and Yuan Huang

10.18		Entrust Agreement, dated February 20, 2009, by and between Joway Group and Changlong Si

14.1		Code of Ethics **

16.1		Letter from the Company to Turner, Stone & Company, LLP, CPA, dated October 5, 2010

16.2		Consent Letter of Turner, Stone & Company, LLP, dated October 6, 2010

21.1		List of Subsidiaries

23.1		Consent Letter of Sherb, dated October 6, 2010

	G2 VENTURES, INC.

Date: October 6, 2010

	/s/ Jinghe Zhang
	Name: Jinghe Zhang
	Title: President and Chief Executive Officer