VLOV INC. - FORM 10-Q/A - October 27, 2010

Attached files

file	filename
EX-31.2 - VLOV INC.	v200031_ex31-2.htm
EX-32.2 - VLOV INC.	v200031_ex32-2.htm
EX-32.1 - VLOV INC.	v200031_ex32-1.htm
EX-31.1 - VLOV INC.	v200031_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

x Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the quarterly period ended: March 31, 2010

¨ Transition Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the transition period from ______________ to _______________

Commission File Number: 000-53155

VLOV INC.

(Exact name of registrant as specified in its charter)

Nevada		20-8658254
(State or other jurisdiction of incorporation of origination)		(I.R.S. Employer Identification Number)

11/F., Xiamen Guanyin Shan International Commercial Operation Centre, A3-2 124 Hubin Bei Road, Siming District Xiamen, Fujian Province People’s Republic of China		N/A
(Address of principal executive offices)		(Zip code)

(86595) 2345999

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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

Large accelerated filer ¨		Accelerated filer ¨

Non-accelerated filer ¨		Smaller reporting company x

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each issuer’s classes of common stock, as of the latest practicable date: 16,767,258 shares issued and outstanding as of May 10, 2010.

EXPLANATORY NOTE

This Form 10-Q/A (“Amendment No.1”) is being filed by VLOV, Inc. (the “Company”) to amend the Company’s Form 10-Q for the three months ended March 31, 2010 filed with the Securities and Exchange Commission (“SEC”) on May 17, 2010 (“Initial 10-Q”). This Amendment No.1 is filed to (A) restate the consolidated statements of income and comprehensive income for the three months ended March 31, 2010 (i) to include preferred stock in its fully diluted earnings per share computation, and (ii) to allocate its net income between common stock and preferred stock so that, using the two-class method, only net income allocated to common stock is reflected in the basic earnings per share computation; and (B) amend note 13 to the financial statements included with the Initial 10-Q consistent with these changes. Please see note 20 to the Company’s financial statements filed with this Amendment No. 1.

These changes were made, and this Amendment No. 1 is filed in connection with, a letter from the SEC dated September 20, 2010 regarding Amendment No. 2 to the Company’s Registration Statement on Form S-1 (333-163803). Except as required to reflect the changes noted above, this Amendment No. 1 does not attempt to modify or update any other disclosures set forth in the Initial 10-Q. Other events or circumstances occurring after the date of the Initial 10-Q or other disclosures necessary to reflect subsequent events have not been updated subsequent to the date of the Initial 10-Q. Accordingly, this Form Amendment No.1 should be read in conjunction with the Initial 10-Q and our filings with the SEC subsequent to the filing of the Initial 10−Q. The filing of this Amendment No. 1 shall not be deemed an admission that the original filing, when made, included any untrue statement of material fact or omitted to state a material fact necessary to make a statement not misleading.

TABLE OF CONTENTS

TO QUARTERLY REPORT ON FORM 10-Q/A

FOR THE QUARTER ENDED MARCH 31, 2010

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	F-1
	Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009	F-1
	Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2010 and 2009 (unaudited)	F-2
	Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited)	F-3
	Notes to the Consolidated Financial Statements	F-4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	10
Item 4.	Controls and Procedures	10

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Reserved	12
Item 5.	Other Information	12
Item 6.	Exhibits	13
Signatures		15

CAUTION REGARDING FORWARD-LOOKING INFORMATION

All statements contained in this Quarterly Report on Form 10-Q/A (“Form 10-Q/A”) for VLOV Inc., other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words “believe,” “anticipate,” “expect” and words of similar import. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties that may cause actual results to differ materially.

Such risks include, among others, the following: national and local general economic and market conditions; our ability to sustain, manage or forecast our growth; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.

Consequently, all of the forward-looking statements made in this Form 10-Q/A are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VLOV, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

	March 31, 2010		December 31,
	(unaudited)		2009

ASSETS
Current Assets:
Cash and cash equivalents	$	11,634	$	11,036
Time deposits		2,240		-
Accounts and other receivables		11,174		9,191
Amount due from a director		-		2,428
Trade deposits		333		2,309
Inventories		2,362		285
Prepaid expenses		717		763
Total current assets		28,460		26,012
Property, plant and equipment, net		953		966
Land use rights		260		263
TOTAL ASSETS	$	29,673	$	27,241

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,837	$	2,565
Accrued expenses and other payables		595		583
Amount due to a director		97		30
Derivative liability - common stock warrants		6,025		3,684
Short-term bank loans		587		734
Income taxes payable		1,416		1,601
Total current liabilities		10,557		9,197
Non-current Liabilities:
Other payable		75		75
Total liabilities		10,632		9,275

Stockholders’ Equity:
Common stock, $0.00001 par value, 100,000,000 shares authorized, 16,667,957 and 16,667,957 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively		1		1
Preferred stock, $0.00001 par value, 100,000,000 shares authorized, 2,796,721 and 2,796,721 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively (liquidation preference $7,998,622)		4,003		4,003
Additional paid-in capital		6,319		6,319
Statutory reserve		913		913
Retained earnings		7,244		6,173
Accumulated other comprehensive income		561		560
Total stockholders' equity		19,041		17,969
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	29,673	$	27,241

See accompanying notes to consolidated financial statements

F-1

VLOV, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2010			2009
	(Restated)

Net sales	$	18,067		$	17,865
Cost of sales		11,145			11,467
Gross profit		6,922			6,398

Operating expenses:
Selling expenses		1,484			745
General and administrative expenses		835			616
		2,319			1,361

Income from operations		4,603			5,037

Other income (expenses):
Change in fair value of derivative liability		(2,341	)		-
Interest income		26			7
Interest expense		(22	)		(14	)
		(2,297	)		(7	)

Income before provision for income taxes		2,266			5,030
Provision for income taxes		1,195			1,257

Net income		1,071			3,773

Other comprehensive income:
Foreign currency translation adjustment		(1	)		16

Comprehensive income	$	1,070		$	3,789

Allocation of net income for calculating basic earnings per share:
Net income attributable to common shareholders		917			3,773
Net income attributable to preferred shareholders		154
Net income	$	1,071		$	3,773

Basic earnings per share- common	$	0.06		$	0.25

Diluted earnings per share	$	0.05		$	0.25

Weighted average number of common shares outstanding:
Basic		16,667,957			15,312,000
Diluted		20,060,571			15,312,000

See accompanying notes to consolidated financial statements

F-2

VLOV, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Three Months Ended March 31,
	2010				2009

Cash flows from operating activities:
Net income		$	1,071		$	3,773
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			17			26
Change in fair value of derivative liability			2,341			-
(Increase) decrease in assets:
Accounts receivables			(1,983	)		(1,627	)
Trade deposits			1,975			-
Inventories			(2,077	)		23
Prepaid expenses			46			(22	)
Increase (decrease) in liabilities:
Accounts payable			(728	)		1,485
Accrued expenses and other payables			14			(284	)
Income and other tax payables			(185	)		(47	)

Net cash provided by operating activities		$	491		$	3,327

Cash flows from investing activities:
Purchases of property, plant and equipment			(1	)		-
Time deposits			(2,240	)		-
Amount due to/from a director			2,494			-
Net cash provided by investing activities		$	253		$	-

Cash flows from financing activities:
Proceeds from debt financing			293			440
Payments of short-term debt			(440	)		(293	)
Payments of dividend *			-			(5,128	)
Net cash used in financing activities			(147	)		(4,981	)
Effect of exchange rate changes			1			(5	)
Net (decrease) increase in cash and cash equivalents			598			(1,659	)
Cash and cash equivalents, beginning of period			11,036			2,863
Cash and cash equivalents, end of period		$	11,634		$	1,204

Supplemental disclosure of cash flow information:
Interest paid		$	2		$	14
Income taxes paid		$	1,092		$	571

See accompanying notes to consolidated financial statements

* The dividend was paid to the private shareholders prior to the reverse merger.

F-3

VLOV, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of business and organization

VLOV Inc. (the “Company”) was incorporated on October 30, 2006 in the State of Nevada, under the name Sino Charter, Inc. The Company changed its name to VLOV, Inc. on March 20, 2009.

On February 13, 2009, the Company completed a stock exchange transaction with the stockholders of Peng Xiang Peng Fei Investments Limited (“PXPF”), whereby 14,560,000 restricted shares of common stock were issued to the stockholders of PXPF in exchange for 100% of the common stock of PXPF (the “Share Exchange”). The completion of the Share Exchange resulted in a change of control.

The Share Exchange has been accounted for as a reverse acquisition and recapitalization of the Company whereby PXPF is deemed to be the accounting acquirer (legal acquiree) and the Company is the accounting acquiree (legal acquirer). The accompanying consolidated financial statements are in substance those of PXPF and the Company is deemed to be a continuation of the business of PXPF. At the time of the reverse merger with PXPF, the Company had no assets or liabilities and the 1,454,421 shares of its common stock outstanding immediately prior to the time of the Share Exchange have been accounted for at their par value at the time of the transaction.

PXPF is a limited liability company incorporated on April 30, 2008 in the British Virgin Islands. PXPF designs, manufactures and sells fashion apparel under the brand name “VLOV”. All current operations of the Company are in the People’s Republic of China (“China” or the “PRC”).

The Company does not conduct any substantive operations of its own and conducts its primary business operations through a variable interest entity, Jinjiang Yinglin Jinduren Fashion Limited (“Yinglin Jinduren”), which is controlled by the Company’s subsidiary, Dong Rong Capital Investment Limited (“HK Dong Rong”). HK Dong Rong is a limited liability company incorporated in Hong Kong on January 5, 2005 originally under the name Korea Jinduren International Dress Limited (“Korea Jinduren”) and was acquired by PXPF from the majority shareholders of PXPF on September 22, 2008.

Yinglin Jinduren is a limited company incorporated without shares in the PRC on January 19, 2002, of which the initial paid-in capital of RMB10,000,000 ($1,237,000) was funded by the majority shareholders of PXPF. The management of Yinglin Jinduren is comprised of Mr. Qingqing Wu as Chairman and Executive Director, and Mr. Zhifan Wu as Executive Director. Mr. Qingqing Wu is the Company’s Chief Executive Officer, President and Chairman of the Board of Directors, and Mr. Zhifan Wu is a Company director. Mr. Qingqing Wu and Mr. Zhifan Wu, who are brothers, hold 65.91% and 34.09%, respectively, of the ownership interests of Yinglin Jinduren.

PRC law currently has limits on foreign ownership of domestic PRC companies. To comply with these foreign ownership restrictions, on December 28, 2005, HK Dong Rong (then known as Korea Jinduren) entered into certain exclusive agreements with Yinglin Jinduren and its shareholders. Pursuant to these agreements, HK Dong Rong provides exclusive consulting services to Yinglin Jinduren in return for a consulting services fee which is equal to Yinglin Jinduren’s net profits. Prior to the Exchange Agreement, however, certain dividends were paid from net income to the equity owners of Yinglin Jinduren. In addition, Yinglin Jinduren’s shareholders have pledged their equity interests in Yinglin Jinduren to HK Dong Rong, irrevocably granted HK Dong Rong an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Yinglin Jinduren and agreed to entrust all the rights to exercise their voting power to the person(s) appointed by HK Dong Rong. Through these contractual arrangements, HK Dong Rong has the ability to control Yinglin Jinduren’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring shareholder approval. As part of these contractual arrangements, HK Dong Rong and Yinglin Jinduren entered into an operating agreement which, amongst other matters, precludes Yinglin Jinduren from borrowing money, selling or acquiring assets, including intellectual property rights, providing guarantees to third parties or assigning any business agreements, without the prior written consent of HK Dong Rong. HK Dong Rong also agreed that, if any guarantee for Yinglin Jinduren’s performance of any contract or loan was required, HK Dong Rong would provide such guarantee to Yinglin Jinduren.

As a result of these contractual arrangements, HK Dong Rong is entitled to receive the expected residual returns of Yinglin Jinduren. Additionally, although Yinglin Jinduren has been profitable, in the event that Yinglin Jinduren were to incur losses, HK Dong Rong would be obligated to absorb a majority of the risk of loss from Yinglin Jinduren’s activities as a result of its inability to receive payment for its accumulated consulting fees that are equal to Yinglin Jinduren’s net income. The Company believes that the equity investors in Yinglin Jinduren do not have the characteristics of a controlling financial interest, and that the Company is the primary beneficiary of the operations and residual returns of Yinglin Jinduren and, in the event of losses, would be required to absorb a majority of such losses. Accordingly, the Company consolidates Yinglin Jinduren’s results, assets and liabilities in the accompanying financial statements. Due to the contractual arrangements, the net income and interest allocable to the noncontrolling interest is zero.

F-4

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

The Company’s consolidated assets do not include any collateral for Yinglin Jinduren’s obligations. The creditors of Yinglin Jinduren do not have recourse to the general credit of the Company.

On November 19, 2009, HK Dong Rong incorporated Dong Rong (China) Co., Ltd. in the PRC as its wholly-owned subsidiary (“China Dong Rong”), with registered capital of $8 million. As of December 31, 2009, $4 million has been contributed to China Dong Rong and the remaining registered capital will be contributed within two years after the date of incorporation. It is the intention of the Company and the equity owners of Yinglin Jinduren to transfer the business operations of Yinglin Jinduren to China Dong Rong; however, such transfer had not yet occurred as of March 31, 2010.

Effective April 27, 2010, Mr. Yushan Zheng resigned as the Company’s chief financial officer and was replaced by Mr. Bennet P. Tchaikovsky.

(b) Basis of presentation and consolidation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.

As previously described, the Company, through its wholly owned subsidiary HK Dong Rong, consolidates Yinglin Jinduren as Yinglin Jinduren is considered to be a variable interest entity (VIE) and the Company is considered to be its primary beneficiary.

Because the Company and Yinglin Jinduren are under common control, the initial measurement of the assets and liabilities of Yinglin Jinduren for the purpose of consolidation by the Company was at book value. The Company has had no other business activities except for the exclusive agreements with Yinglin Jinduren and its shareholders.

The consolidated financial statements include the financial statements of the Company, its subsidiary and the variable interest entity, Yinglin Jinduren. All significant inter-company transactions and balances between the Company, its subsidiary and the variable interest entity are eliminated upon consolidation.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make certain 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. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions we are required to make. Estimates that are critical to the accompanying consolidated financial statements relate primarily to returns, sales allowances and customer chargebacks, the valuation of long-lived assets and the identification and valuation of derivative instruments. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary. Actual results could differ from these estimates.

(d) Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (‘‘FASB’’) issued a statement establishing the FASB Accounting Standards Codification™ (the “FASB ASC" or the “Codification"). The Codification became the single source of authoritative U.S. generally accepted accounting principles (‘‘US GAAP’’) recognized by the FASB to be applied by non-governmental entities. Rules and interpretive releases of the United States Securities and Exchange Commission under authority of federal securities laws are also sources of authoritative US GAAP for SEC registrants. The Codification did not change existing US GAAP but incorporated existing accounting and reporting standards into a new topical structure with a new referencing system. Authoritative standards included in the Codification are designated by their Accounting Standards Codification (‘‘ASC’’) topical reference, and new standards will be designated as Accounting Standards Updates (‘‘ASU’’), with a year and assigned sequence number. We have updated our references to US GAAP to reflect the Codification.

F-5

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(e) Revenue Recognition

A majority of the Company’s products are manufactured on its behalf by third parties, based on orders for the Company’s products received from customers. The Company is responsible for product design, product specification, pricing to the customer, the choice of third-party manufacturer, product quality and credit risk associated with the customer receivable. As such, the Company acts as a principal and records revenues on a gross basis.

The Company recognizes revenues when (a) the price to the customer is fixed or determinable, (b) persuasive evidence of an arrangement exists, (c) delivery has occurred and (d) collectability of the resulting receivable is reasonably assured. Revenue from the sales of goods is recognized on the transfer of significant risks and rewards of ownership, which generally coincides with the time when the goods are delivered and the title has passed to the customer. Revenue excludes value-added tax and is stated after deduction of trade discounts and allowances.

(f) Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents comprise cash at bank and on hand and demand deposits with banks.

(g) Accounts receivable

Accounts receivable, which are unsecured, are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company evaluates the collectability of its accounts receivable based on a combination of factors, including customer credit-worthiness and historical collection experience. Management reviews the receivable aging and adjusts the allowance based on historical experience, financial condition of the customer and other relevant current economic factors. As of March 31, 2010, all of the trade receivable balances were aged less than 90 days. Management has determined no allowance for uncollectible amounts is required.

(h) Depreciation and Amortization

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation of property, plant and equipment is computed using the straight-line method based on the following estimated useful lives:

Buildings	30 years
Furniture, fixtures and equipment	5 years
Motor vehicles	5 years
Office equipment	3 to 5 years
Plant and machinery	5 to 15 years

(i) Inventories

Inventories are stated at the lower of cost or market value, determined by the weighted average method. Work-in-progress and finished goods inventories consist of raw materials, direct labor and overhead associated with the manufacturing process.

(j) Foreign Currency Translation

The Company has its local currency, Renminbi (“RMB”), as its functional currency. The consolidated financial statements of the Company are translated from RMB into U.S. Dollars (“US$”). Accordingly, all assets and liabilities are translated at the exchange rates prevailing at the balance sheet dates, all income and expenditure items are translated at the average rates for each of the periods and equity accounts, except for retained earnings, are translated at the rate at the transaction date. Retained earnings reflect the cumulative net income (loss) translated at the average rates for the respective periods since inception less dividends translated at the rate at the transaction date.

F-6

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People's Bank of China (the "PBOC") or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. The rates of exchange quoted by the People's Bank of China on March 31, 2010 and December 31, 2009 were US$1.00 to RMB 6.84 and RMB 6.84, respectively. The average translation rates of US$1.00 to RMB 6.84 and RMB 6.85 were applied to the income statement accounts for the three months ended March 31, 2010 and 2009, respectively.

Translation adjustments are recorded as other comprehensive income in the consolidated statement of stockholders equity and comprehensive income and as a separate component of stockholders equity.

Commencing from July 21, 2005, China adopted a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. Since then, the PBOC administers and regulates the exchange rate of US$ against RMB taking into account the demand and supply of RMB, as well as domestic and foreign economic and financial conditions.

(k) Land Use Rights and Intangible Assets

All land in the PRC is owned by the government and cannot be sold to any individual or company. However, the government grants the user a “land use right” to use the land.

Land use right is stated at cost less accumulated amortization and impairment losses. Amortization is calculated on the straight-line method over the estimated useful life of 50 years. The Company’s land use right expires in 2054.

Intangible assets of the Company are reviewed annually to determine whether their carrying value has become impaired. The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations. The Company also re-evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. As of March 31, 2010, the Company expects these assets to be fully recoverable.

(l) Long-Lived Assets

The Company estimates the future undiscounted cash flows to be derived from an asset to assess whether or not a potential impairment exists when events or circumstances indicate the carrying value of a long-lived asset may be impaired. If the carrying value exceeds the Company’s estimate of future undiscounted cash flows, the Company then calculates the impairment as the excess of the carrying value of the asset over the Company’s estimate of its fair market value.

(m) Comprehensive Income

The Company’s only component of other comprehensive income is foreign currency translation gains and losses. The foreign currency translation gains/(losses) for the three months ended March 31, 2010 and 2009 were US$(1,000) and US$16,000 respectively. Accumulated other comprehensive income is recorded as a separate component of stockholders’ equity.

(n) Income Taxes

The Company is mainly subject to income taxes in the PRC. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

F-7

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company evaluates its uncertain tax positions and prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return.

(o) Advertising Costs

Advertising costs are expensed in the period in which the advertisements are first run. Advertising expense for the three months ended March 31, 2010 and 2009 were approximately US$1.37 million and US$0.70 million, respectively. Advertising costs include advertising subsidy expense which is accrued based on the terms in effect with distributors and paid when all attaching conditions have been completed.

(p) Shipping and Handling Costs

Shipping and handling costs are expensed as incurred and included in cost of sales.

(q) Research and Development Costs

The Company charges all product design and development costs to expense when incurred. Product design and development costs aggregated approximately US$0.51 million and US$0.41 million for the three months ended March 31, 2010 and 2009, respectively.

(r) Derivative Financial Instruments

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.

We review the terms of convertible debt or convertible preferred stock that we issue to determine whether there are embedded derivative instruments, including the embedded conversion option, that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the sale of convertible debt or equity instruments, we may issue freestanding warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.

Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based derivative financial instruments, we use a binomial option pricing model to value the derivative instruments.

(s) Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, which principally include cash and cash equivalents, time deposits, accounts receivable and accounts payable, approximate their fair values due to the relatively short maturity of such instruments.

The carrying amount of the Company’s short-term borrowings approximates their fair value based upon current rates and terms available to the Company for similar debt.

Warrants that are recorded as derivative instrument liabilities are carried at their fair value, with changes in the fair value reported as charges or credits to income each period.

F-8

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(t) Earnings Per Share

Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares used in the basic earnings per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common stock equivalents outstanding. We exclude equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is anti-dilutive.

(u) New Accounting Pronouncements

The following lists the Accounting Standards Codification Updates that are relevant to the Company’s consolidated financial statements and were effective during the periods covered by these financial statements. These pronouncements, however, did not have material impact on the Company’s financial statements.

Pronouncement	Issued	Title

ASU No. 2009-15	October 2009	Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing

ASU No. 2009-16	December 2009	Transfers and Servicing (Topic 860): Accounting for Transfers and Financial Assets.

ASU No. 2010-01	January 2010	Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash – a consensus of the FASB Emerging Issues Task Force

ASU No. 2010-02	January 2010	Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification

ASU No. 2010-05	January 2010	Compensation - Stock Compensation (Topic718): Escrowed Share Arrangements and the Presumption of Compensation

The following pronouncements will become effective after the periods covered by these financial statements. The Company is assessing their impact, but does not believe that the adoption of these pronouncements will have a material impact on the Company’s financial statements.

Pronouncement	Issued	Title
ASU No. 2009-13	October 2009	Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements – a consensus of the FASB Emerging Issues Task Force

ASU No. 2009-17	December 2009	Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities

ASU No. 2010-06	January 2010	Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements

ASU No. 2010-09	February 2010	Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements

ASU No. 2010-11	March 2010	Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives

F-9

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

At its meeting on March 18, 2010, the FASB’s Emerging Issues Task Force reached a consensus on five issues (the "Issues"). The Issues were ratified by the FASB at its meeting on March 31, 2010, and the related Accounting Standards Codification Updates to be issued will become authoritative accounting guidance. None of these Issues are anticipated to have a material effect on the Company’s consolidated financial statements.

(2) TIME DEPOSITS

Time deposits (in thousands):

	March 31,		December 31,
	2010		2009
	(unaudited)
Time deposits	$	2,240	$	-

	$	2,240	$	-

Time deposits represent amounts deposited with Xiamen International Bank and will mature on September 30, 2010.

(3) AMOUNT DUE FROM A DIRECTOR

The Company raised capital from October 2009 to December 2009 by issuing convertible preferred stocks, common stock and warrants.

To avoid currency translation losses from RMB appreciation against the US$ and given China’s currency conversion controls over business enterprises, the Company withdrew part of the net proceeds from the capital raise (US$2,428,000) and converted the amount into RMB. This amount was then deposited into a personal account held in trust by one of the Company’s directors, Mr. Qingqing Wu.

The RMB remained on deposit in the director’s bank account until March 29, 2010, when it was withdrawn, converted into US$ and deposited into the Company's HK Dong Rong account.

(4) INVENTORIES

Inventories consist of the following (in thousands):

	March 31,		December 31,
	2010		2009
	(unaudited)
Raw materials	$	760	$	145
Work in process		164		15
Finished goods		1,438		125

	$	2,362	$	285

F-10

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(5) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is summarized as follows (in thousands):

	March 31,			December 31,
	2010			2009
	(unaudited)
Buildings	$	914		$	914
Furniture, fixtures and equipment		83			83
Motor vehicles		196			196
Office equipment		25			24
Plant and machinery		207			207

Total property, plant and equipment		1,425			1,424
Less : accumulated depreciation		(472	)		(458	)

Property, plant and equipment, net	$	953		$	966

There was no capitalized interest during the three months ended March 31, 2010 and 2009.

(6) LAND USE RIGHTS

The Company’s land use right is summarized as follows (in thousands):

	March 31,			December 31,
	2010			2009
	(unaudited)
Land use right	$	315		$	315
Less: accumulated amortization		(55	)		(52	)
Land use right, net	$	260		$	263

There was no capitalized interest during the three months ended March 31, 2010 and 2009.

(7) ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables are summarized as follows (in thousands):

	March 31,		December 31,
	2010		2009
	(unaudited)
Current portion:
Accrued salaries and wages	$	90	$	165
Accrued expenses		392		305
Advertising subsidies payables		113		113

	$	595	$	583

Non-current portion:
Advertising subsidies payables		75		75
	$	670	$	658

F-11

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(8) RELATED PARTY TRANSACTIONS

	March 31		December 31,
	2010		2009
	(unaudited)
Amount due from a director:
Mr. Qingqing Wu	$	-	$	2,428,000

Amount due to a director:
Mr. Qingqing Wu	$	97,000	$	30,000

Please see Note 3 regarding the amount due from a director.

The amount due to a director is unsecured, interest-free and repayable on demand.

Pursuant to trademark licensing agreements license contracts with Mr. Qingqing Wu, a Company director, the Company has the rights to use four trademarks which are owned by the director without consideration, although to date, the Company has not utilized these trademarks. The director is in the process of transferring these trademarks to the Company. Costs associated with the transfer of these trademarks are not significant.

(9) DERIVATIVE FINANCIAL INSTRUMENTS

On October 27, November 17 and December 1, 2009, respectively, the Company issued 723,052, 675,308 and 326,767 common stock purchase warrants (the “Warrants”), respectively. Each Warrant entitles its holder to purchase one share of common stock of the Company at an exercise price of $3.43 per share (subject to certain adjustments) for a period of three years. The Company is entitled to redeem the Warrants for the then applicable exercise price (currently $3.43) if the volume-weighted average price of our common stock for 20 consecutive days exceeds 200% of the then applicable exercise price.

The Company uses a binomial option pricing model to value these Warrants. In valuing the Warrants at the time they were issued and at March 31, 2010, the Company used the market price of its common stock on the date of valuation, an expected dividend yield of 0% and the remaining period to the expiration date of the Warrants. All Warrants can be exercised by the holder at any time.

Because of the limited historical trading period of the Company’s common stock, the expected volatility of its common stock over the remaining life of the Warrants, which has been estimated at 85%, is based on a review of the volatility of entities considered by management as comparable. The risk-free rates of return used ranged from 1.14% to 1.66%, based on constant maturity rates published by the U.S. Federal Reserve, applicable to the remaining life of the Warrants.

At March 31, 2010, the following derivative liabilities related to common stock warrants were outstanding:

Issue Date	Expiration Date	# of Warrants		Exercise Price Per Share		Value - December 31, 2009		Value - March 31, 2010

October 27, 2009	October 27, 2012		723,052	$	3.43	$	1,538,959	$	2,522,980

November 17 2009	November 17, 2012		675,308		3.43		1,440,952		2,359,286

December 1, 2009	December 1, 2012		326,767		3.43		704,510		1,142,532

			1,725,127			$	3,684,421	$	6,024,798

F-12

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

During the three months ended March 31, 2010, the Company recognized a loss of $2,340,377 from the change in fair value of the warrant liability.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s derivative financial instruments which are required to be measured at fair value on a recurring basis are measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following represents a reconciliation of the changes in fair value of financial instruments measured at fair value using Level 3 inputs during the quarter ended March 31, 2010:

	Warrants

Balance – December 31, 2009	$	3,684,421
Fair value adjustments		2,340,377
Balance – March 31, 2010	$	6,024,798

Estimating the fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, valuation techniques are sensitive to changes in the trading market price of our common stock, which may exhibit significant volatility. Because derivative financial instruments are initially and subsequently carried at fair values, our income will reflect the volatility in these estimate and assumption changes.

(10) SHORT-TERM BORROWINGS

The carrying amounts of the Company’s borrowings are as follows (in thousands):

	March 31 ,2010					December 31 ,2009
	Amount		Interest Rate			Amount		Interest Rate
	(unaudited)
Bank loan	$	587		7.700	%	$	734		7.700	%

As of March 31, 2010, the short-term borrowings were secured by a personal guarantee granted by Mr. Qingqing Wu, a director of the Company.

(11) COMMON STOCK

The Company is authorized to issue 100,000,000 shares of common stock, $0.00001 par value. The Company had 1,454,421 common shares outstanding prior to the Share Exchange with PXPF, and, as described in Note 1, issued 14,560,000 common shares to the shareholders of PXPF in connection with the Share Exchange. For accounting purposes, the shares issued to the shareholders of PXPF are assumed to have been outstanding on January 1, 2008 and the 1,454,421 shares held by the existing shareholders of the Company prior to the Share Exchange on February 13, 2009 are assumed to have been issued on that date in exchange for the net assets of the Company.

On December 1, 2009, the Company sold 653,534 shares of common stock to certain accredited investors.

At March 31, 2010, 16,667,957 shares of common stock were issued and outstanding.

F-13

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(12) PREFERRED STOCK

The Company is authorized to issue 100,000,000 shares of preferred stock, $0.00001 par value, of which 2,800,000 shares have been designated as Series A Convertible Preferred Stock.

On October 27 and November 17, 2009, the Company sold 1,446,105 and 1,350,616 shares, respectively, of its Series A Convertible Preferred Stock (the “Preferred Shares”) to certain accredited investors. Each Preferred Share is convertible into one share of common stock, at a conversion price of $2.86 per share (subject to certain adjustments) at any time at the holder’s option, and will automatically convert if the common stock is qualified for listing on either the NASDAQ Capital Market or the NYSE Amex Equities. The designation, rights, preferences and other terms and provisions of the Preferred Shares are set forth in the Certificate of Designation filed with the Nevada Secretary of State on October 23, 2009. The Preferred Shares are entitled to participate in any dividends declared and paid on the common stock on an as-converted basis. Preferred Shares holders are also entitled to notice of any stockholders’ meeting and vote together with common stock holders on an as-converted basis. The Preferred Shares have a liquidation preference of $2.86 per share, plus any accrued but unpaid dividends. At March 31, 2010, 2,796,721 Preferred Shares were outstanding, with an aggregate liquidation preference of $7,998,622.

(13) EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

(a) Basic

“Basic earnings per share - common” is calculated by dividing the net income attributable to common shareholders of the Company by the weighted average number of common shares. Using the two class method pursuant to ASC 260-10-45, the Company allocated its net income to preferred and common shareholders during the three months ended March 31, 2010, based on the number of common shares outstanding during the periods shown (taking into account the number of preferred shares converted into common shares at the end of such periods on a 1-for-1 basis), and participating preferred shares outstanding during the periods shown.

	Three Months Ended March 31,
	2010		2009
Income attributable to common shareholders of the Company	$	917	$	3,773
Income attributable to preferred shareholders of the Company		154		-
Net income		1,071		3,773
Weighted average number of common shares outstanding		16,667,957		15,312,000

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of common shares outstanding to assume conversion of all dilutive potential common shares. The Company has two categories of dilutive potential common shares: the Preferred Shares issued in October and November 2009 (the “Preferred Shares Financing”), and the Warrants issued in connection with both the Preferred Shares Financing and the shares of common stock sold in December 2009. The Warrants are assumed to have been converted into common shares and the calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s common stock) based on the monetary value of the subscription rights attached to outstanding Warrants. The Preferred Shares that were outstanding at the end of the respective periods are assumed to have been converted into common shares on a 1-for-1 basis. Since the Preferred Shares are included in the diluted calculation, net income (attributable to both common and preferred shareholders) is used. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the Warrants.

	Three Months Ended March 31,
	2010		2009
Net income	$	1,071	$	3,773
Weighted average number of common shares outstanding		16,667,957		15,312,000

Adjustment for:
Preferred stock		2,796,721
Warrants		595,893		-
		20,060,571		15,312,000

F-14

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(14) INCOME TAXES

The provisions for income tax expense were as follows (in thousands):

	Three Months Ended March 31,
	2010		2009
	(unaudited)		(unaudited)
PRC enterprise income tax - current	$	1,195	$	1,257

The Company is mainly subject to income taxes in the PRC and provision for the PRC corporate income tax was calculated based on the statutory tax rate of 33% on the assessable income arose in or before year 2007. Pursuant to the PRC Enterprise Income Tax Law (the “Income Tax Law”) passed by the Tenth National People’s Congress on 16 March 2007, the PRC income tax rates for domestic and foreign enterprises are unified at 25% effective from January 1, 2008. The enactment of the Income Tax Law is not expected to have any significant financial effect on the amounts accrued in the consolidated balance sheet in respect of taxation payable and deferred taxation.

The following table reconciles the US statutory rates to the Company's effective tax rate for three months ended March 31, 2010 and 2009:

	For Three Months Ended March 31,
	2010			2009
	(Unaudited)			(Unaudited)
U.S. statutory rates		34	%		34	%
Foreign income not recognized in U.S.		(34	)		(34	)
China income tax rate		25			25
Effective tax rate		25	%		25	%

The following table reconciles the theoretical tax expense calculated at the statutory rates to the Company’s effective tax expense for the three months ended March 31, 2010 and 2009 respectively.

Reconciliation of effective tax expense (in thousands):

	For Three Months Ended March 31,
	2010		2009
	(Unaudited)		(Unaudited)
Theoretical tax expense calculated at PRC statutory enterprise income tax rate of 25%	$	567	$	1,257
Tax effect of non-deductible expenses		585		—
Other		43		—
Effective tax expense	$	1,195	$	1,257

The applicable rate of Hong Kong profits tax for the three months ended March 31, 2010 and 2009 was 16.5%. However, no provision for Hong Kong profits tax has been made for the quarter ended March 31, 2010 and 2009 as the Company did not carry on any business subject to the Hong Kong profits tax.

PXPF is a company incorporated as an international company in the BVI and is fully exempt from Domestic Corporate Tax of the BVI.

As of the balance sheet dates presented, there were no deferred tax assets or liabilities.

F-15

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(15) STATUTORY RESERVES

Under PRC regulations, Yinglin Jinduren may pay dividends only out of its accumulated profits, if any, determined in accordance with PRC GAAP. In addition, it is required to set aside at least 10% of its after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of its registered capital. The statutory reserves are not distributable in the form of cash dividends to the Company but can be used to make up prior year cumulative losses. As of March 31, 2010, the registered capital was RMB 10,000,000 and the statutory reserves have been fully funded.

(16) LEASE COMMITMENTS

The Company leases certain premises under long-term, non-cancelable leases and year-to-year leases. These leases are accounted for as operating leases. Rent expense amounted to US$18,000 and US$11,000 for the quarter ended March 31, 2010 and 2009 respectively.

Future minimum payments under long-term, non-cancelable leases as of March 31, 2010, are as follows (in thousands):

	Future minimum payments
Nine Months Ending December 31:
2010	$	53
Year Ending December 31:
2011		70
2012		54
	$	177

(17) BUSINESS AND CREDIT CONCENTRATIONS

The Company operates in the fashion apparel industry and generates all of its sales in the PRC. The fashion apparel industry is impacted by the general economy. Changes in the marketplace would significantly affect management’s estimates and the Company’s performance.

The Company had distribution agreements with 12 distributors at March 31, 2010. The Company had the following concentrations of business with each distributor (customer) constituting greater than 10% of the Company’s sales:

	Three months ended March 31,
	2010			2009
	(unaudited)			(unaudited)
Distributors
Distributor A		14.85	%		20.19	%
Distributor B		*	%		12.11	%
Distributor C		*	%		10.06	%
Distributor D		13.71	%		13.46	%
Distributor E		13.74	%		11.03	%

F-16

VLOV, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

The Company’s accounts receivable concentrations of distributors (customers) constituting greater than 10% of the Company's accounts receivable were as follows:

	March 31,
	2010			2009
	(unaudited)			(unaudited)
Distributors
Distributor A		10.96	%		16.47	%
Distributor B		10.39	%		14.37	%
Distributor C		14.66	%		12.06	%
Distributor D		12.74	%		10.69	%
Distributor E		*			10.65	%
Distributor F		10.09	%		10.63	%

The Company had the following concentrations of business with each vendor constituting greater than 10% of the Company’s purchases:

	Three Months Ended March 31,
	2010			2009
	(unaudited)			(unaudited)
Vendors
Vendor A		13.75	%		10.74	%
Vendor B		11.15	%		11.15	%
Vendor C		*			17.00	%
Vendor D		10.82	%		*

The above concentrations make the Company vulnerable to a near-term severe impact should the relationships be terminated.

* The concentration is less then 10%

(18) BENEFIT PLAN

Pursuant to the relevant regulations of the PRC government, Yinglin Jinduren participates in a local municipal government retirement benefits scheme (the “Scheme”), whereby Yinglin Jinduren is required to contribute a certain percentage of the basic salaries of its employees to the Scheme to fund their retirement benefits. Contributions under the Scheme are charged to the income statement as incurred. Contributions to the Scheme were US$29,000 and US$43,000 for the quarter ended March 31, 2010 and 2009 respectively.

(19) SUBSEQUENT EVENTS

On April 27, 2010, Mr. Yushan Zheng voluntarily resigned as the Company’s Chief Financial Officer and the board of directors appointed Mr. Bennet P. Tchaikovsky to replace Mr. Zheng.

(20) RESTATEMENT

The Company restated its consolidated statements of income and comprehensive income for the three months ended March 31, 2010 in order to (1) reflect preferred stock in its fully diluted earnings per share calculation, and (2) allocate net income between common stock and preferred stock in the computation of basic earnings per share using the two-class method.

Three months ended March 31, 2010:

	Originally
	Filed		Adjustment			Restated
Net income attributable to common shareholders	1,071			(154	)		917
Net income attributable to preferred shareholders	-			154			154
Basic earnings per share- common	$	0.06	$	(0.01	)	$	0.05
Diluted earnings per share	$	0.06	$	(0.01	)	$	0.05
Weighted average number of common shares and participating preferred shares Outstanding:
Diluted		17,384,002		2,676,569			20,060,571

F-17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto that are included elsewhere in this report. In addition to historical information, the following discussion contains certain forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to our future plans, objectives, expectations and intentions. These statements may be identified by the use of words such as “may, “will,” “could,” “expect,, “anticipate,” “intend,” “believe, “estimate,” “plan,” “predict” and similar terms or terminology, or the negative of such terms or other comparable terminology. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of our annual report on Form 10-K for the year ended December 31, 2009 and filed with the SEC on April 15, 2010. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.

Our financial statements are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United States. See “Exchange Rates” below for information concerning the exchanges rates at which Renminbi were translated into U.S. Dollars at various pertinent dates and for pertinent periods.

Overview

We design, develop, manufacture, distribute and sell casual apparel and clothing products in the PRC targeted toward middle-class Chinese men under the brand name “V·LOV”. We sell our products to our independent distributors, each of whom is granted rights to market and sell our products in a defined market or territory. As of March 31, 2010, we had agreements with 12 distributors throughout northern, central and southern China. After distributors place purchase orders for our products, such products are manufactured by us and our outsourced manufacturers and delivered to our distributors. As of March 31, 2010, our distributors owned and operated 742 points of sales, or POS, across the PRC, including counters, concessions and free standing stores and store-in-stores. We maintain and exercise control over advertising and marketing activities from our headquarters in Fujian, China, where we set the tone for integrity, consistency and direction of the V·LOV brand image throughout China.

All of our business operations are carried out by our variable interest entity Jinjiang Yinglin Jinduren Fashion Limited (“Yinglin Jinduren”), which we control through contractual arrangements between Yinglin Jinduren and our wholly-owned subsidiary Dong Rong Capital Investment Limited (“HK Dong Rong”), a Hong Kong company formerly known as Korea Jinduren International Dress Limited. Through these contractual arrangements, we have the ability to control Yinglin Jinduren’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring shareholder approval, and receive a fee equal to Yinglin Jinduren’s net income. As a result of these contractual arrangements, we are considered the primary beneficiary of Yinglin Jinduren’s operations. Accordingly, we consolidate Yinglin Jinduren’s results, assets and liabilities in our financial statements. Mr. Qingqing Wu, our Chairman Chief Executive Officer, and his brother Mr. Zhifan Wu, a director of our Company, hold 65.91% and 34.09%, respectively, of the ownership interests of Yinglin Jinduren.

We also have a wholly-owned PRC subsidiary through HK Dong Rong called Dong Rong (China) Co., Ltd. (“China Dong Rong”). It is our intention and that of the equity owners of Yinglin Jinduren to transfer all of the business operations currently conducted by Yinglin Jinduren to China Dong Rong sometime in 2010. As of March 31, 2010 and through the date of this report, however, such transfer has not occurred and China Dong Rong currently conducts no business activities.

Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in Note 1 to our consolidated financial statements. Our critical accounting policies are those where we have made the most difficult, subjective or complex judgments in making estimates, and/or where these estimates can significantly impact our financial results under different assumptions and conditions. Our critical accounting policies are:

Basis of presentation and consolidation

As discussed above and in Note 1 to our consolidated financial statements, our operations are conducted through Yinglin Jinduren, a PRC company in which the equity interests are held by Mr. Qingqing Wu, our chief executive officer, and his brother Mr. Zhifan Wu, a director of our Company. Through contractual arrangements, we control the daily operations of Yinglin Jinduren, as well as all matters requiring shareholder approval. We receive a fee equal to Yinglin Jinduren’s net income and, in the event it were to incur losses, would be expected to absorb those losses through our inability to collect the accumulated net income due to us. As a result, we are considered to be the primary beneficiary of Yinglin Jinduren’s operations and accordingly we consolidate its assets, liabilities and results of operations in our consolidated financial statements. We have no operations other than those conducted through Yinglin Jinduren.

Revenue Recognition

A majority of our products are manufactured on our behalf by third parties, based on orders for our products received from customers. We are responsible for product design, product specification, pricing to the customer, the choice of third party manufacturer, product quality and credit risk associated with the customer receivable. As such, the Company acts as a principal, not as an agent, and records revenues on a gross basis.

We recognize revenues in accordance with FASB ASC 605-10-S99-1 when (a) the price to the customer is fixed or determinable, (b) persuasive evidence of an arrangement exists, (c) delivery has occurred and (d) collectability of the resulting receivable is reasonably assured. Revenue from the sales of goods is recognized on the transfer of significant risks and rewards of ownership, which generally coincides with the time when the goods are delivered to the carrier designated by the customer and title passes to the customer.

Accounts receivable

Accounts receivable, which are unsecured, are stated at the amount we expect to collect. We continuously monitor collections and payments from our customers (our distributors) and maintain a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified. Historically, our credit losses have not been significant and within our expectations; however, we cannot guarantee that we will continue to experience the same credit loss rates that have been experienced in the past. On average, we collect our receivables within 90 days. Our ability to collect is attributed to the steps that we take prior to extending credit to our distributors as discussed above. If we are having difficulty collecting from a distributor, we take the following steps: cease existing shipments to the distributor, visit the distributor to request payment on past due invoice, and if necessary, take legal recourse. If all of these steps are unsuccessful, management would then determine whether or not the receivable should be written off.

Income Taxes

We are subject to income taxes, primarily in the PRC. We believe we have adequately provided for all taxes due but amounts asserted by tax authorities could be greater or less than the amounts we have accrued. We have concluded all PRC corporate income tax matters through March 31, 2010 and do not anticipate adjustments as a result of any tax audits within the next twelve months.

Derivative instruments

In connection with the sale of debt or equity instruments, we may sell warrants to purchase our common stock. In certain circumstances, these warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.

The identification of, and accounting for, derivative instruments is complex. Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income in the period in which the changes occur. At March 31, 2010, the warrants that we issued in 2009 in connection with sales of our series A convertible preferred stock and our common stock are accounted for as derivative instrument liabilities, We determine the fair value of these instruments using a binomial option pricing model. That model requires the use of a number of assumptions, including our expected dividend yield and the expected volatility of our common stock price over the life of the instruments. Because of the limited trading history for our common stock, we have estimated the future volatility of our common stock price based on the historical experience of other entities considered comparable to us. The identification of, and accounting for, derivative instruments and the assumptions used to value them can significantly affect our financial statements.

Results of Operations

	Three Months Ended March 31,
	2010					2009
	Amount		% of total revenue				Amount		% of total revenue
	(Amounts in thousands, in U.S. Dollars, except for percentages)
Net Sales	$	18,067		100.00	%		$	17,865		100.00	%
Gross Profit	$	6,922		38.31	%		$	6,398		35.81	%
Operating Expense	$	2,297		12.83	%		$	1,361		7.62	%
Income from Operations	$	4,603		25.47	%		$	5,037		28.19	%
Other Expenses /(Income)	$	2,297		12.71	%		$	7		0.04	%
Income Tax Expenses	$	1,195		6.61	%		$	1,257		7.04	%
Net Income	$	1,071		5.93	%		$	3,773		21.11	%

Sales

Sales were $18,067,000 for the three months ended March 31, 2010, compared with $17,865,000 for the same period in 2009, an increase of $202,000 or 1.13%. We generate revenue primarily from the sales of our apparel products to our distributors, who sell them at retail locations throughout northern, central and southern China. These retail locations, also known as points of sales (“POS”), include counters, concessions, free standing stores and store-in-stores. We do not own or operate any V·LOV retail locations ourselves; the POS are established and owned by our distributors, each of whom operates its network of POS directly or through third-party retail operators. The slight increase in our sales was primarily attributable to our marketing efforts in northeastern China, including Beijing, Shandong and Liaoning. Since 2009, we have been devoting our marketing efforts in these regions because of the number of second to third-tier cities in northeastern China that we believe are potential markets for our products. As a result of such focused marketing efforts, we recorded sales increases to our distributors for these regions ranging from 16.26% to 51% as detailed in the table below. At the same time, our sales to distributors for southern regions such as Zhejiang, Jiangxi, and Yunnan declined due to distributor underperformance. We are undertaking an evaluation of our underperforming distributors including POS location, physical store environment, and marketing strategies. By taking these steps, we hope to improve the underperformance of these distributors.

The following table sets forth the geographical breakdown of our total sales revenue for the periods indicated:

	Three Months ended March 31,
	2010				2009
	(Amounts in thousands, in U.S. Dollars, except for percentages)
	$		% of total sales revenue		$		% of total sales revenue		Growth (Decline) in 2010 compared with 2009
Beijing	$	951	5.26	%	$	818	4.58	%		16.26	%
Zhejiang	$	2,683	14.85	%	$	3,607	20.19	%		(25.62)	%
Shandong	$	2,482	13.74	%	$	1,970	11.03	%		25.99	%
Jiangxi	$	1,198	6.63	%	$	2,163	12.11	%		(44.61)	%
Yunnan	$	1,430	7.91	%	$	1,797	10.06	%		(20.42)	%
Shanxi	$	1,222	6.76	%	$	1,285	7.19	%		(4.90)	%
Liaoning	$	1,786	9.89	%	$	1,185	6.63	%		50.72	%
Hubei	$	2,478	13.72	%	$	2,405	13.46	%		3.04	%
Henan	$	1,305	7.22	%	$	1,303	7.29	%		0.15	%
Guangxi	$	1,250	6.92	%	$	1,200	6.72	%		4.17	%
Sichuan	$	870	4.82	%	$	-	0.00	%		NA	%
Fujian	$	412	2.28	%	$	132	0.74	%		212.12	%
Total Net Sales	$	18,067	100.00	%	$	17,865	100.00	%		1.13	%

Cost of Sales and Gross Profit Margin

The following table sets forth the components of our cost of sales and gross profit both in absolute amount and as a percentage of total net sales.

	Three Months ended March 31,
	2010					2009
	Amount		% of total revenue				Amount		% of total revenue
	(Amounts in thousands, in U.S. Dollars, except for percentages)
Total Net Sales	$	18,067		100.00	%		$	17,865		100.00	%
O.E.M. Finished Goods Cost	$	10,881		60.23	%		$	10,685		59.81	%
Raw Materials	$	149		0.82	%		$	465		2.60	%
Labor	$	74		0.41	%		$	169		0.95	%
Overhead and Other Expenses	$	41		0.23	%		$	148		0.83	%
Total Cost of Sales	$	11,145		61.69	%		$	11,467		64.19	%
Gross Profit	$	6,922		38.31	%		$	6,398		35.81	%

A majority of our products are manufactured on our behalf by third parties, based on orders for our products that we receive from our distributors. Historically, we have outsourced to two types of manufacturers: (1) sub-contractors, which require us to provide them with the raw materials for our products, and (2) O.E.M. manufacturers, that supply their own raw materials. Beginning in 2009, we have shifted our outsourcing entirely to O.E.M. manufacturers.

As we shifted away from sub-contracting manufacturing entirely to O.E.M. manufacturing in 2009, the components of our cost of sales have correspondingly shifted. Raw material costs accounted for 0.82% of our total net sales for the three months ended March 31, 2010, compared with 2.60% for the same period in 2009. With the shift to O.E.M. manufacturing, O.E.M. finished goods cost, representing our purchase of finished products from the O.E.M. manufacturers, correspondingly increased, accounting for 60.23% of our total net sales for the three months ended March 31, 2010, compared with 59.81% for the same period in 2009.

Labor cost accounted for 0.41% of our total net sales for the three months ended March 31, 2010, compared with 0.95% for the same period in 2009. The decrease was primarily attributable to a decrease in our own manufacturing activities.

Similarly, overhead and other expenses relating to cost of sales also decreased, down to 0.23% of our total net sales for the three months ended March 31, 2010, compared with 0.83% for the same period in 2009.

Total cost of sales for the three months ended March 31, 2010 was $11,145,000, a decrease of 2.81% from $11,467,000 for the same period in 2009. As a percentage of total net sales, our cost of sales decreased to 61.69% of total net sales for the three months ended March 31, 2010, down from 64.19% of total net sales for the same period in 2009. Consequently, gross margin as a percentage of total net sales increased to 38.31% for the three months ended March 31, 2010 from 35.81% for the same period in 2009. Our gross margin increased mainly due to an increase of 15% in our average selling prices.

The following table sets forth our total net sales, cost of sales, gross profit and gross margin of the geographic market segments for the periods indicated.

	Three Months ended March 31,
	2010									2009
	Net Sales		Cost of sales		Gross profit		Gross profit %			Net Sales		Cost of sales		Gross profit		Gross profit %
	(Amounts in thousands, in U.S. Dollars, except for percentages)
Beijing	$	951	$	587	$	364		38.28	%	$	818	$	525	$	293		35.82	%
Zhejiang	$	2,683	$	1,653	$	1,030		38.39	%	$	3,607	$	2,315	$	1,292		35.82	%
Shandong	$	2,482	$	1,530	$	952		38.36	%	$	1,970	$	1,265	$	705		35.79	%
Jiangxi	$	1,198	$	739	$	459		38.31	%	$	2,163	$	1,389	$	774		35.78	%
Yunnan	$	1,430	$	882	$	548		38.32	%	$	1,797	$	1,153	$	644		35.84	%
Shanxi	$	1,222	$	753	$	469		38.38	%	$	1,285	$	825	$	460		35.80	%
Liaoning	$	1,786	$	1,101	$	685		38.35	%	$	1,185	$	760	$	425		35.86	%
Hubei	$	2,478	$	1,528	$	950		38.34	%	$	2,405	$	1,544	$	861		35.80	%
Henan	$	1,305	$	805	$	500		38.31	%	$	1,303	$	836	$	467		35.84	%
Guangxi	$	1,250	$	771	$	479		38.32	%	$	1,200	$	770	$	430		35.83	%
Sichuan	$	870	$	536	$	334		38.39	%	$	-	$	-	$	-		NA	%
Fujian	$	412	$	260	$	152		36.89	%	$	132	$	85	$	47		35.61	%
Total	$	18,067	$	11,145	$	6,922		38.31	%	$	17,865	$	11,467	$	6,398		35.81	%

Selling, General and Administrative Expenses

	Three Months ended 31,
	2010					2009
	$		% of Total Net Sales			$		% of Total Net Sales
	(Amounts in thousands, in U.S. Dollars, except for percentages)
Gross Profit	$	6,922		38.31	%	$	6,398		35.81	%
Operating Expenses:
Selling Expenses		1,484		8.22	%		745		4.17	%
General and Administrative Expenses		835		4.62	%		616		3.45	%
Total		2,319		12.84	%		1,361		7.62	%
Income from Operations		4,603		25.47	%		5,037		28.19	%

Selling expenses were $1,484,000 for the three months ended March 31, 2010, compared with $745,000 for the same period in 2009, an increase of $739,000 or 99.19%. The increase was mainly due to increase in advertising expenses related to our marketing efforts in northeastern China, from $696,000 for the three months ended March 31, 2009 to $1,364,000 for the three months ended March 31, 2010. We expect that our selling expenses will continue to increase as we continue our marketing efforts to support our existing distribution network as well as to penetrate potential new markets in these regions.

General and administrative expenses increased to $835,000 for the three months ended March 31, 2010, from $616,000 for the same period in 2009, an increase of $218,000 or 35.39%. The increase was mainly due to an increase in research and development expense.

Change in Fair Value of Derivative Liability

We issued common stock purchase warrants to the investors in our financings completed from October 2009 through December 2009. As of December 31, 2009, these warrants had a carrying value of $3,684,000. These warrants are accounted for at fair value as derivative instruments and are marked-to-market each period, with changes in the fair value charged or credited to income each period. Due to the increase in our stock price from December 31, 2009 to March 31, 2010, the derivative liability correspondingly increased resulting in a loss of $2,341,000. The carrying value for the derivative liability as of March 31, 2010 was $6,025,000. In future periods, we may experience significant gains or losses, as the value of these warrants fluctuates in response to changes in our stock price.

Income Tax Expenses

For the three months ended March 31, 2010 and 2009, we were subject to income tax at a rate of 25%. Income tax expense for the three months ended March 31, 2010 and 2009 amounted to $1,195,000 and $1,257,000 respectively. The decrease in income tax expense was attributable to the decrease in income from operations.

Liquidity and Capital Resources

Net cash provided by operating activities in the three months ended March 31, 2010 was $491,000 compared with $3,327,000 net cash provided by operating activities in the same period of 2009 resulting in a decrease of net cash provided by operating activities of $2,836,000. This decrease was mainly attributable to an increased inventory balance of $2,100,000 and a $356,000 increase in the change of accounts receivable from the three months ended March 31, 2009 to the three months ended March 31, 2010. Our accounts receivable balance increased as some distributors paid later, but within credit terms. Our inventory balance increased as a result of working with three new O.E.M. manufacturers who required us to take delivery of finished products at our facility instead of delivering them directly to our distributors which is our standard business practice with all of our other O.E.M. manufacturers. We anticipate that as we establish a history with these new manufacturers that we will be able to have these manufacturers deliver finished products directly to our distributors, thereby decreasing our inventory level.

Net cash provided by investing activities was $253,000 in the three months ended March 31, 2010, compared with $0 net cash provided by investing activities in the same period of 2009. This increase was mainly due to expenses paid by a director of behalf of the company and our director’s repayment of $2,428,000 on March 29, 2010. These inflows for the three months ended March 31, 2010 were offset by an outflow of $2,240,000 into a time deposit account in to our HK Dong Rong account which will mature within 6 months.

Net cash used in financing activities was $147,000 in the three months ended March 31, 2010, compared with net cash used in financing activities of $4,981,000 in the same period of 2009. The decrease of net cash used in financing activities of $4,834,000 resulted from dividends declared and paid by Yinglin Jinduren to its equity owners during the three months ended March 31, 2009 (prior to our share exchange transaction with PXPF in February 2009). No dividends were declared or paid out during the three months ended March 31, 2010.

As of March 31, 2010, we had cash and cash equivalents of $11,634,000, other current assets of $16,826,000 and current liabilities, net of the derivative liability of $4,512,000. The $6,025,000 derivative liability relating to our warrants will be allocated to equity when warrants are exercised and eliminated when the warrants expire. The $6,025,000 derivative liability does not require cash settlement. We presently finance our operations primarily from the cash flow from our operations, and we anticipate that this will continue to be our primary source of funds to finance our short-term cash needs.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We present below a summary of the most significant assumptions used in our determination of amounts presented in the tables in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows.

The following tables summarize our contractual obligations as of March 31, 2010, and the effect that these obligations are expected to have on our liquidity and cash flows in future periods.

	Payments Due by Period
	Total		Less than 1 year		1 Year +
	(in thousands of dollars)
Contractual Obligations :
Total Indebtedness	$	587	$	587	$	-
Operating Leases		177		53		124

Total Contractual Obligations:	$	764	$	640	$	124

Total indebtedness consists of installment loans from financial institutions in the PRC.

Operating lease amounts include minimum lease payments under our non-cancelable operating leases for office facilities, as well as limited computer and office equipment that we utilize under certain lease arrangements.

Off-Balance Sheet Arrangements

Under the operating agreement between our subsidiary HK Dong Rong and our variable interest entity Yinglin Jinduren, it was agreed that, if any guarantee for the performance of Yinglin Jinduren for any contract or loan was required, HK Dong Rong would agree to provide such guarantee. To date, no such guarantees have been provided. We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We do not use off-balance sheet derivative financial instruments to hedge or partially hedge interest rate exposure nor do we maintain any other off-balance sheet arrangements for the purpose of credit enhancement, hedging transactions, or other financial or investment purposes. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are a “smaller reporting company” as defined by Regulations S-K and as such, are not required to provide this information.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2010, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level.

Remediation of Material Weaknesses in Internal Control over Financial Reporting

In our annual report on Form 10-K for the year ended December 31, 2009, we reported the following material weakness involving control activities:

Accounting and Finance Personnel Weaknesses - The current accounting staff is relatively inexperienced, and requires substantial training so as to meet with the higher demands necessary to fulfill the requirements of U.S. GAAP-based reporting and SEC rules and regulations. In reaching such conclusion, the following factors were considered:

(a)

how appropriately we complied with U.S. GAAP in accounting for transactions; and

(b)

how accurately we prepared supporting information to provide to our independent auditors on a quarterly and annual basis.

The Company’s management has identified the steps necessary to address the material weaknesses described above, as follows:

(1)

Recruit sufficient qualified accounting personnel;

(2)

Set up an internal audit department and assign more resources to enhance the internal audit function, especially in the supervision of complex, non-routine transactions;

(3)

Involve both internal accounting and operations personnel and outside contractors with technical accounting expertise, as needed, early in the evaluation of complex, non-routine transactions to obtain additional guidance as to the application of U.S. GAAP to such transactions; and

(4)

Improve the interaction among our management, audit committee, and other external advisors.

The effectiveness of these remediation efforts will not be known until the Company performs a test of these controls in connection with management’s tests of internal controls over financial reporting that the Company will undertake as of December 31, 2010.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

None

Item 1A.

Risk Factors.

As of and for the three months ended March 31, 2010, there were no material changes in our risk factors from those disclosed in Part I, Item 1A, of our annual report on Form 10-K as of and for the year ended December 31, 2009.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.

Defaults upon Senior Securities.

None

Item 4.

Reserved.

Item 5.

Other Information.

None

Item 6. Exhibits.

Exhibit Number		Description
2.1		Share Exchange Agreement (1)

3.1		Articles of Incorporation (2)

3.2		Amendment to Articles of Incorporation (for 1-for-100 reverse stock split), filed with the Nevada Secretary of State on January 12, 2009 (10)

3.3		Articles of Merger filed on March 4, 2009 and effective March 20, 2009 (3)

3.4		Certificate of Correction filed on March 6, 2009 (3)

3.5		Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, filed with the Nevada Secretary of State on October 23, 2009 (4)

3.6		Bylaws (2)

3.7		Amendment to the Bylaws (1)

4.1		Specimen Common Stock Certificate (2)

4.2		Specimen Series A Convertible Preferred Stock Certificate (4)

4.3		Form of Common Stock Purchase Warrant for the Preferred Shares Financing (4)

4.4		Form of Common Stock Purchase Warrant for the Common Shares Financing (6)

10.1		Consulting Services Agreement (1)

10.2		Operating Agreement (1)

10.3		Equity Pledge Agreement (1)

10.4		Option Agreement (1)

10.5		Voting Rights Proxy Agreement (1)

10.6		Share Purchase Binding Letter of Intent with ARC China, Inc. dated September 29, 2009 (5)

10.7		Form of Securities Purchase Agreement for the Preferred Shares Financing (4)

10.8		Form of Escrow Agreement for the Preferred Shares Financing (4)

10.9		Form of Securities Purchase Agreement for the Common Shares Financing (6)

10.10		Supplemental Agreement dated February 18, 2009 (8)

10.11		Form of Director Offer Letter entered into with Ying Zhang and Jianwei Shen (11)

10.12		Bridge Loan and Financing Agreement dated June 11, 2008 (12)

10.13		Trademark License Contract for serial number 3871951 dated February 12, 2009 (12)

10.14		Trademark License Contract for serial number 3884844 dated February 12, 2009 (12)

10.15		Trademark License Contract for serial number 3884845 dated February 12, 2009 (12)

10.16		Trademark License Contract for serial number 4247545 dated February 12, 2009 (12)

10.17		Form of Securities Purchase Agreement dated February 13, 2009 (12)

10.18		Form of Securities Purchase Agreement dated February 12, 2009 (12)

14.1		Code of Ethics (7)

16.1		Letter from Malone & Bailey CPA dated April 15, 2009 (9)

21.1		List of Subsidiaries (12)

31.1		Section 302 Certification by the Corporation’s Chief Executive Officer *

31.2		Section 302 Certification by the Corporation’s Chief Financial Officer *

32.1		Section 906 Certification by the Corporation’s Chief Executive Officer *

32.2		Section 906 Certification by the Corporation’s Chief Financial Officer *

* Filed Herewith.

(1)	Filed on February 13, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.
(2)	Filed on February 9, 2007 as an exhibit to our Registration Statement on Form SB-2, and incorporated herein by reference.
(3)	Filed on March 20, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.
(4)	Filed on October 30, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.
(5)	Filed on October 5, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.
(6)	Filed on December 2, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.
(7)	Filed on March 7, 2008 as an exhibit to our Annual Report on Form 10-K, and incorporated herein by reference.
(8)	Filed on February 20, 2009 as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.
(9)	Filed on April 15, 2009, as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.
(10)	Filed on December 17, 2009, as an exhibit to our Registration Statement on Form S-1, and incorporated herein by reference.
(11)	Filed on March 16, 2010, as an exhibit to our Current Report on Form 8-K, and incorporated herein by reference.
(12)	Filed on April 15, 2010, as an exhibit to our Annual Report on Form 10-K, and incorporated herein by reference.

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VLOV INC. (Registrant)

Date: October 27, 2010	By:	/s/ Qingqing Wu
		Qingqing Wu
		Chief Executive Officer

Date: October 27, 2010	By:	/s/ Bennet P. Tchaikovsky
		Bennet P. Tchaikovsky
		Chief Financial Officer

VLOV INC. - FORM 10-Q/A - October 27, 2010

Attached files

VLOV INC. Reports