The consumer market in China is large and one of the fastest growing in the world. Driving this growth are China’s economic expansion and a growing consumer base with increasing levels of disposable income.

The annual retail market for the consumer products in China reached $687.5 billion in 2005, compared to $2,430.2 billion in the United States in the same period, according to Euromonitor. While China’s retail market is the largest market in Asia outside of Japan, it is substantially smaller than the retail market in the United States. Further, the annual gross domestic product, or GDP, per capita in China, which was $1,709 in 2005, is low compared to that of developed countries such as the United States ($42,000), the United Kingdom ($37,023) and Germany ($33,854) in 2005, according to the International Monetary Fund, or IMF, statistics.

Annual retail sales for consumer products grew at a compound annual growth rate, or CAGR, of 10.9% from 2003 to 2005, according to Euromonitor, driven in part by China’s GDP growing by 10.1% and 10.2% in 2004 and 2005, respectively, according to the National Bureau of Statistics of China. In comparison, annual retail sales for consumer products grew at a CAGR of 5.0% from 2003 to 2005 in the United States according to historical and projected data from Euromonitor.

The television broadcasting industry has developed significantly in China over the last several decades. According to the National Statistics Bureau and the Euromonitor report, China had over 300 television stations, including 50 nationwide satellite television stations, with a combined coverage of 95.8% of the population at the end of 2005, implying a reach of over 1.2 billion viewers. This coverage makes China the largest television market in the world.

The Company offers over 100 products and services through its multiple sales platforms, approximately 40% of which are sold primarily through its TV direct sales platform, nationwide distribution network or both. The Company’s current featured product categories consist of electronic learning devices, consumer electronics, cell phones and health and wellness products, including over 35 products, all of which are primarily sold through its TV direct sales platform, nationwide distribution network, or both. The Company also sells other products including autocare, beauty and household products primarily through its catalogs, outbound calls and cross-selling.

The Company’s primary Ozing branded product is a multi-functional handheld electronic device with a screen display that provides lessons for independent English learning. The Company began marketing and selling its first Ozing device, targeted at middle and high school students, in December 2003 and since then have introduced new and upgraded products under the Ozing brand.

The Company began marketing and selling its first digital camera product under the Net E-cam brand in June 2001. In October 2002, the Company introduced its first digital video product under the Aptek Net E-cam brand name. The Company began marketing and selling new consumer electronics products with more advanced applications under its Soloky brand in August 2005. The Company’s featured Soloky product is a digital video device that includes digital camera, MP3 and MP4 capabilities. In 2006, the Company also began selling its GPS product under the Soloky brand.

The Company began marketing and selling its first Babaka branded posture correction product in December 2004, its first Zehom branded sleeping aid product in October 2000, and its first Youngleda branded portable mechanized oxygen generating device in November 2000. The Company has introduced both product upgrades and extensions relating to these original products and developed each brand into a propriety branded product line.

Since 2000, the Company has introduced 15 branded product lines, including 11 proprietary branded product lines and four third-party branded product lines.

Direct sales net revenues in the year ended December 31, 2006 increased by $30.6 million, or 39.8%, to $107.4 million from $76.8 million in the year ended December 31, 2005.

Distribution net revenues in the year ended December 31, 2006 decreased by $4.4 million, or 4.7%, from $93.5 million to $89.1 million in the year ended December 31, 2005.