GME INNOTAINMENT, INC. - Annual Report: 2010 (Form 10-K)

Water Scientific Holdings Limited

Water Scientific Holdings Limited (“Water Scientific”) was a fully-operating subsidiary of the Company from October 26, 2010 to March 31, 2011. Water Scientific produces a product called Solidwater(sometimes referred to as Waterlog, depending on the market).  Solidwater is an ecological product that provides an optimal alternative solution for total irrigation and synchronous irrigation. Water Scientific is active in the irrigation product industry. Solidwater is suitable for use on all types of vegetation, and can be used for: urban tree planting and forestry, domestic gardens, commercial landscaping, agriculture, and horticulture.  Solidwater is a stagnant and non-volatile water compound.  It is in a gel form, and produced by using advanced techniques to solidifying water.  This causes fundamental changes in the physical properties of water.  Because of this, the water properties in Solidwater remain stable in this gel form between minus six degrees and 100 degrees Celsius.  Solidwater contains 97 percent

11

water and three percent patented molecular science technology, which releases pure water for irrigation purposes.  Solidwater is bio-degradable, free of degradation pollution, and can be used as a long-term irrigation water source.  Solidwater gradually releases water to a plant’s roots.  This provides a slow but steady supply of moisture, which results in minimal water wastage.  Solidwater provides advantages including, but not limited to: water savings, labor savings, enhanced planting success rates, and no requirements of an irrigation or pipe system.  Solidwater is also non-toxic, and harmless to children, pets, wildlife, and insects.  Solidwater is packaged in one liter, standard size, 100 percent biodegradable tubes.  This packaging is customizable according to different customer requirements.  Solidwater has an estimated shelf life of over a year.  A single liter of Solidwater is equivalent to hundreds of liters of water used through traditional irrigation systems.  In addition, under normal ground conditions, Solidwater lasts up to three months.  

GME Holdings Limited

GME Holdings Limited was incorporated February 18, 2011, in Hong Kong.  GME Holdings Limited organizes artists to participate in movies, event management and promotion for its clients. GME Holdings Limited currently represents and promotes four male artists and twelve female artists, for a total of sixteen clients.  There are 10 employees of GME Holdings Limited. GME Holdings Limited promotes its clients by providing event management and booking for movies, public relations functions, and brand promotions.

Great China Media Limited

Great China Media Limited was incorporated February 1, 2011, in Hong Kong.  Great China Media Limited leases an office in Hong Kong.and employs 70 employees.  Great China Media Limited publishes eight magazines.  Each magazine title is produced on either a weekly or bi-weekly basis.  Each magazine published focuses on a specialized subject matter, including computer technologies, video games, digital equipment, and automobiles.  The actual printing of these magazines is performed by a third party vendor.

Great China Games Limited

Great China Games Limited was incorporated February 1, 2011, in Hong Kong.  Great China Games Limited leases two retail stores in Hong Kong. Each store sells video game machines (including Play Station, Nintendo Wii, and Xbox, among others) as well as an assortment of video games and accessories.

Material Intellectual Property

The Company does not hold, own or license any patents, trademarks, or other material intellectual property.

Research and Development

We did not incur or pay any costs in relation to research and development in 2010, as our products are able to satisfy the existing product specifications from our major customers.

Regulation

Our company has a policy to comply with all applicable laws and regulations not only in China but also all countries throughout the world in which we do business.

Business regulation (For the period ending December 31, 2010)

The production in China of the operating entities’ is generally subject to environmental protection regulations that require all manufacturing industries to adopt measures to control the disposal of industrial waste, industrial manufacturing licensing and company licensing laws that regulate the business scope of companies, taxation laws that require income tax payable to the Chinese government, and labor laws that restrict maximum work-hours.

12

Environmental Protection Regulations

The Environmental Protection Law of China has been developed and implemented by the Ministry of Environment Protection (the “Ministry”).  Since 1984, the Chinese government has attempted to mitigate its pollution problem amid the industrialization process. The Ministry has set up subsidiary bureaus throughout all provinces of China to implement fast-improving measures for environmental protection. In particular, companies are required to adopt measures to control pollution engendered by industrial waste, noise, radiation, and vibration. All companies are required to report to the bureau in their county about the status of pollutants and the measures adopted to deal with the pollutants. Penalty fees are levied on companies whose pollutant discharge levels exceed the standards set by the Ministry. The Ministry also often issues warning notices and fines, and may mandate temporary suspension of production for installation of pollution control facilities. In serious cases where the pollution causes physical or personal damage, the Ministry may impose sanctions, demand compensation to victims, coerce permanent termination of companies, or sue company owners for criminal liability.

Our Company only paid some minimal administrative costs with respect to submitting environmental reports and other related documents to the Ministry of Environment Protection in accordance with environmental laws in China. No other substantial cost was paid relating to compliance with environmental protection laws in China.

Company Laws and Regulations

The Chinese government has promulgated company laws and regulations through its State Administration for Industry and Commerce. To operate a business in China, a company has to apply for business and production licenses at the Enterprise Registration Bureau and/or the Registration Bureau of Foreign-Invested Enterprise. Such various licenses have to be obtained for companies manufacturing important industrial products such as plastic bottles and containers. Application for production licenses requires official tests and inspections by the government be passed, and maintenance of the licenses require subsequent regular periodic inspections. Production and product quality is also monitored by government, through the General Administration of Quality Supervision, Inspection, and Quarantine of PRC.

Corporate Income Taxation

Income taxes chargeable to companies in China may differ across industries and location due to differences in preferential tax treatment or subsidies. In general, the corporate income tax rate has a ceiling of 33%, but foreign-invested companies shall enjoy preferential rates: full tax exemption applies to the first two years when the company records profits, and thereafter there is a 50% tax exemption for the subsequent third to fifth years. Our company belongs to this foreign-invested category, hence our present and future subsidiaries shall enjoy the same tax concessions.

Labor Laws

According to Chinese Labor Law, the maximum work hours for a labor are 40 hours per week. Owing to the seasonality factor, the PET CSD bottle production industry has peak and non-peak seasons throughout the year. During peak seasons, our employees may have to work for more than 40 hours per week; but during non-peak seasons, our employees may have to work for less than 40 hours per week. The operating entities have therefore applied for and have been granted approvals from relevant government authorities to count the work hours for a labor on yearly basis instead of weekly basis. As a result, the operating entities have not violated the maximum work-hour requirement, but at the same time have greatly improved flexibility of their labor force in coping with the seasonality problem.

13

Current Business Regulation (From January 1, 2011, to the Date of this Filing and Onward)

There is no specific government regulation in Hong Kong that relates to the operations and businesses of Global except the general company laws and regulations.  These laws and regulations include things such as the paying of corporate taxes and registration fees.  Failure to adhere to these laws and regulations could result in fines and penalties.

Employees

As of December 30, 2010, the Company and the operating entities had about 700employees through GEHZ, GENJ, GEXN, United Joy, UpjoyGreatgrand and their operations.

As of April 15, 2011, the Company in connection with its currently-operating subsidiaries has approximately85 total employees.  GME Holdings has approximately 10 employees; Great China Media Limited has approximately 70 employees; and Great China Games Limited has approximately 5 employees.  

We are subject to the reporting requirements of federal securities laws, which can be expensive.

We are a public reporting company in the U.S. and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we remained a privately-held company.

Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly.

It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by Sarbanes-Oxley.  We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with Sarbanes-Oxley’s internal controls requirements, we may not be able to obtain the independent accountant certifications that Sarbanes-Oxley Act requires publicly-traded companies to obtain.

There is not now, and there may not ever be, an active market for our common stock.

There currently is no market for our common stock. Further, although our common stock may be quoted on the OTC Bulletin Board, trading of our common stock has been, and may continue to be, extremely sporadic. For example, several days may pass before any shares may be traded. We cannot assure you that a more active market for the common stock will develop.

Because we became public by means of a “reverse merger”, we may not be able to attract the attention of major brokerage firms.

Additional risks may exist since we will become public through a “reverse merger.” Securities analysts of major brokerage firms may not provide coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock. We cannot assure you that brokerage firms will want to conduct any secondary offerings on behalf of our company in the future.

We cannot assure you that the common stock will become liquid or that it will be listed on a securities exchange.

We would like to list our common stock on the American Stock Exchange or the NASDAQ Capital Market as soon as practicable. However, we cannot assure you that we will be able to meet the initial listing standards of either of

14

those or of any other stock exchange, or that we will be able to maintain any such listing. Until the common stock is listed on an exchange, we expect that it would be eligible to be quoted on the OTC Bulletin Board, another over-the-counter quotation system, or in the “pink sheets.” In those venues, however, an investor may find it difficult to obtain accurate quotations as to the market value of the common stock. In addition, if we failed to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling the common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital.

There may be issuances of shares of preferred stock in the future.

Although we currently do not have preferred shares outstanding, the board of directors could authorize the issuance of a series of preferred stock that would grant holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends would be declared to common stockholders, and the right to the redemption of such shares, possibly together with a premium, prior to the redemption of the common stock. To the extent that we do issue preferred stock, the rights of holders of common stock could be impaired thereby, including without limitation, with respect to liquidation.

We have never paid dividends.

We have never paid cash dividends on our common stock and do not anticipate paying any for the foreseeable future.

Our common stock is considered a “penny stock.”

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and therefore is a “penny stock.” Broker and dealers effecting transactions in “penny stock” must disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect your ability to sell shares. In addition, if our common stock is quoted on the OTC Bulletin Board as anticipated, investors may find it difficult to obtain accurate quotations of the stock, and may find few buyers to purchase such stock and few market makers to support its price.

Risks relating to doing business in China

Substantially all of our business assets are located in China, and substantially all of our sales are derived from China. Accordingly, our results of operations, financial position and prospects are subject to a significant degree to the economic, political and legal development in China.

The operating entities derive a substantial portion of sales from China

Substantially all sales by the operating entities are generated from China. We anticipated that sales of the operating entities’ products in China will continue to represent a substantial proportion of our total sales in the near future. Any significant decline in the condition of the PRC economy could adversely affect consumer buying power and reduce consumption of their products, among other things, which in turn would have a material adverse effect on our business and financial condition.

The ability to implement planned development depends on many factors, including the ability to receive various governmental permits.

In accordance with PRC laws and regulations, the operating entities are required to maintain various licenses and permits in order to operate at each production facility including, without limitation, hygiene permits and industrial products production permits. The operating entities are required to comply with applicable hygiene and food safety standards in relation to production processes. Failure to pass these inspections, or the loss of or suspend some or all of production activities, could disrupt their operations and adversely affect our business.

15

Changes in the policies of the Chinese government could have a significant impact upon the ability to sustain growth and expansion strategies.

Since 1978, the PRC government has promulgated various reforms of its economic system and government structure. These reforms have resulted in significant economic growth and social progress for China in the last two decades. Many of the reforms are unprecedented or experimental, and such reforms are expected to be modified from time to time. Although we cannot predict whether changes in China’s political, economic and social conditions, laws, regulations and policies will have any materially adverse effect on the operating entities’ current or future business, results of operation or financial condition.

The operating entities’ ability to continue to expand business depends on a number of factors, including general economic and capital market conditions in China and credit availability from banks and other lenders in China. Recently, the PRC government has implemented various measures to control the rate of economic growth and tighten its monetary policies. Slower economic growth rate may in turn have an adverse effect on the ability to sustain the growth rate historically achieved due to the aggregate market demand for consumer goods like bottled water. 

Fluctuation in the value of the RMB may have a material adverse effect on your investment.

The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions.  The operating entities’ revenues and costs are mostly denominated in RMB.  Any significant fluctuation in value of RMB may materially and adversely affect our cash flows, revenues, earnings and financial position, and the value of our stock in U.S. dollars.  For example, an appreciation of RMB against the U.S. dollar would make any new RMB denominated investments or expenditures more costly, to the extent that the operating entities need to convert U.S. dollars into RMB for such purposes.  In addition, the depreciation of significant U.S. dollar denominated assets could result in a charge to our income statement and a reduction in the value of the assets of the operating entities.

We must comply with the Foreign Corrupt Practices Act.

We are required to comply with the United States Foreign Corrupt Practices Act, which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business.  Foreign companies, including some of our competitors, are not subject to these prohibitions.  Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in mainland China.  If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage.  Although we inform our personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible.  If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.

Failure to comply with the State Administration of Foreign Exchange regulations relating to the establishment of offshore special purpose companies by PRC residents may adversely affect the operating entities.

On October 21, 2005, the State Administration of Foreign Exchange issued a new public notice which became effective on November 1, 2005. The notice requires PRC residents to register with the local State Administration of Foreign Exchange branch before establishing or controlling any company, referred to in the notice as a “special purpose offshore company”, outside of China for the purpose of capital financing. PRC residents who are shareholders of a special purpose offshore company established before November 1, 2005 were required to register with the local State Administration of Foreign Exchange Branch. Our beneficial owners need to comply with the relevant the State Administration of Foreign Exchange requirements in all material respects in connection with our investments and financing activities. If such beneficial owners fail to comply with the relevant the State Administration of Foreign Exchange requirements, such failure may subject the beneficial owners to fines and legal sanctions and may also adversely affect our business operations.

16

Because assets and operations of the operating entities are located outside the United States and a majority of our officers and directors are non-United States citizens living outside of the United States, investors may experience difficulties in attempting to enforce judgments based upon United States federal securities laws against us and our directors. United States laws and/or judgments might not be enforced against us in foreign jurisdictions.

All of our holdings are held through a subsidiary corporation organized and located outside of the United States, and all the assets of our subsidiary and the operating entities are located outside the United States. In addition, all of our officers and directors are foreign citizens. As a result, it may be difficult or impossible for U.S. investors to enforce judgments made by U.S. courts for civil liabilities against the operating entities or against any of our individual directors or officers. In addition, U.S. investors should not assume that courts in the countries in which our subsidiary is incorporated or where the assets of our subsidiary or the operating entities are located (i) would enforce judgments of U.S. courts obtained in actions against us or our subsidiary based upon the civil liability provisions of applicable U.S. federal and state securities laws or (ii) would enforce, in original actions, liabilities against us or our subsidiary based upon these laws. 

The legal system in China has inherent uncertainties that may limit the legal protections available in the event of any claims or disputes with third parties.

The legal system in China is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, the central government has promulgated laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. As China’s foreign investment laws and regulations are relatively new and the legal system is still evolving, the interpretation of many laws, regulations and rules is not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit the remedies available in the event of any claims or disputes with third parties. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.

The Chinese government exerts substantial influence over the manner in which we the operating entities must conduct their business activities.

The operating entities depend on their relationships with the local governments in the province in which they operate. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.  Operations in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters.  We believe that the operating entities are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.  Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.

We may have difficulty establishing adequate management, legal and financial controls in the PRC.

The PRC historically has been deficient in Western style management and financial reporting concepts and practices, as well as in modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. We concluded that our internal controls over financial reporting were not effective as of the periods for our annual reports for the fiscal years December 31, 2008, 2009, and 2010.

17

Competition may increase in the industry.

We may in the future compete for potential customers with current companies not yet offering services in our industry and/or new companies to the industry.  Competition in the industry may increase in the future.  Increased competition could result in price reductions, and reduced margins or loss of market share.

There can be no assurance that we will be able to compete successfully against future competitors. If we are unable to compete effectively, or if competition results in a deterioration of market conditions, our business and results of operations would be adversely affected.

Our profitability depends, in part, on our ability to provide customer satisfaction, and if we are unable to maintain this, we could lose our competitive advantage.

We believe our brand has gained recognition by customers and consumers.  We believe this is largely due to our high standards of quality control.  If we fail to continue to maintain this, we could potentially lose customers, which would adversely affect our operations.

The success of our business depends on maintaining key personnel who may terminate their employment with us at any time, and we will need to hire additional qualified personnel.

We rely heavily on the services of our management, as well as sales staff.  Loss of the services of any such individuals would adversely impact our operations.  In addition, we believe that both our management and sales staff represent a significant asset and provide us with a competitive advantage over many of our competitors and that our future success will depend upon our ability to retain these key employees and our ability to attract and retain equally skilled employees.

If we are unable to attract, train and retain highly qualified personnel, the quality of our services may decline and we may not successfully execute our internal growth strategies.

Our success depends in large part upon our ability to continue to attract, train, motivate and retain highly skilled and experienced employees, including sales and management staff.  Qualified employees periodically are in great demand and may be unavailable in the time frame required to satisfy our customers’ requirements.  While we currently have available ample staff for the requirements of our business, expansion of our business could require us to employ additional staff.

There can be no assurance that we will be able to attract and retain sufficient numbers of highly skilled sales and management staff in the future. The loss of personnel or our inability to hire or retain sufficient personnel at competitive rates of compensation could impair our ability to secure and complete customer engagements and could harm our business.

We are exposed to risks associated with the ongoing financial crisis and weakening global economy, which increase the uncertainty of consumers purchasing products and/or services.

The recent severe tightening of the credit markets, turmoil in the financial markets, and weakening global economy are contributing to a decrease in spending by consumers.  If these economic conditions are prolonged or deteriorate further, the market for our services could potentially decrease accordingly.

We have experienced product and service changes in our industry. New products and services may provide additional alternatives and result in a decrease in our consumer base.

The industry, in which we compete, in general, is a quickly changing industry. Our future success will depend on our ability to appropriately respond to changing changes in customer preferences, as well as new products or services being offered by our competitors.  If we adopt products and services that are not attractive to consumers, we may not be successful in capturing or retaining a significant share of our market.  

18

Existing regulations, and changes to such regulations, may present barriers to the use of our products and/or service, which may significantly reduce demand for our products and/or services.

Our services are currently only regulated by general company laws and regulations.  We currently comply with the regulations that have been set forth.  However, a change in these regulations could create unknown barriers in continuing our operations as they currently exist.  

Our success depends on providing products and services that create an enjoyable experience for our customers.

Our Company must continue be aware of our customer’s needs and satisfaction of the services we offer.  The Company’s operating results would suffer if we were not responsive to the needs of our customers.  

Our Company could potentially experience rapid growth in operations, which would place significant demands on the Company’s management, operational, and financial infrastructure.

If the Company does not effectively manage its growth, the quality of its products and services could suffer, which could negatively affect the Company’s brand and operating results.  To effectively manage this growth, the Company will need to continue to improve its operational, financial, and management controls and its reporting systems and procedures.  Failure to implement these improvements could hurt the Company’s ability to manage its growth and financial position.

The brand identity that the Company has developed has contributed to the success of its business. Maintaining and enhancing the Company’s brand image is critical to expanding the Company’s base of customers and members.

Not Applicable.

19

To the knowledge of our management, there is no litigation currently pending or contemplated against us or any of our officers or directors in their capacity as such.

PART II

Our common stock has been traded on the Over the Counter Bulletin Board (OTCBB) under the symbol “GEBD,” since May 22, 2008.  The following table sets forth the high and low bid information for our common stock from the commencement of trading on May 22, 2008 through March 31, 2011 as reported by OTCBB.

(1) Our common stock commenced trading on May 22, 2008.

(2) On April 16, 2008, our board of directors approved a 1-for-5 forward stock split (the “Forward Split”) of our common stock. The record date for the Forward Stock split was April 26, 2008.  Pursuant to the Forward Split, every one (1) share of our then issued and outstanding Common Stock was reclassified and divided into five (5) post-split shares of our Common Stock.  

Number of Holders of Common Stock

The number of holders of record of our common stock on April15, 2011, was fifty four.

Dividends

There were no cash dividends or other cash distributions made by us during the fiscal year ended December 31, 2008, the fiscal year ended December 31, 2009, or the fiscal year ended December 31, 2010. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition.  The payment of any dividends is within the discretion of our board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future.

20

Recent Sales of Unregistered Securities and Use of Proceeds

On March 9, 2011, the Company acknowledged the execution of a certain PURCHASE AND ASSIGNMENT AGREEMENT between Great East Bottles & Drinks (BVI), Inc. (the “Assignor”) and Chan KaWai (the “Assignee”) whereby the Assignor assigned the rights of a certain past due promissory note dated December 31, 2010, due by the Company in the principal amount of HK$10,834,900 (the “Note”) to the Assignee. As consideration for assignment of the Note by Assignor, Assignee agreed to pay Assignor or its designees consideration in the aggregate sum of $600,000 United States Dollars.

Thereafter, the Assignee provided notice to the Company that he elected to convert the debt represented by the Note into shares of common stock of the Company and the Company agreed to convert the Note into 15,474,000 shares of common stock of the Company.

Repurchases of Equity Securities

None.

Equity Compensation Plan Information

None.

As a smaller reporting company, we are not required to include this information in our annual report on Form 10-K.

Note regarding forward – looking statements

This annual report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate", "expect", "intend", "plan", "will", "we believe", "the Company believes", "management believes" and similar language. The forward-looking statements are based on the current expectations of the Company and are subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. The actual results may differ materially from results anticipated in these forward-looking statements. We base the forward-looking statements on information currently available to us, and we assume no obligation to update them.

Investors are also advised to refer to the information in our filings with the Securities and Exchange Commission, specifically Forms 10-Q and 8-K, in which we discuss in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks and uncertainties or potentially inaccurate assumptions.

Except as otherwise indicated by the context, references in this Form 10-K to “we”, “us”, “our”, “the Registrant”, “our Company” or “the Company” are to Great East Bottles & Drinks (China) Holdings, Inc., a Florida corporation and its consolidated subsidiaries. Unless the context otherwise requires, all references to (i) “BVI” are to British Virgin Islands; (ii) “PRC” and “China” are to the People’s Republic of China; (iii) “U.S. dollar”, “$” and “US$” are to United States dollars; (iv) “RMB” are to Yuan Renminbi of China; (v) “Securities Act” are to the Securities Act of 1933, as amended; and (vi) “Exchange Act” are to the Securities Exchange Act of 1934, as amended.

Critical Accounting Policies and Estimates

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates;

21

assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our consolidated financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.

We recognize revenue in accordance with ASC 605. All of the following criteria must exist in order for us to recognize revenue:

The majority of the Company's revenue results from sales contracts with direct customers and revenues are generated upon the shipment of goods. The Company's pricing structure is fixed and there are no rebate or discount programs. Management conducts credit background checks for new customers as a means to reduce the subjectivity of assuring collectability. Based on these factors, the Company believes that it can apply the provisions of ASC 605 with minimal subjectivity.

Recent Accounting Pronouncements

The Company does not expect that the adoption of any recent accounting pronouncements will have any material impact on its financial statements.

Note regarding forward – looking statements

This annual report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate", "expect", "intend", "plan", "will", "we believe", "the Company believes", "management believes" and similar language. The forward-looking statements are based on the current expectations of the Company and are subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. The actual results may differ materially from results anticipated in these forward-looking statements. We base the forward-looking statements on information currently available to us, and we assume no obligation to update them.

Investors are also advised to refer to the information in our filings with the Securities and Exchange Commission, specifically Forms 10-K, 10-Q and 8-K, in which we discuss in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks and uncertainties or potentially inaccurate assumptions.

Except as otherwise indicated by the context, references in this Form 10-K to “we”, “us”, “our”, “the Registrant”, “our Company” or “the Company” are to Great East Bottles & Drinks (China) Holdings, Inc., a Florida corporation and its consolidated subsidiaries. Unless the context otherwise requires, all references to (i) “BVI” are to British Virgin Islands; (ii) “PRC” and “China” are to the People’s Republic of China; (iii) “U.S. dollar”, “$” and “US$”

22

are to United States dollars; (iv) “RMB” are to Yuan Renminbi of China; (v) “Securities Act” are to the Securities Act of 1933, as amended; and (vi) “Exchange Act” are to the Securities Exchange Act of 1934, as amended.

Critical Accounting Policies and Estimates

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our consolidated financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Revenue recognition

For continuing operations, the Company is principally engaged in trading of ecological products. Revenue represents invoiced value of goods sold and is recognized when the following criteria are met:

(i) Persuasive evidence of an arrangement exists;

(ii) Delivery has occurred;

(iii) Seller’s price to the buyer is fixed or determinable; and

(iv) Collectability is reasonably assured.

For discontinued operations, the Company recognizes revenue from sale of beverage bottles and OEM bottled water when products are delivered and customers take ownership and assume risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and selling price is fixed or determinable.

Recent Accounting Pronouncements

The Company does not expect that the adoption of any recent accounting pronouncements will have any material impact on its financial statements.

On October 26, 2010, the Company entered into an Acquisition Agreement with Mr. Wong Heong Kin to acquire 100% of Water Scientific in exchange for 500,000 shares of common stock of the Company. The results of Water Scientific are consolidated from the date of acquisition.

On December 30, 2010, the Company sold GEBD BVI in exchange for Mr. Chung surrendering 31,498,000 shares of common stock.   GEBD BVI is principally engaged in the production of beverage bottles and OEM of bottled water.  The results from GEBD BVI are reported as discontinued operations in the consolidated financial statements.

Results of continued Operations – Twelve Months Ended December 31, 2010 as Compared to twelve months ended December 31, 2009.

The following table summarizes the results of our continued operations during the twelve-month period ended December 31, 2010 and 2009, and provides information regarding the dollar and percentage increase or (decrease) from the twelve-month period ended December 31, 2010 to the twelve-month period ended December 31, 2009.

23

Revenues

Sales revenue decreased from $47,845,825 during the twelve-month period ended December 31, 2009 to $44,155,538 in the same period in 2010, representing a 7.71% decrease. The decrease in revenue was mainly due to the decrease in demand of PET bottles from Coca – Cola and Pepsi, which are our major customers.

25

Cost of sales and gross margin

Cost of sales decreased from $35,909,267 during the twelve-month period ended December 31, 2009 to $35,894,026 in the same period in 2010, representing a 0.04% decrease. The decrease was due to the decrease in sales during the twelve-month period ended December 31, 2010 as compared to the same period last year. We recorded a gross margin of 18.71% during the twelve-month period ended December 31, 2010, a decrease of nearly 6.24% as compared to 24.95% in the same period last year. The decrease was mainly due to the increase in production costs, which lowered the gross profits.

Selling and distribution

Sales and marketing expenses decreased by $621 or 0.06 % from $1,031,579 during the twelve-month period ended December 31, 2009 to $1,030,958 in the same period 2010. The increase was mainly due to the decrease in courier expenses.

General and administrative

General and administrative expenses increased from $3,571,438 during the twelve-month period ended December 31, 2009 to $4,730,881 for the same period 2010, representing an increase of $1,159,443 or 32.46%. The increase was mainly a result of increase in staff costs, including social insurance costs for staff.

Net income

Net loss during the twelve-month period ended December 31, 2010 was $128,991 as compared to net income $1,793,094 in the same period 2009. The material decrease was mainly attributable to the increase in staff costs during the period.

Cash flow

Discontinued Operating Activities

Net cash used in discontinued operating activities during the twelve months ended December 31 of 2010 amounted to $1,695,541 as compared to net cash provided by discontinue operating activities of $6,764,376 in the same period of 2009, representing an increase of $8,459,917. The increase was mainly attributable to increase in used in discontinued operating activities.

Discontinued Investing Activities

Net cash used in discontinued investing activities was $11,902,481 for the twelve months ended December 31 of 2010, representing an increase of $8,873,512. The increase was mainly attributable to increase in used in discontinued investing activities (Include disposal of GEBD (BVI)).

Discontinued Financing Activities

Net cash provided by discontinued financing activities was $12,519,067 for the twelve months ended December 31 of 2010, representing an increase of $14,821,144 over the net cash $2,302,077 used in the same period of 2009. The change was primarily due to an increase in provided by discontinued financing activities.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements

26

Inflation

Inflation has not had a material impact on our business and we do not expect inflation to have an impact on our business in the near future.

As a smaller reporting company, we are not required to include this information in our annual report on Form 10-K.

The response to this item is included in a separate section of this Annual Report. See “Index to Consolidated Financial Statements” on Page F-1.

Not Applicable.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, to allow timely decisions regarding required disclosure. Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2010. Based on that evaluation and as described below under “Management’s Report on Internal Control Over Financial Reporting”, we have identified a material weakness in our internal control over financial reporting. As a result of this material weakness and as a result of our failure to identify this material weakness in our internal control over financial reporting as a material weakness in our disclosure controls and procedures, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of December 31, 2010.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).  Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the TreadwayCommission. In connection with management's assessment of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we identified the following material weakness in our internal control over financial reporting as of December 31, 2010:

As a result, we have concluded that our internal controls over financial reporting are not effective as of December 31, 2010.

27

Remediation of Material Weakness in Internal Control

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can only provide reasonable assurances with respect to financial statement preparation and presentation. In addition, any evaluation of effectiveness for future periods is subject to the risk that controls may become inadequate because of changes in conditions in the future.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

To remediate the material weakness surrounding this, we have performed and are continuing to perform, among others, the following actions:

The Company has begun to convene meetings among its top executives to address budgeting issues.  As a private company for over fourteen years, the budgeting process was never formalized.  We have recently begun to utilize an independent third party to assist in the preparation of formal budget forecasts

Changes in Internal Control over Financial Reporting

Our Certifying Officers have indicated that there were significant changes in our internal controls or other factors that could significantly affect such controls subsequent to the date of their evaluation, and there were such control actions with regard to significant deficiencies and material weaknesses.  We have performed, among others, the following actions:

None.

28

PART III

At December 31, 2010, our directors and executive officer were (since December 31, 2010, these are no longer the officers and directors of the Company, the list of the Company’s current officers and directors follows the table below):

(1)

Additional information about these individuals can be found on the Company’s previous Form 10-K for the period ending December 31, 2009, which was filed with the SEC on March 24, 2010.

Our current directors and executive officers are as follows:

Mr. Kwong Kwan Yin Roy, age 35, received his education at Poly University Hong Kong. He joined Hong Kong Television Broadcasts Limited in 1997, where he was responsible for variety and music shows and became familiar with the operation of the electronic media. He joined Hong Kong Emperor Entertainment in 2000, where he was responsible for corporate promotion of music, film, and production. Mr. Kwong has experience in advertising, corporate matters and brand building. In 2004, he successfully formed an alliance between California Red Group (a karaoke operator) with NEWAY (a karaoke operator) and Emperor Group. During his experience at Emperor Group, Mr. Kwong organized a number of large-scale publicity projects including work for the top artist in Hong Kong and China.

Mr. Chan Wing Hing, age 43, finished his formal education in Hong Kong. Mr. Chan set up his first publishing company in 1997 and has established several magazines.  In 2002, he consolidated all of his magazines into China Culture Limited. Mr. Chan has extensive experience in the areas of publishing and distribution.

Mr. YauWai Hung, age 36, received his education at St.FrancisXavierCollege in Hong Kong. Mr. Yau started working at Gaming Industrial in 1991 and later sold his retail company to a listed company in Hong Kong in 1997. Mr. Yau joined China Culture Limited in 2006 and successfully converted its magazine content into electronic form and into a major mobile and broadband operator in Hong Kong, Singapore, Taiwan and Macau. In 2010 Mr. Yau successfully coordinated with soccer stars Gary Neville and Van De Sar to provide exclusive World Cup expert analysis to the Hong Kong Jockey Club.

Mr. Cheung, 36, is currently the Chief Producer of Cross Media. Since 1993, he has worked at several well-known mass media companies such as ATV, Culturecom Holdings Limited, and Next Media. In 1997, Mr. Cheung established many popular magazines such as Game Weekly, Game Wave, Soccer Wave and has since become familiar with the publishing and magazine distribution procedures. Since 2007, Mr. Cheung has established web and video programs about TV games and has acted as the anchorperson within these programs, performing demonstrations, analyzing and commenting on TV games.

29

Mr. Chan KaWai, 30, received his education as the TuenMunCatholicSecondary School and the JuChing Chu Secondary School.  From 1997 to 2007, he worked at Crown Worldwide (Hong Kong) Limited, first as an Operational Assistant and then as a Team Leader.  Since 2008 he has worked at Iron Mountain Hong Kong where he serves as a Supervisor.

CORPORATE GOVERANCE

Number and Term of Directors

We currently have five directors of the Company.  All directors of our company hold office until the next annual meeting of our shareholders and until such director’s successor is elected and has been qualified, or until such director’s earlier death, resignation or removal. The following table sets forth the names, positions and ages of our executive officers and directors. Our board of directors elects officers and their terms of office are at the discretion of our board of directors.

Audit Committee

In October 2009, our board of directors established an audit committee.  The scope of the audit committee includes:

Other Committees

None.

Family Relationships

Stetson Chung, our previous officer and director is the son of Guy A-Tsan Chung.

There are no other family relationships.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics (the “Code”) that applies to our directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions in accordance with applicable federal securities laws. The Code was filed as Exhibit 14 to our Registration Statement on Form SB-2 (Registration No. 333-139008).

Changes in Director Nomination Process for Stockholders

None.

30

Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act requires our directors, executive officer and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership of our common stock with the Securities and Exchange Commission. Our directors, executive officer and persons who own more than 10% of our common stock are required by Securities and Exchange Commission regulations to furnish to us copies of all Section 16(a) forms they file. To our knowledge, based solely upon a review of Forms 3, 4 and 5 and amendments to these forms furnished to the Company, none of our directors, executive officer or persons who own more than 10% of our common stock filed Forms 3, 4 and 5 on a timely basis during the year ended December 31, 2010.

The following table sets forth all cash compensation paid or to be paid by the Company, as well as certain other compensation paid or accrued, during each of the Company’s last three fiscal years to each of the following named executive officers (the “Named Executive Officers”):

SUMMARY COMPENSATION TABLE

(1)

Based on 24,676,000 outstanding shares of common stock on April 1, 2011.

(2)

The business address for each of our officers and directors is 203 Hankow Center, 5-15 Hankow Road, Tsimshatsui, Kowloon, Hong Kong.

On October 26, 2010, the Company entered into, and completed, an Acquisition Agreement with Water Scientific and the shareholder of Water Scientific whereby the Company acquired 100% of Water Scientific in exchange for 500,000 shares of common stock of the Company.

On December 30, 2010, the Company entered into an Asset Purchase and Sale Agreement with Chung A. Tsan Guy whereby the Company sold its subsidiary GEBD BVI in exchange for Mr. Chung surrendering 31,498,000 shares of common stock of the Company.

On March 9, 2011, the Company acknowledged the execution of a certain Purchase and Assignment Agreement GEBD BVI and Chan KaWai whereby the GEBD BVI assigned the rights of a certain past due promissory note

32

dated December 31, 2010, due by the Company in the principal amount of HK$10,834,900 (the “Note”) to the Chan KaWai. As consideration for assignment of the Note by GEBD BVI, Chan KaWai agreed to pay GEBD BVI or its designees consideration in the aggregate sum of $600,000 United States Dollars.Thereafter, the Chan KaWai provided notice to the Company that he elected to convert the debt represented by the Note into shares of common stock of the Company and the Company agreed to convert the Note into 15,474,000 shares of common stock of the Company.

Director Independence

The Company’s directors as of December 31, 2010 and currently are not an “independent director” within the meaning of Rule 121(A) of the American Stock Exchange Company Guide and Rule 10A-3 promulgated under the Securities Act of 1934, as amended.

On January 14, 2008, the Company engaged Madsen & Associates CPA Inc. (“Madsen”) as its new principal independent accountants.  The decision to engage Madsen as the Company’s principal independent accountants was approved by the Company’s Board of Directors on April 18, 2008.  During the Company’s fiscal years ended December 31, 2007 and 2006 and through January 14, 2008, the Company did not consult with Madsen on (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the Company’s financial statements, and Madsen did not provide either a written report or oral advice to the Company that was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject of any disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

The Company paid the following fees to its auditors during its fiscal years ended December 31, 2010, 2009, and 2008:

Audit Fees

Audit fees consist of fees for professional services rendered for the audit of the Company’s financial statements and review of the final financial statements included in our annual reports on Form 10-K.

Audit Related Fees

We did not incur any audit-related fees with Madsen for the years ended December 31, 2010, 2009, and 2008.

Tax Fees

We did not incur any tax fees with Madsen for the years ended December 31, 2010, 2009, and 2008.

All Other Fees

We incurred $3,000 in service fees from Madsen in 2010. We did not incur any fees with Madsen for other professional services rendered for the years ended December 31, 2009 or 2008.

Pre-Approval of Services

The Board of Director’s policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. The Board may also pre-approve particular services on a case-by-case basis.

33

(a)(1) Financial Statements

An index to Consolidated Financial Statements appears on page F-1.

(b) Exhibits

The following Exhibits are filed as part of this report:

(1)

Filed with the SEC on Form SB-2 on November 29, 2006, and its subsequent amendments.

(2)

Filed with the SEC on Form 8-K on April 21, 2008.

(3)

Filed with the SEC on Form 10-K on March 24, 2010.

SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

34

GREAT CHINA MANIA HOLDINGS, INC. AND SUBSIDIARIES

(FORMERLY GREAT EAST BOTTLES & DRINKS (CHINA) HOLDINGS, INC.)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

INDEX

F - 1

To the Board of Directors and Shareholders of Great China Mania Holdings, Inc. and subsidiaries (formerly Great East Bottles and Drinks (China) Holdings, Inc.) and subsidiaries

Hong Kong

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of Great China Mania Holdings, Inc. and subsidiaries (formerly Great East Bottles and Drinks (China) Holdings, Inc.) and subsidiaries  (the Company) as of December 31, 2010 and 2009 and the consolidated statements of income, stockholders’ equity and comprehensive income and cash flows for each of the years in the two year period ended December 31, 2010.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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

In our opinion, these consolidated financial statements referred to above present fairly, in all material aspects, the consolidated financial position of the Company as of December 31, 2010 and 2009, and the consolidated results of its operations and cash flows for each of the years in the two year period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company does not have the necessary working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are described in the notes to the financial statements.  These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

s/Madsen & Associates CPA’s, Inc.

Madsen & Associates CPA’s, Inc.

April 14, 2011

Salt Lake City, Utah

F - 2

GREAT CHINA MANIA HOLDINGS, INC. AND SUBSIDIARIES

(FORMERLY GREAT EAST BOTTLES & DRINKS (CHINA) HOLDINGS, INC.)

CONSOLIDATED BALANCE SHEETS

December 31, 2010 and 2009

GREAT CHINA MANIA HOLDINGS, INC. AND SUBSIDIARIES

(FORMERLY GREAT EAST BOTTLES & DRINKS (CHINA) HOLDINGS, INC.)

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2010 and 2009