Item 2.01

Completion of Acquisition or Disposition of Assets

Share Exchange Agreement

On June 24, 2010, Cleopatra International Group, Inc. (formerly known as Vibrosaun International, Inc.) (the “Company,” “we,” “our,” or “us”) entered into a share exchange agreement with Festive Lion Limited, a British Virgin Island company (“FLL”), and majority shareholders of FLL (the “Shareholders”). According to the terms of this agreement, the Company acquired 100% of equity ownership of FLL held by the Shareholders (the “FLL Shares”) in exchange for the issuance of 57,000,000 shares of the Company’s common stock (the “Exchange Shares”) in the aggregate, to the Shareholders. Upon the consummation of the transactions contemplated by the share exchange agreement, the aggregate percentage ownership of the Company held by shareholders of FLL was approximately 95%.

The share exchange agreement was entered into on June 24, 2010, in accordance with applicable law, and was consummated on September 15, 2010 (the “Exchange”). Immediately prior to the Exchange, the Company had a total of approximately 2,999,648 shares of its common stock issued and outstanding, and the Exchange Shares were issued in addition to the existing amount. For Federal income tax purposes, it was intended that the Exchange constitute a tax-free reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Board of Directors of the Company and the Board of Directors of FLL each approved the Exchange.  At the time of the Exchange, FLL wholly owned World Alliance Holdings Limited, a Hong Kong company (“World Alliance Holdings”), and World Alliance Holdings wholly owned Shenzhen New Cleopatra Beauty & Salon Company Limited, a PRC limited liability company (“New Cleopatra”). As a result of the Exchange, New Cleopatra is an indirect wholly-owned subsidiary of the Company. Mr. Xu has no ownership interest in New Cleopatra except through his equity ownership of the Company.

Exhibit A of the share exchange agreement has been amended to reflect changes in the shareholders and the shareholders’ allocation since the execution of the agreement on June 24, 2010.  A copy of the share exchange agreement with Exhibit A, as amended, has been filed as an exhibit to this Current Report on Form 8-K/A is attached hereto.

The Company’s current corporate structure is set forth below:

Cleopatra International Group, Inc.

(Nevada) (the “Company”)

100%  â

Festive Lion Limited

(British Virgin Islands) (“FLL”)

100% â

 World Alliance Holdings Limited

(Hong Kong) (“World Alliance Holdings”)

100% â

Shenzhen New Cleopatra Beauty & Salon Company Limited

(People’s Republic of China) (“New Cleopatra”)

In this Current Report on Form 8-K/A, all references to “the Company,” “we”, “our”, or “us” prior to the Exchange refer to Cleopatra International Group, Inc. and the business of the entity formerly known as Vibrosaun International, Inc.  Any references to “the Company,”, “we”, “our”, or “us” after the Exchange refer to Cleopatra International Group, Inc., together with its wholly-owned subsidiaries, FLL, World Alliance Holdings, and New Cleopatra.

Market Information

The Company’s common stock is currently listed on the Over-the-Counter Bulletin Board, under the symbol CLIN.OB.  In the last two fiscal years, there has been no trading in the Company’s common stock. As March 11, 2011, there were approximately 146 holders of the Company’s common stock.  The Company has yet to declare or pay any cash dividends, and do not intend to pay cash dividends in the foreseeable future. Furthermore, the Company does not currently have any equity compensation plans.

Description of the Registrant’s Securities

As of March 11, 2011, the Company had 100,000,000 authorized shares of common stock. Of these shares, there are 59,999,648 shares issued and outstanding. There are no dividend rates or indication of preference associated with these shares. Furthermore, the shares are not convertible or redeemable. The Company has no other equity authorized, issued, or outstanding.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

The issuance of the 57,000,000 Exchange Shares to the FLL shareholders in connection with the Exchange described above was exempt from registration pursuant to Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

Other than the shares issued in connection with the Exchange, the Company has not sold any securities within the past three years which were not registered under the Securities Act. Likewise, the Company has not sold any registered securities in which proceeds would need to be accounted for.

Name Change

Prior to the execution of the share exchange agreement, on June 15, 2010, the Company, then known as Vibrosaun, formed a direct wholly-owned subsidiary with the name Cleopatra International Group, Inc. as a corporation under the laws of the State of Nevada.  On June 30, 2010 and effective July 2, 2010, the Company and Cleopatra International Group, Inc. entered into an Agreement and Plan of Merger, pursuant to which Cleopatra International Group, Inc. merged with and into the Company and the Company remained as the surviving corporation of the merger.

As a result of the merger, the corporate name of the Company was changed to “Cleopatra International Group, Inc.” Prior to the merger, Cleopatra International Group, Inc. had no liabilities or assets and, as a result of the merger the separate existence of Cleopatra International Group, Inc. then ceased.  The Company was the surviving corporation in the merger and, except for the name change provided for in the Agreement and Plan of Merger, there was no change in the directors, officers, capital structure or business of the Company.

The Company, as the parent domestic Nevada corporation, owning 100% of the outstanding shares of its wholly owned subsidiary, Cleopatra International Group, Inc., under Nevada law (NRS Section 92A.180) was authorized to merge Cleopatra International Group, Inc. into itself without shareholder approval and effectuate a name change without shareholder approval.

The foregoing description of the share exchange agreement, merger and related transactions does not purport to be complete and is qualified in its entirety by reference to the complete text of the (i) share exchange

Description of our Company

Cleopatra International Group, Inc. was previously named Vibrosaun International, Inc.  Vibrosaun was formed as a Nevada corporation in 1986, under the name “Morning Glory Mining, Inc.”  Through the transactions described elsewhere in this section, the Company is now called “Cleopatra International Group, Inc.” The Company is in the beauty, hair, and spa industry and provides various beauty, hair, and spa services to its clients and members. The practices of the Company is described more fully in “The Business” section that follows.

The Business

Old Cleopatra was established in August 1994 in Shenzhen City, Guangdong Province.  Old Cleopatra operated in the beauty and hair service industry, primarily providing hair care services, and at that time was managed and operated by our chief executive officer, Mr. YongPing Xu, as a sole proprietor.  In 2007, in view of changing market conditions in Shenzhen, Mr. Xu established New Cleopatra, a new company in Shenzhen City, Guangdong Province in order to provide luxury beauty and hair services that would cater to high-income elite and celebrity clientele and to expand the company’s business scope to include spa services. As Chinese citizens have begun to enjoy higher disposable income due to recent years of economic growth, they have begun to seek and demand a better lifestyle and ways to demonstrate their heightened social status. Therefore, the demand for luxury hair and beauty services began to develop and the Company expanded to capture the increasing needs of the market. The clientele of New Cleopatra was transferred from Old Cleopatra and the luxurious clubhouse (described below), which has served to further promote the Company’s brand recognition.  

New Cleopatra is located in an upscale shopping district and operates a 7,000 sq.m. beauty salon and spa facility (the “Clubhouse”).  In July 2007, New Cleopatra received the honorary title of “Six Stars” by the All-China Federation of Industry and Commerce—Hairdressing and Beauty Association (now known as the Beauty & SPA Exchange Centre, Chamber of Beauty Culture & Cosmetics, ACFIC) (the “ACFIC”).  The “Six Stars” are given annually for décor, quality of service, level of professionalism, pricing of services, and business operating procedures and based upon the standard of service, quality of equipment used, and the interior decorations at a facility.  This is a national honorary title and one of the highest given in our industry.  In October 2009, New Cleopatra was honored as the “Best Large Five-Service Beauty and Hair Club” in its province by the ACFIC. This honorary title is given to beauty salons and facilities that provide exceptional hair, beauty, and spa services. It is given on an annual basis to one company in each province in China. As such, approximately 31 of these honorary titles are awarded annually.

The Industry

We currently operate in the beauty, hair, and spa industry. China’s beauty, hair, and spa industry is a fragmented market.   According to China’s 2009-2012 Beauty, Hair, and Spa Market Research Report, which can be found at the China Research Report Website at www.BaogaoBaogao.com, the industry as a whole was worth approximately RMB400 billion in 2009.  This is also a very rapidly growing market, with a yearly growth rate typically not less than 20%.  The industry has a contribution margin of approximately 3% to 4% GDP to the Chinese economy.

The industry is highly fragmented with an increasingly competitive environment as customers seek to demonstrate their social status and as quality of living and per capital income continue to improve in China. According to the 2006 Market Research Report, beauty and hair salon customers in China are largely females and have an average age of 25.72.  In related statistics, approximately 28% are ages 20 and below, approximately 42% are ages between 21 and 30, approximately 23% are ages between 31 and 40, and approximately 7.33% are ages 41 and up. At the same time, the spending patterns on beauty and hair services trend by age group as follows: 7.83% are ages 20 and below, 30.41% are between ages 21 and 30, 30.01% are between ages 31 and 40, 20.6% are between ages 41 and 50, 8.02% are between ages 51 and 60 and 3.11% are ages 60 and up.

and spa management software, as well as standard operating procedures for our business operations.  All of our equipment and equipment maintenance is supported by our vendors at the time of the equipment’s purchase.  Each member of our staff is a trained and competent service professional.  Finally, all of our customers are chaperoned by at least one member of our staff during their treatments.

Memberships and Marketing

We have several different types of memberships catered for different customer preferences. The level of membership selected by the customer will determine the specific type and amount of benefits the customer is eligible to receive and will determine pricing of the membership package. We adapt ourselves to the ever changing market by offering different types of packages for our services in the industry. The diversity of options helps both to attract new customers and to provide a variety of benefits to our existing customers.

As of 2009, we have approximately 10,000 members and 5,000 walk-in customers annually.  We have membership plans ranging from RMB5,000 to RMB280,000, or approximately $750 to $42,000 U.S. Dollars. We also offer discounts to our members ranging from 15% to 90% on our services and beauty products depending on the members choice of plans and services. As we want to promote the benefit of becoming a member, only members are eligible for discounts, while walk-in customers are not. Approximately 80% of our revenue is derived from members, and 20% of our revenue is derived from walk-in customers.

Competition

According to China Beauty & Hair Industry Market Research Report published by China Federation of Industry Beauty and Cosmetic Association in 2006 (the “2006 Market Research Report”), the beauty and hair salon industry is a highly fragmented and competitive market.  Currently, it is estimated that the industry has about 1.82 million beauty and hair salons in China.

Whereas many market entrants operate only as hair salons or only as beauty salons, our business model provides integrated services, offering beauty, hair salon and spa services under one roof.  Our most direct competitor in Shenzhen in terms of its scope of services is “M Beauty”. M Beauty describes itself as having been founded in Changsha, a Tier-2 city in China located in Hunan Province. M Beauty caters to middle and high-income clientele, and most of the 20 stores that M Beauty operates are located in Tier-2 cities, only recently beginning to expand into Tier-1 cities such as Shenzhen. Since we have been operating in the Tier-1 market for over 15 years, we believe we have a better understanding of the needs of customers in Tier-1 cities and can therefore provide better services that more accurately cater to their demands.

With respect to salons offering single-type services, we consider Salon Esprit located in Shenzhen as our most direct competitor in the hair salon service business based on service fee, target customer, and geographic location.  We both target customers with high disposable income who desire to demonstrate their social status.  Based on the price list available on Salon Esprit’s web site, Salon Esprit’s services range between RMB 100 and RMB 10,000, depending on the kind of hair service ordered. Our service fees are comparable but have a narrower price range of RMB 200 to RMB 3,000 per service ordered.

With respect to our beauty salon services, we compete with “Meng Yuan Beauty Center” and “Papira”, also located in Shenzhen. Based on information presented on their web sites, these salon companies offer services ranging from few hundred to tens of thousands RMB. In comparison our service fees range from RMB 280 – RMB 16,800 per service ordered.

Our Strategy

We target high disposable income customers with ages ranging between 25 and 45.  We believe that continual investment into fashion design know-how and techniques are important to attracting and retaining our customers. We believe that higher disposable income clients tend not to be as price sensitive, as long as their desired fashion and social status can be satisfactorily expressed. We believe that our business differentiates itself from its competitors by the numerous awards that it has received. New Cleopatra has not only received ISO 9001 Service

Quality Assurance and ISO 14000 Facility Management Standard Recognition, but it was awarded “6 Stars” for the quality of its facilities and services in 2007 and was nominated as one of the top-5 hair salons in the nation.

As the Company has been operating in Shenzhen, a Tier-1 city, since 1994, we have evolved from a hair salon providing limited hair services to a luxurious high-end multi-service health and beauty clubhouse. As Shenzhen is designated by the PRC government as a special economic zone with geographic proximity to Hong Kong, it enjoys fashion influences from the international community ahead of any other Tier-2 cities.  The Company’s management system has grown from a sole proprietorship to a corporate system that allows for increased operational efficiency and service quality control.  Moreover, the Company has earned a reputation over the years in our target customer group.  The Company will continue to seek to distinguish ourselves from other competitors by offering a combination of beauty and hair services that maximizes cross-sector sales opportunities.  We plan to continue to focus on fashion design services that cater toward the elite and celebrities seeking luxurious individualized services and will strive to continually enhance our products and services to satisfy evolving customer demand.

In addition, as the market is highly fragmented, we may consider deploying a consolidation strategy to further consolidate the market and become a leading brand.  We intend to use our existing proven business management system, fashion training know-how and business model to further our geographic expansion. We intend to continue to target and grow in other Tier-1 cities by leveraging our existing clientele and marketing our service quality.

Material Marketing and Promotional Efforts

We attribute significant revenue growth to our promotion and marketing efforts.  Furthermore, our brand is important to our business. Therefore we employ the following marketing and promotional efforts to increase our brand awareness and service affordability:

1)

Advertisement: Advertisements in numerous consumer medias and physical locations such as the high-end shopping malls and high foot traffic and waiting areas, such as the airport.  We work with numerous advertisers and pay advertising fees.

2)

Payment Plan: To make our services more affordable, we work with China Merchant Bank to offer payment plans with no interest to China Merchant Bank’s credit card holders on selective services.  Pursuant to an agreement dated December 25, 2010, we have agreed to pay a transaction fee to the bank and receive full-payment up-front at the time of the transaction.  The amount of fees we incur range from 4% to 6%, depending on the size of the customer purchase, with no penalty action from the bank should a cardholder fail to make his or her payment obligation.

3)

Cross-Promotion: We work with other vendors that target similar types of clientele. We may offer discount vouchers for our services to such stores in exchange for the same value of gift vouchers that can be picked up by our members at our Clubhouse when using our services.

We may also provide free advertising space or sales counters for vendors. As an example of this type of arrangement, pursuant to an agreement with Shenzhen Daiweike Jewelry Co., Ltd. (“DBE”), between June 24, 2010 and July 23, 2010, DBE agreed to sponsor articles of jewelry for us to use in connection with promotional events at a Clubhouse evening gala and provided us with a section in its jewelry exhibit hall to sell our products and services. In return, we agreed to advertise DBE’s logo and products at our Clubhouse. We also provided DBE with a display counter on-site at the Clubhouse and included printed DBE advertisements in our brochures and at certain special events.

4)

Internet Sales:  To attract Internet customers to try our services, we offer selective heavily discounted priced service vouchers to a number of internet merchants. The internet merchant purchases the vouchers from us, then resells the vouchers and places our advertisement on their web site. The internet merchant earns the difference of the voucher price sold to customers and the price paid to us. The service vouchers sold by the Internet merchant is non-refundable.

Our promotional arrangements are generally short-term with options to renew at different terms and considerations, depending on the market conditions and previous marketing results.

Suppliers

Currently we use several different products in tandem with the services we supply to our clients.  However, we feel we are not dependent on any significant product or service from a third party.  The products used by our Company are easily attainable through several suppliers.  In addition, we strive to and currently maintain professional relationships with our suppliers.

Regulatory Matters

Our industry is regulated by the Ministry of Commerce (“MOFCOM”), the Ministry for Industry and Commerce, and the Ministry of Health.  In November, 2004, MOFCOM promulgated Interim Measures for the Administration of Beauty Treatment and Hairdressing Industry (“the Measures”), which became effective on January 1, 2005.  Under the Measures, operators engaged in beauty treatment and hairdressing business (“Operators”) shall meet the following basic conditions: (A) having the ability to bear civil liability; (B) having a fixed place of business; (C) rendering the service with suitable facilities and equipment; and (D) has employed professional and technical personnel with appropriate certificates.  Furthermore, Operators are required to display the business licenses, health permits, service items and service fees; use or sell products or equipment that meet product quality and safety and health requirements and standards.  In the event that Operators fail to comply with this Measures, the local branch of MOFCOM may give them a warning, require them to rectify their noncompliance within a specific time period or make an announcement of such non-compliance to the public if deemed necessary.

Foreign Ownership of Chinese Companies

Investment activities in the PRC by foreign investors are principally governed by the Guidance Catalogue of Industries for Foreign Investment (the “Catalogue”), which was promulgated and is amended from time to time by MOFCOM and the National Development and Reform Commission.  The Catalogue divides industries into three categories: encouraged, restricted and prohibited.  An industry not listed in the Catalogue is generally open to foreign investment unless it is specifically restricted by other PRC regulations.  In addition, the establishment of wholly foreign-owned enterprises is generally permitted in many industries except for the restricted industries which are listed in the Catalogue or restricted by other government regulations (which are subject to governmental approvals) and industries prohibited from foreign investments.  Pursuant to the currently effective Catalogue (2007 version) and other PRC regulations, the business scope of New Cleopatra as indicated on its business license does not fall into the restricted or prohibited industries and does not restrict New Cleopatra from being a wholly foreign-owned enterprise.

On August 8, 2006, MOFCOM joined by the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission and State Administration of Foreign Exchange released a substantially amended version of the Provisions for Foreign Investors to Merge with or Acquire Domestic Enterprises (the “Revised M&A Regulations”), which took effect on September 8, 2006 and was further amended on June 22, 2009.  These new rules significantly revised China’s regulatory framework governing onshore-to-offshore restructurings and foreign acquisitions of domestic enterprises.  These new rules signify greater PRC government attention to cross-border merger, acquisition and other investment activities, by confirming MOFCOM as a key regulator for issues related to mergers and acquisitions in China and requiring MOFCOM approval of a broad range of merger, acquisition and investment transactions. 

Employees

As of March 11, 2011, we had a total of 242 full-time employees. Our employees are not party to any collective bargaining agreement. We believe our relations with our employees are good.

Corporate History

Vibrosaun International, Inc.

Vibrosaun was organized pursuant to the laws of the State of Nevada on October 22, 1986, under the name “Morning Glory Mining, Inc,” with an authorized capital of $50,000 divided into 50,000,000 shares of common stock, par value $0.001 per share.  We were initially organized to engage in mining and mineral exploration; to deal in real and personal property; to issue indebtedness in the furtherance of the purposes of the corporation; to execute contracts; to acquire and develop patents, trademarks and copyrights; to borrow money; to acquire and pay for other businesses; to acquire and dispose of our own shares; to reorganize or dissolve corporations; and to engage in any lawful business which may be conducted under the laws of the State of Nevada.

Share Exchange Agreement

On June 24, 2010, the Company entered into a share exchange transaction with FLL and the majority shareholders of FLL. According to the terms of this Agreement, the Company acquired 100% of the FLL shares in exchange for the issuance of 57,000,000 shares of the Company’s common stock, in the aggregate, to the Shareholders.

The share exchange agreement was entered into on June 24, 2010, in accordance with applicable law, and was consummated on September 15, 2010.  Immediately prior to the Exchange, the Company had a total of approximately 2,999,648 shares of its common stock issued and outstanding, and the Exchange Shares were issued in addition to the existing amount. For Federal income tax purposes, it was intended that the Exchange constitute a tax-free reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Board of Directors of the Company and the Board of Directors of FLL each approved the Exchange.  At the time of the Exchange, FLL wholly owned World Alliance Holdings, a Hong Kong company, and World Alliance Holdings wholly owned New Cleopatra. As such, New Cleopatra is an indirect wholly-owned subsidiary of FLL.

The Company’s current corporate structure is set forth below:

Cleopatra International Group, Inc.

(Nevada) (the “Company”)

100% â

Festive Lion Limited

(British Virgin Islands) (“FLL”)

100% â

World Alliance Holdings Limited

(Hong Kong) (“World Alliance Holdings”)

100% â

Shenzhen New Cleopatra Beauty & Salon Company Limited

(People’s Republic of China) (“New Cleopatra”)

Revenues

Revenue for the years ended December 31 of 2009 and 2008 are analyzed as follows:

Sales revenue of $6,066,241 for the year ended December 31, 2009 represents revenue from the provision for beauty services.

Sales revenue of $690,720 for the year ended December 31, 2008 represents management fee income received from YongPing Xu, a shareholder of the Company.

The Clubhouse was established in February 2007 by YongPing Xu, one of Shenzhen Cleopatra Beauty & Salon Center (“Old Cleopatra”) and the Company’s shareholders, as a private entity. For future expansion, Mr. Xu established New Cleopatra with Haiying Guan in October 2007 to jointly own and operate the Clubhouse, with Mr. Xu and Ms. Guan owning a 51% and 49% stake in the Clubhouse, respectively. The shareholders also entered into the following transitional arrangements (the “Transitional Arrangements”) for the transfer of Clubhouse operations to New Cleopatra:

(i)

Mr. Xu transferred the Clubhouse’s property, plant and equipment with a net book value of $2,304,218 to New Cleopatra in November 2007.

(ii)

New Cleopatra became solely responsible for the management of the Clubhouse’s property, plant and equipment from November 2007 to December 2008. In return, New Cleopatra entered into an agreement to receive management fee income of RMB400,000 per month from Mr. Xu.

(iii)

The Clubhouse operations were not transferred to the Company until January 1, 2009. Mr. Xu transferred the Clubhouse’s operations, together with certain operating assets of $169,256 and obligations of $432,008, to the Company on January 1, 2009.

Prior to January 1, 2009, the Clubhouse was operated by Mr. Xu and he was entitled to the net proceeds, if any, arising from the Clubhouse operations during the period. The Company was responsible for the management of the Clubhouse’s property, plant and equipment during the period for a management fee income of RMB400,000 (or equivalent to approximately $57,560) per month.

Cost of services and other operations

Cost of services and other operations for the years ended December 31, 2009 and 2008 are analyzed as follows:

12

Cost of services significantly increased from $468,005 for the year ended December 31, 2008 to $2,698,659 for the year ended December 31, 2009.   The increase in cost of services was mainly attributable to a full Clubhouse operation in 2009 whereas the Company was solely responsible for the provision of management service in 2008.

Gross profit

Gross profit and gross profit margin for the years ended December 31 of 2009 and 2008 are analyzed as follows:

Gross profit increased from $222,715 for the year ended December 31, 2008 to $3,367,582 for the year ended December 31, 2009. The increase in gross profit and gross profit margin was mainly attributable to full Clubhouse operations in 2009 whereas the Company was only responsible for the provision of management services in 2008.

Selling and distribution expenses

Selling and distribution expenses for the year ended December 31, 2009 mainly comprised payroll for marketing staff of $123,297 and promotion expenses of $30,088.

The Company did not incur any selling and distribution expense in 2008 as the Company was only responsible for the provision of management services in 2008.

General and administrative expenses

General and administrative expenses mainly comprised administrative payroll of $248,434 and office expenses of $12,980. The increase in general and administrative expenses by $149,902 was mainly attributable to an increase in administrative payroll in 2009, as the Company took up full Clubhouse operations during the year and increased back office headcounts to support frontline operations.

Income before income taxes and provision for income taxes

Income before tax for the year ended December 31, 2009 was $2,986,295, representing an increase of $2,934,540 from 2008. The increase in income before tax was mainly attributable to the increase in sales revenue in 2009, as the Company took up full Clubhouse operations during the year.

Income tax for the years ended December 31, 2009 and 2008 was $746,574 and $12,939, respectively. The effective tax rate was approximately 25% for both financial years.

Net income

Net income for the years ended December 31, 2009 and 2008 amounted to $2,239,721 and $38,816, respectively.  The increase in net income by $2,200,905 was mainly attributable to the increase in sales revenue.

Results of Operations – Six Months Ended June 30, 2010 as Compared to Six Months Ended June 30, 2009

Revenues

Sales revenue for the six months ended June 30, 2010 and 2009 represents revenue from Clubhouse operations.

Revenue for the six months ended June 30 of 2010 and 2009 are analyzed as follows:

(a) Beauty services

Revenue for the six months ended June 30, 2010 and 2009 was $3,565,124 and $2,672,428, respectively, accounting for over 99% of total revenue for both periods. The increase in sales revenue by $892,696 mainly represents an increase in the revenues from beauty services of $588,543 and an increase in revenues from salon services of $304,153.

(b) Food, beverages and others

Revenue for the six months ended June 30, 2010 and 2009 only accounted for less than 1.0% of the Company’s operations for both periods, which is not significant to the Company’s operations.

Cost of services and other operations

Cost of services and other operations for six months ended June 30 of 2010 and 2009 are analyzed as follows:

(a)

Beauty service

Cost of services increased by $488,466 from $1,276,371 for the six months ended June 30, 2009 to $1,764,837 for the same period of 2010. The change was generally in line with the increase in revenue.

(b)

Food, beverages and others

The increase was insignificant to the Company’s operations.

Gross profit

Gross profit and gross profit margin for the six months ended June 30 of 2010 and 2009 are analyzed as follows:

(a)

Beauty service

Gross profit increased by $404,230, or 29%, from $1,396,057 for the six months ended June 30, 2009 to $1,800,287 for the same period of 2010. The increase in gross profit was mainly driven by the increase in sales revenue. Gross profit margin for the six months ended June 30, 2010 is generally comparable to the gross profit margin for the same period of last year.

(b)

Food, beverage and others

The increases in gross profit and gross profit margin were not significant to the Company’s operation.

Selling and distribution expenses

Selling and distribution expenses increased from $153,552 for the six months ended June 30, 2009 to $514,325 for the six months ended June 30, 2010.  The significant increase in selling and distribution expenses was mainly attributable to the increase in marketing and advertising expenses of $370,965.

General and administrative expenses

General and administrative expenses increased by $33,875 from $142,935 for the six months ended June 30, 2009 to $176,810 for the six months ended June 30, 2010. The increase in general and administrative expenses was primarily due to the increase in office expenses of $26,357, as the Company expanded its back office during the first half of 2010.

Income before income taxes and provision for income taxes

The Company recorded a profit before income tax of $1,107,111 for the six months ended June 30, 2010. The amount is generally comparable to a profit of $1,116,367 for the six months ended June 30, 2009.

Income tax expense for the six months ended June 30, 2010 and 2009 was $276,778 and $279,092, respectively. The effective tax rate was approximately 25% for both financial years.

Net income

Net income for the six months ended June 30, 2010 was $830,333. The amount is generally comparable to a net income of $837,275 for the comparative period last year.

Liquidity and Capital Resources

Cash and cash equivalents

As of June 30, 2010, the Company had a total cash and cash equivalents of $208,245 compared to $21,000 as of December 31, 2009.  The cash was mainly used to fund our operations.  The Company’s cash flows for the six months ended June 30, 2010 are analyzed as follows:

Cash Flows – Six Months Ended June 30, 2010 as Compared to Six Months Ended June 30, 2009

Our net cash provided by operating activities for the six months ended June 30, 2010 and 2009 was $504,498 and $1,600,073, respectively. The decrease in cash flows from operating activities by $1,095,575 was mainly due to i) the increase in prepayment by $881,670, as the Company prepaid approximately $769,950 for purchase of cosmetic products; and ii) the increase in amount due from Old Cleopatra of $509,912. Old Cleopatra is a PRC entity that is owned by Mr. YongPing Xu, our chief executive officer and majority shareholder of the Company. As of the balance sheet dates, the amounts are unsecured, interest free, and have no fixed terms of repayments.

Our cash flow used in investing activities of $111,245 for the six months ended June 30, 2010 represents purchase of equipment and machinery during the period.

Our cash flows used in financing activities for the six months ended June 30, 2010 and 2009 was $207,358 and $1,377,163, respectively. The decrease in cash flows used in financing activities was mainly due to the decrease in amount due to a shareholder by $1,226,054. The amount due to a shareholder represents advances from Mr. YongPing Xu to the Company. As of the balance sheet dates, the balances are unsecured, interest free, and have no fixed terms of repayments.

Working Capital

As of June 30, 2010, the Company recorded a working capital deficit of $1,076,299, as compared to a deficit of $2,638,339 as of December 31, 2009.  The decrease in deficit was mainly attributable to the profit for the first half of 2010.

As of June 30, 2010, there are no lines of credit or other external sources available to the Company.  We currently do not have any material commitments for capital expenditures.

We anticipate that our existing cash balances and cash generated from future sales will be sufficient to permit us to conduct our operations and to carry out our contemplated business plans for the next twelve months.

Off-Balance Sheet Transactions

We do not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on our financial condition, cash flows, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimates are made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur, could materially impact the consolidated financial statements.

We believe that the following critical accounting policy reflect the significant estimates and assumptions which are used in the preparation of the consolidated financial statements and affect our financial condition and results of operations.

Revenue Recognition

Revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred, price has been fixed or is determinable, and collectability is reasonably assured, on the following bases:

(i)

Service revenue

The Company provides membership packages to members while also accepting walk-in customers.

For membership packages, the amount received from customers represents prepaid beauty services. As the Company is obliged to provide future beauty services to customers, all moneys received will be recognized as deferred service revenue. When services are rendered, the amount will be recognized as revenue.

For walk-in customers, sales revenue is recognized at the time the service is rendered.

There can be no assurance that we will be able to attract and retain sufficient numbers of highly skilled technical directors 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.

Risks Relating to Our Industry

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 beauty, hair, and spa industry, 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.

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 regulated by the Ministry of Commerce, the Ministry for Industry and Commerce, and the Ministry of Health.  We currently comply with the regulations these Ministries have 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 and members.

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

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 significantly 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.

The Company believes that the importance of brand recognition will increase due to the relatively low barriers to entry in the beauty, hair, and spa market. If the company fails to maintain and enhance the Company’s brand, or if it incurs excessive expenses in this effort, the Company’s business, operating results and financial condition will be materially and adversely affected. Maintaining and enhancing the Company’s brand will depend largely on the Company’s ability to continue to provide high-quality products and services.

Risks Relating to Our Organization and Our Common Stock

As of July 2, 2010, we became a consolidated subsidiary of a company that is subject to the reporting requirements of federal securities laws, which can be expensive and may divert resources from other projects, thus impairing our ability to grow.

As a result of the Merger, we became a public reporting company and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC (including reporting of the Merger) and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we remained privately held and did not consummate the Merger.

Our accounting personnel lacks significant experience in preparing financial statements and converting our books and records to U.S. GAAP, which could adversely affect the accuracy of our financial statements and the management of our business.

Our accounting personnel lacks significant experience in preparing financial statements and converting our books and records to U.S. GAAP, which could adversely affect the management of our business. There are several factors that impact our ability to accurately prepare financial statements and to convert our books and records to U.S. GAAP, including that our books and records are maintained and prepared in PRC GAAP and the employees who have primary responsibilities of preparing and supervising the preparation of the financial statements under U.S. GAAP do not have significant knowledge of and professional experience with U.S. GAAP and SEC rules and regulations. To address this weakness, we have recently hired two additional employees to our accounting and financial staff that we believe with assist us in this regard.  

If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.

It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures. Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. In addition, if we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, then we may not be able to obtain the independent accountant certifications required by such act, which may preclude us from keeping our filings with the SEC current and may adversely affect any market for, and the liquidity of, our common stock.

Public company compliance may make it more difficult for us to attract and retain officers and directors.

The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these new rules and regulations to increase our compliance costs and to make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

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

There may be risks associated with us becoming public through a merger. Securities analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock. No assurance can be given that brokerage firms will, in the future, want to conduct any secondary offerings on behalf of our post-merger company.

Our stock price may be volatile.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

·

changes in our industry;

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competitive pricing pressures;

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our ability to obtain working capital financing;

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additions or departures of key personnel;

·

limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;

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sales of our common stock;

·

our ability to execute our business plan;

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operating results that fall below expectations;

·

loss of any strategic relationship;

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regulatory developments;

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economic and other external factors; and

·

period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

We may not pay dividends in the future. Any return on investment may be limited to the value of our common stock.

We do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

There is currently no liquid trading market for our common stock and we cannot ensure that one will ever develop or be sustained.

To date there has not been a liquid trading market for our common stock. We cannot predict how liquid the market for our common stock might become.  As soon as is practicable after becoming eligible, we anticipate applying for listing of our common stock on either the NYSE Amex Equities, The Nasdaq Capital Market or other national securities exchange, assuming that we can satisfy the initial listing standards for such exchange. We currently do not satisfy the initial listing standards for any of these exchanges, and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges, or our common stock is otherwise rejected for listing and remains quoted on the OTC Bulletin Board or is suspended from the OTC Bulletin Board, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.

Furthermore, for companies whose securities are quoted on the OTC Bulletin Board, it is more difficult (i) to obtain accurate quotations, (ii) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies and (iii) to obtain needed capital.

Our common stock is currently a “penny stock,” which may make it more difficult for our investors to sell their shares.

Our common stock is currently and may continue in the future to be subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on The NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. Since our securities are subject to the penny stock rules, investors may find it more difficult to dispose of our securities.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market, or upon the expiration of any statutory holding period under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall.

An overhang is a measure of the potential dilution to which a common stock’s existing shareholders are exposed, due to the potential that stock-based compensation will be awarded to executives, directors, or key employees of the company.  It is usually represented in percentage form.  There is no precise rule-of –thumb for determining what level of options overhang is bad for investors but, general speaking, the higher the number, the greater the risk.

The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

Techniques employed by manipulative short sellers in Chinese small cap stocks may drive down the market price of our common stock.

Short selling is the practice of selling securities that the seller does not own but rather has, supposedly, borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale.   As it is therefore in the short seller’s best interests for the price of the stock to decline, many short sellers (sometime known as “disclosed shorts”) publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a stock short.  While traditionally these disclosed shorts were limited in their ability to access mainstream business media or to otherwise create negative market rumors, the rise of the Internet and technological advancements regarding document creation, videotaping and publication by weblog (“blogging”) have allowed many disclosed shorts to publicly attack a company’s credibility, strategy and veracity by means of so-called research reports that mimic the type of investment analysis performed by large Wall Street firm and independent research analysts.  These short attacks have, in the past, led to selling of shares in the market, on occasion in large scale and broad base.  Issuers with business operations based in China and who have limited

Executive Officers and Directors

The following persons are our executive officers and directors as of September 15, 2010 and hold the positions set forth opposite their respective names.

*In connection with the Exchange, David Rees resigned as CEO on September 15, 2010 and as director on September 20, 2010.

Our directors hold office until the earlier of their death, resignation or removal by stockholders or until their successors have been qualified.  Our officers are elected annually by, and serve at the pleasure of, our board of directors.  We feel our officers and directors should serve in such capacity in light of our business structure because: they all have a degree or professional diploma, they have management knowledge, they have previous experience in the industry and are able to adapt to changes within the industry, and they are able to work resourcefully to strategize for the Company.

Biographies

Directors and Officers

YongPing Xu, age 36, is the CEO & Director. Mr. Xu started learning hairstyling in Hong Kong in 1992 at MingFaLang. He started working in Shenzhen Shangri La in 1993 as a hairstylist. He has been the owner of New Cleopatra since 1994 when he founded the company (initially as Old Cleopatra). In 2000, he studied creative hairstyling at Shanghai’s Vidal Sassoon Academy. In 2001, he attended Singapore’s Toni & Guy hairstyling course. In 2002, he attended UK’s Vidal Sassoon Academy hairstyling course. In 2003, he learned creative hairstyling in Japan. We believe that Mr. Xu provides the Board of Directors with unique insight into the know-how and competitive landscape of the industry as well as a strong understanding of corporate development, all of which are important to achieving the Company’s vision.

HaiYing Guan, age 43, is the President and Director. She graduated from Guangzhou City Huang Village Sports Training Base where she studied Management from 1988 ~ 1990. From 1990 to 1991 she served as the Operations Supervisor of Shenzhen City Guomao Management Co. Ltd., a property management company.  From 1991 to 1993, she was the General Manager (Shenzhen Branch) of Hong Kong Heli Development Ltd., a property management company.  From 1993 to 1996, she was the president of Shenzhen City Feida Electronics Co. Ltd., a company that manufactures and sells mobile phone chips.  From 1996 to 2006, she was the President of Shenzhen City Chuanhe Information Co. Ltd., a company that provides industry information on various industries, such as the medical, beauty, and salon industries.  Since 2007, she has served in the capacity of President of New Cleopatra.  We believe that Ms. Guan provides the Board of Directors with unique insight into the high-income customer market as well as social networks that can be utilized to promote the Company’s image through brand recognition and corporate social responsibility.  

ZheYong He, age 39, is the interim CFO. He graduated from Zhengzhou Institute of Aeronautical Industry Management in Accounting in 1995. From 1995 to 1997, he was the accountant in Aviation Industry Corporation of China, a military research and production facility. From 1997 to 1999, he was the Cost Estimator for Cai Zhong Computers (Shenzhen) Co. Ltd., a computer motherboard manufacturer.  From 1999 to 2003, he was the Finance Supervisor in Xin Yi Optical Plant Co. Ltd., an optical manufacturer.  From 2003 to 2008 he was the Finance

(1) The amount provided in the “All Other Compensation” column reflects the net proceeds received by Mr. Xu arising out of the Clubhouse operations (as described elsewhere in this document).

(2) David Rees, the chief executive officer and director of the Company prior to the Exchange, resigned from his positions as CEO and director on September 15, 2010 and September 20, 2010, respectively. As of September 15, 2010, Mr. Rees held 2,279,000 shares of common stock through his ownership of Vincent & Rees, LC.

(3) David Merrell served as president and director of the Company from February 10, 1997 to May 14, 2010.

Shenzhen Cleopatra Beauty & Salon Center, or Old Cleopatra, is a PRC entity owned by Mr. YongPing Xu, a shareholder of the Company. As of the dates indicated, the amounts are unsecured, interest free, and have no fixed terms of repayments. The amounts were advanced and accumulated during the year for the purpose of developing the wholesale and retail business of beauty products with Old Cleopatra in connection with the product cooperation agreement between New Cleopatra and Old Cleopatra dated January 1, 2010.

In addition to the transactions described above, the following transactions occurred between the Company and Mr. YongPing Xu:

1.

Mr. Xu entered into the following transitional arrangements (the “Transitional Arrangements”) for the transfer of Clubhouse operations to New Cleopatra:

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired. In accordance with Item 9.01(a), Festive Lion Limited’s audited consolidated financial statements for the fiscal years ended December 31, 2009 and 2008 and FLL’s unaudited consolidated financial statements for the period ended June 30, 2010 and 2009 are filed in this Current Report on Form 8-K/A as Exhibits 99.1 and 99.2, respectively.

(b) Proforma Financial Statements.  In accordance with Item 9.01(b), the unaudited pro forma financial statements of Cleopatra International Group, Inc. are filed in this Current Report on Form 8-K/A as Exhibit 99.3.

(c) Exhibits.  The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K/A.

29

*     Filed herewith

(1)          Exhibit 2.1, the Share Exchange Agreement between Vibrosaun International, Inc. and Festive Lion Limited, dated June 24, 2010, as amended, was previously filed with the SEC on Form 8-K on September 16, 2010, and are herein incorporated by reference.

(2)

Vibrosaun International, Inc.’s Amended and Restated Certificate of Incorporation and By-laws, Exhibits 3.1 and 3.2, respectively, were previously filed with the SEC on Form 10, on September 12, 2008, and are herein incorporated by reference.

(3)

Exhibit 3.3, the Filed Stamped Articles of Amendment including Agreement and Plan of Merger, was previously filed with the SEC as Exhibit 3.1 to Form 10-Q on August 16, 2010, and are herein incorporated by reference

(4)

Exhibits 10.1 through 10.6 were previously filed with the SEC on Form 8-K/A on December 28, 2010, and are herein incorporated by reference.