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   <TITLE>Nutrastar International Inc.: Form S-1 - Prepared by TNT Filings Inc.</TITLE>

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<P align=center style="margin-top: 0; margin-bottom: 0">As filed with the Securities and Exchange Commission on January
28, 2010 </P>
<div style="border-bottom-style: double; border-bottom-width: 3">
<P align=right style="margin-top: 0; margin-bottom: 0"><B>Registration No. 333 - </B></P>
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<P align=center><B><font size="5">UNITED STATES <br>
SECURITIES AND EXCHANGE COMMISSION </font>
<BR></B><B>WASHINGTON, D.C. 20549
<BR>____________________________<BR></B><B><BR><font size="5">FORM S-1 </font> </B></P>
<P align=center><B>REGISTRATION STATEMENT UNDER THE <BR>SECURITIES ACT OF 1933
</B></P>
<P align=center><B><font size="6">NUTRASTAR INTERNATIONAL INC.<BR></font>(Exact name of
registrant as specified in its charter) </B></P>
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    <TD align=center width="33%">Nevada </TD>
    <TD align=center width="33%">2000 </TD>
    <TD align=center width="33%">80-0264950 </TD></TR>
  <TR vAlign=top>
    <TD align=center width="33%"><B>(State or other jurisdiction of </B></TD>
    <TD align=center width="33%"><B>(Primary Standard Industrial </B></TD>
    <TD align=center width="33%"><B>(I.R.S. Employer </B></TD></TR>
  <TR vAlign=top>
    <TD align=center width="33%"><B>incorporation or organization) </B></TD>
    <TD align=center width="33%"><B>Classification Code Number) </B></TD>
    <TD align=center width="33%"><B>Identification No.)
</B></TD></TR></TABLE>
<P align=center>7/F Jinhua Mansion <BR>41 Hanguang Street <BR>Nangang District,
Harbin, 150080 <BR>People&#146;s Republic of China <BR>(86) 451-82287746
<BR><B>(Address and telephone number of principal executive offices)
<BR>____________________________<BR></B><B><I><BR>Copies to:</I></B></P>
<P align=center>Scott C. Kline, Esq. <BR>Pillsbury Winthrop Shaw Pittman LLP
<BR>50 Fremont Street <BR>San Francisco, CA 94105-2228 <BR>(415) 983-1000
<BR><B>(Names, addresses and telephone numbers of agents for
service)<BR>____________________________<BR></B></P>
<P align=justify style="text-indent: 5%"><B>Approximate date of commencement of proposed sale to
public</B>: From time to time after the effective date of this Registration
Statement, as determined by market conditions and other factors. </P>
<P align=justify style="text-indent: 5%">If any of the securities being
registered on this form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, check the following box.
    <font face="Wingdings">x</font> </P>
<P align=justify style="text-indent: 5%">If this form is filed
to register additional securities for an offering pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. <font face="Wingdings">o</font></P>
<P align=justify style="text-indent: 5%">If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.&nbsp; <font face="Wingdings">o</font> </P>
<P align=justify style="text-indent: 5%">If this form is
a post-effective amendment filed pursuant to Rule 462(d) under the Securities
Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement the same offering.&nbsp;
<font face="Wingdings">o</font> </P>
<P align=justify style="text-indent: 5%">If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.&nbsp; <font face="Wingdings">o</font> </P>
<P align=justify style="text-indent: 5%">Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definitions of &#147;large accelerated
filer," "accelerated filer,&#148; and "smaller reporting company" in Rule 12b-2 of
the Exchange Act. (Check one):</P>
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    <TD align=center>Large accelerated filer&nbsp; <font face="Wingdings">o</font></TD>
    <TD align=center width="50%">Accelerated filer&nbsp; <font face="Wingdings">
    o</font></TD></TR>
  <TR vAlign=top>
    <TD align=center>Non-accelerated filer&nbsp; <font face="Wingdings">o</font></TD>
    <TD align=center width="50%">Smaller reporting company&nbsp;
    <font face="Wingdings">x</font></TD></TR>
  <TR vAlign=top>
    <TD align=center>(Do not check if a smaller reporting company) </TD>
    <TD align=center width="50%">&nbsp; </TD></TR></TABLE>
<DIV>
&nbsp;</DIV><BR>
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<p align="center"><B>CALCULATION OF REGISTRATION FEE </B></p>
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    <TD align=center>Title of securities </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">Proposed maximum offering </TD>
    <TD align=center width="20%">Proposed maximum aggregate </TD>
    <TD align=center width="20%">Amount of </TD></TR>
  <TR vAlign=top>
    <TD align=center>to be registered </TD>
    <TD align=center width="20%">Amount to be registered<SUP>(1) </SUP></TD>
    <TD align=center width="20%">price per share<SUP>(2) </SUP></TD>
    <TD align=center width="20%">offering price<SUP>(2) </SUP></TD>
    <TD align=center width="20%">registration fee </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff>Common stock, $0.001 <BR>par value per
      share </TD>
    <TD align=center width="20%" bgColor=#e6efff><BR>1,000,000<SUP>(5)
    </SUP></TD>
    <TD align=center width="20%" bgColor=#e6efff><BR>$3.76 </TD>
    <TD align=center width="20%" bgColor=#e6efff><BR>$3,760,000 </TD>
    <TD align=center width="20%" bgColor=#e6efff><BR>$268.09
</TD></TR></TABLE>
<DIV>
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    <TD align=center>Common stock <BR>underlying Series A <BR>Warrants
      exercisable at <BR>$3.25 per share </TD>
    <TD align=center width="20%"><BR><BR>250,000<SUP>(6) </SUP><BR></TD>
    <TD align=center width="20%"><BR><BR>3.76<SUP>(3) </SUP><BR></TD>
    <TD align=center width="20%"><BR><BR>940,000 <BR></TD>
    <TD align=center width="20%"><BR><BR>67.02 <BR></TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff>Common stock <BR>underlying Series B
      <BR>Warrants exercisable at <BR>$4.00 per share </TD>
    <TD align=center width="20%" bgColor=#e6efff><BR><BR>250,000<SUP>(6)
      </SUP><BR></TD>
    <TD align=center width="20%"
    bgColor=#e6efff><BR><BR>4.00<SUP>(4)</SUP><BR></TD>
    <TD align=center width="20%" bgColor=#e6efff><BR><BR>1,000,000 <BR></TD>
    <TD align=center width="20%" bgColor=#e6efff><BR><BR>71.30 <BR></TD></TR>
  <TR vAlign=top>
    <TD align=center>Total </TD>
    <TD align=center width="20%">1,500,000 </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">$5,700,000 </TD>
    <TD align=center width="20%">$406.41 </TD></TR></TABLE></DIV>
<P align=justify>(1) In accordance with Rule 416(a), the Registrant is also
registering hereunder an indeterminate number of shares that may be issued and
resold resulting from stock splits, stock dividends or similar transactions.
<BR>(2) Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely
for the purpose of computing the amount of the registration fee based on the
average of the bid and asked prices reported on the Over-the-Counter Bulletin
Board on January 25, 2010. <BR>(3) Calculated in accordance with Rule 457(g)
based upon the offering price of the securities of the same class included in
the registration statement. <BR>(4) Calculated in accordance with Rule 457(g)
based upon the exercise price of the Series B Warrants held by selling stockholders named
in this registration statement. <BR>(5) Represents shares of the Registrant&#146;s
common stock being registered for resale that have been issued to the selling
stockholders named in this registration statement. <BR>(6) Represents shares of
common stock issuable upon exercise of three-year warrants to purchase shares of
common stock held by selling stockholders named in this registration statement.
</P>
<P align=justify><B>The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall hereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine. </B></P>
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<p>The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted. </p>
</b></font>
<P align=justify><B><I>PROSPECTUS</I></B> </P>
<P align=center><font color="#FF0000"><B><I>Subject to completion, dated January 28, 2010</I></B>
</font> </P>
<P align=center><B>1,500,000 Shares </B></P>
<P align=center><IMG src="forms1x3x1.jpg" border=0 width="281" height="237"> </P>
<P align=center><B>NUTRASTAR INTERNATIONAL INC.</B></P>
<P align=center><B>Common Stock, par value $0.001 per share </B></P>
<P align=center>____________________________ </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus relates to
1,500,000 shares of common stock of Nutrastar International Inc. that may be
sold from time to time by the selling stockholders named in this prospectus,
which includes:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>1,000,000 shares of common stock; <BR>
  <LI>250,000 shares of common stock issuable to the selling stockholders upon
  the exercise of Series A warrants; and <BR>
  <LI>250,000 shares of common stock issuable to the selling stockholders upon
  the exercise of Series B warrants. </LI></UL>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will not receive any proceeds
from the sales of outstanding shares of common stock by the selling
stockholders, but we will receive funds from the exercise of warrants held by
the selling stockholders, if exercised for cash. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is quoted on the
OTC Bulletin Board under the symbol &#147;NUIN.OB.&#148; The closing price for our common
stock on January 25, 2010 was $3.76 per share, as reported on the OTC Bulletin
Board. You are urged to obtain current market quotations of our common stock
before purchasing any of the shares being offered for sale pursuant to this
prospectus. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The shares of our common stock
offered under this prospectus are being registered to permit the selling
stockholders to sell the shares from time to time in the public market. The
selling stockholders may sell the shares through ordinary brokerage transactions
or through any other means described in the section titled &#147;Plan of
Distribution.&#148; We do not know when or in what amount the selling stockholders
may offer the shares for sale. The selling stockholders may sell any, all or
none of the shares offered by this prospectus.</P>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investing in the shares being
offered pursuant to this prospectus involves a high degree of risk. You should
carefully read and consider the information set forth in the section of this
prospectus titled &#147;Risk Factors,&#148; beginning on page 7, when determining whether
to purchase any of these shares. </B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither the Securities and
Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense. </B></P>
<P align=center>The date of this prospectus
is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
, 2010. </P>
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<P align=center><B><U>TABLE OF CONTENTS</U></B><B> </B></P>
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    <TD align=left>&nbsp; </TD>
    <TD align=right width="15%"><B><U>Page</U></B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>PROSPECTUS SUMMARY</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>1</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>RISK FACTORS</B> </TD>
    <TD align=right width="15%"><b>7</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>SPECIAL NOTE REGARDING FORWARD-LOOKING
      STATEMENTS</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>17</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>USE OF PROCEEDS</B> </TD>
    <TD align=right width="15%"><b>17</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>BUSINESS</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>17</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF</B> <B>OPERATIONS</B> </TD>
    <TD align=right width="15%"><b>25</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>HISTORY AND CORPORATE STRUCTURE</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>36</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>MANAGEMENT</B> </TD>
    <TD align=right width="15%"><b>40</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>EXECUTIVE COMPENSATION</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>42</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
      CONTROL PERSONS;</B> <B>CORPORATE GOVERNANCE</B> </TD>
    <TD align=right width="15%"><b>44</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>SELLING STOCKHOLDERS</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>46</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT</B> </TD>
    <TD align=right width="15%"><b>48</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>DESCRIPTION OF SECURITIES</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>49</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER
      MATTERS</B> </TD>
    <TD align=right width="15%"><b>52</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>SHARES ELIGIBLE FOR FUTURE SALE</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>53</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>PLAN OF DISTRIBUTION</B> </TD>
    <TD align=right width="15%"><b>54</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>LEGAL MATTERS</B> </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>56</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>EXPERTS</B> </TD>
    <TD align=right width="15%"><b>56</b></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>WHERE YOU CAN FIND MORE INFORMATION</B>
    </TD>
    <TD align=right width="15%" bgColor=#e6efff><b>56</b></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B> </TD>
    <TD align=right width="15%"><B>F-1</B> </TD></TR></TABLE>
<P align=justify><B>You should rely only on the information provided in this
prospectus. Neither we nor the selling stockholders have authorized anyone to
provide you with additional or different information. The selling stockholders
are not making an offer of these securities in any jurisdiction where the offer
is not permitted. You should assume that the information in this prospectus is
accurate only as of the date on the front of the document. </B></P>
<P align=center>i </P>
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<P align=center style="margin-left: 20; margin-right: 20"><B>PROSPECTUS SUMMARY </B></P>
<P align=justify style="margin-left: 20; margin-right: 20"><I>The items in the following summary are described in more
detail later in this prospectus. You should read the following summary together
with the more detailed information regarding our company and the common stock
being sold in this offering, including &#147;Risk Factors&#148; and our consolidated
financial statements and related notes, included elsewhere in, or incorporated
by reference into, this prospectus. </I></P>
<P align=justify style="margin-left: 20; margin-right: 20">In this prospectus, unless indicated otherwise:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;we,&#148; &#147;us,&#148; &#147;our company,&#148; &#147;our&#148; and &#147;Nutrastar&#148; refer to the combined
  business of Nutrastar International Inc. and/or its consolidated subsidiaries,
  as the case may be; <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;New Resources&#148; refers to New Zealand WAYNE&#146;s New Resources Development
  Co., Ltd., our direct, wholly-owned subsidiary, a BVI corporation; <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;Heilongjiang Shuaiyi&#148; refers to Heilongjiang Shuaiyi New Energy
  Development Co., Ltd. our indirect, wholly-owned subsidiary, a Chinese
  corporation; <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;Daqing Shuaiyi&#148; refers to Daqing Shuaiyi Biotech Co., Ltd., our indirect,
  wholly-owned subsidiary, a Chinese corporation; <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;Harbin Shuaiyi&#148; refers to Harbin Shuaiyi Green &amp; Specialty Food
  Trading LLC, our indirect, wholly-owned subsidiary, a Chinese corporation;
<BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;BVI&#148; refers to the British Virgin Islands; <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;China,&#148; &#147;Chinese&#148; and &#147;PRC,&#148;
  refer to the People&#146;s Republic of China and for the purpose of this
  prospectus, do not include Taiwan and the special administrative regions of
  Hong Kong and Macau;<BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;Renminbi&#148; and &#147;RMB&#148; refer to the legal currency of China; <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;U.S. dollars,&#148; &#147;dollars&#148; and &#147;$&#148; refer to the legal currency of the
  United States; <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;SEC&#148; refers to the United States Securities and Exchange Commission; <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;Securities Act&#148; refers to the Securities Act of 1933, as amended; and
<BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20">&#147;Exchange Act&#148; refers to the Securities Exchange Act of 1934, as amended.
  </LI></UL>
<P align=justify style="margin-left: 20; margin-right: 20">Effective May 19, 2009, we implemented a 1-for-114.59 reverse
stock split of issued and outstanding shares of our common stock. Except where
specifically indicated, all common share information (including information
related to warrants to purchase common stock) has been restated to reflect the
1-for-114.59 reverse split.</P>
<P align=center style="margin-left: 20; margin-right: 20"><B>The Company </B></P>
<P align=justify style="margin-left: 20; margin-right: 20"><B><I>Overview of Our Business </I></B></P>
<P align=justify style="margin-left: 20; margin-right: 20">We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading grower and producer of
Cordyceps Militaris, or &#147;Chinese Golden Grass&#148; in China. We specialize in
developing, processing, marketing and distributing a variety of agricultural and
nutraceutical products consisting of Chinese Golden Grass, organic and specialty
food products. In addition, we plan to produce and market other products
developed from Cordyceps Militaris within the coming months and years, including
specialty beverage products as indicated in more detail below. </P>
<P align=justify style="margin-left: 20; margin-right: 20">Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in north-eastern mountainous China. It is a precious
ingredient in traditional Chinese medicine, as Cordyceps Militaris is widely
believed in China to offer high medical and health benefits by nourishing the
<I>yin,</I> boosting the <I>yang,</I> and invigorating the meridians of the
lungs and kidneys. </P>
<p align="center">1<br>
&nbsp;</div>
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<P align=justify style="margin-left: 20; margin-right: 20">We generated 75.32%
and 68.46% of our revenues from Chinese Golden Grass for the nine months ended September 30, 2009 and the fiscal year
of 2008, respectively. We believe that we own 19% of the world wide market share
in the cultivated Chinese Golden Grass industry. We plan to continue to focus on
Chinese Golden Grass, which is our fastest growing product line with the
greatest market demand and a significantly high profit margin. We also sell
organic and specialty food products through our subsidiary, Harbin Shuaiyi,
which was formed in 2001. After years of development, we believe that we have
become the largest wholesale distributor of organic and specialty food in
Heilongjiang Province, China.</P>
<P align=justify style="margin-left: 20; margin-right: 20"><B>Our Competitive Strengths</B></P>
<P align=justify style="margin-left: 20; margin-right: 20">We believe that our success to date and potential for future
growth can be attributed to a combination of our strengths, including the
following:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>High-end niche products. </I></B>We sell organic and specialty food
  products and Chinese Golden Grass products that the followers of traditional
  Chinese medicine believe have high nutrient concentration, potential health
  benefits and high value. Our products are positioned in the high-end market as
  premium healthy food and are distinguished from the common nutraceutical
  products in the market. <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>Leading market position and significantly high margin. </I></B>We
  believe we have established ourselves as a dominant player in China&#146;s Chinese
  Golden Grass industry. We believe that we currently own approximately 19% of
  world market of Chinese Golden Grass. By successfully commercializing our
  Cordyceps Militaris planting technology, we believe that we have achieved
  economies of scale and accordingly significantly high margin that no other
  major competitor can match in the near future. <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>Leading-edge R&amp;D team. </I></B>Our research and development team
  has a strong and extensive technology background and has been an early
  participant in the Chinese Golden Grass market. Currently we have 21
  technicians in our R&amp;D department. The head of our research and
  development team, Mr. Lichen Wang, is a lead expert in the field of edible
  fungus in China. Mr. Wang graduated with a Bachelor&#146;s degree in edible fungus
  and has served as the deputy director of several research institutes of edible
  fungus in Northeast China. <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>Experienced management team with a strong track record. </I></B>Our
  management team has extensive operating experience and industry knowledge.
  Lianyun Han, our founder and chief executive officer, has more than 10 years
  experience in operational management and business development. Daniel K. Lee,
  our chief financial officer, has extensive financial and investment experience
  with U.S. financial institutions including Morgan Stanley &amp; Co., Roth
  Capital Partners, Punk, Ziegel, &amp; Knoell. We believe that our management
  team&#146;s experience and capabilities have contributed greatly to our significant
  growth in the past three years. </LI></UL>
<P align=justify style="margin-left: 20; margin-right: 20"><B>Our Growth Strategy</B></P>
<P align=justify style="margin-left: 20; margin-right: 20">As a leading nutraceutical producer in China, we believe we are
well positioned to capitalize on future industry growth in China. We are
dedicated to providing healthy and high nutritional products to our consumers.
We will implement the following strategic plans to take advantage of industry
opportunities and our competitive strengths:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>Focus on brand development</I>. </B>With intense price
  competition among many similar or identical products in the industry, we
  believe that building brand awareness is the primary means to generate and
  sustain profitable growth in the future. We believe that developing close
  cooperative relationships with research centers of well-known universities in
  China and globally is key to building brand equity. We also market our
  products through an integrated marketing program that includes advertising in
  relevant media outlets, attending trade shows such as Harbin International
  Fair for Trade and Economic Corporation and Beijing Agriculture Exposition and
  offering seminars and lectures to local communities regarding the products and
  their heath benefits. <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>Introducing new products</I>. </B>We constantly evaluate our
  products and seek to adapt to changing market conditions by updating our
  products to reflect new trends in consumer preferences. We endeavor to expand our market presence by introducing additional
  competitive nutraceutical products to our product offerings. Our new products
  under development include specialty beverage products. <BR><BR>
  </LI></UL>
<P align=center>2 </P>
</div>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>Increase production capacity. </I></B>Our existing production lines
  of Chinese Golden Grass have been running at close to full capacity while the
  market demand for our existing products continues to increase. We plan to
  develop an additional 4.1 million square meters to grow Cordyceps Militaris
  with a designed annual production capacity of 65 tons by the end of 2010. We
  also own 75 buildings in our company compound and only 10 of them are
  currently used to plant Cordyceps Militaris. We plan to convert more buildings
  into biotechnologically controlled cultivation plants to grow and process
  Cordyceps Militaris. <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>Further expand our distribution network to increase the prevalence
  of our products nationwide. </I></B>Our current sales depend heavily on the
  sales of our large-pack products to pharmaceutical companies. To support our
  rapid growth in sales, we plan to expand our distribution network by
  selling our small-pack products through drug stores, supermarkets and
  franchise stores. We have one-year contracts with our major distributors which
  normally extend for one more year by the end of the contracts. We maintain
  constant communications with these distributors to keep us informed regarding
  consumer preferences and market trends in order to develop new products. We
  also organize monthly product promotion meetings with the distributors to
  increase the sales of small package products. <BR>
  <LI>
  <p style="margin-left: 20; margin-right: 20"><B><I>Technology innovation. </I></B>We believe that the development of
  new technology is critical to our success. We will continuously improve the
  quality of our existing and future products through new technologies. We
  intend to maintain our long-term partnership with Chinese universities and
  research institutes in order to develop new technologies. </LI></UL>
<P align=justify style="margin-left: 20; margin-right: 20"><B><I>Our Background and History </I></B></P>
<P align=justify style="margin-left: 20; margin-right: 20">We were originally incorporated in the State of Nevada on
December 22, 2002. Following incorporation, we engaged in the business of
developing software which allowed us to act as an application service provider
acting as a conduit between retailers and financial institutions. Because this
business was not successful, we were focused on the identification of suitable
businesses with which to enter into a business opportunity or business
combination until December 23, 2008, when we completed our reverse acquisition
of New Resources. As a result of our reverse acquisition of New Resources, we
are no longer a shell company and active business operations were revived. </P>
<P align=justify style="margin-left: 20; margin-right: 20">On May 19, 2009, we filed amended and restated articles of
incorporation with the Nevada Secretary of State to amend our articles of
incorporation to, among other things, (1) change our name from &#147;YzApp
International Inc.&#148; to &#147;Shuaiyi International New Resources Development Inc.,&#148;
(2) increase the total number of shares of common stock that we have the
authority to issue from 50,000,000 to 190,000,000 shares and (3) effect a
1-for-114.59 reverse split of our outstanding common stock.</P>
<P align=justify style="margin-left: 20; margin-right: 20">On January 11, 2010, we changed our name to Nutrastar
International Inc. to more accurately reflect our marketing and branding
strategy and our products. Our common stock has been quoted on
the OTC Bulletin Board under the new symbol NUIN.OB since January 20, 2010. </P>
<P align=justify style="margin-left: 20; margin-right: 20"><B><I>Corporate Information </I></B></P>
<P align=justify style="margin-left: 20; margin-right: 20">The following chart reflects our organizational structure as of
the date of this prospectus. </P>
<P align=center>3</P>
</div>
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<IMG
src="forms1x9x1.jpg" border=0 width="604" height="352"> <BR>
  </p>
<P align=justify style="margin-left: 20; margin-right: 20">Our corporate headquarters are located at 7/F Jinhua Mansion,
41 Hanguang Street, Nangang District, Harbin 150080, China. Our telephone number
is (86) 451-82287746. We maintain a website at http://www.syxny.net that
contains information about us, but that information is not a part of this
prospectus. </P>
<P align=center>4 </P>
</div>
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<P align=center><B>The Offering </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin:10 20; ">Common stock offered by selling
      stockholders <BR></TD>
    <TD align=left width="50%" bgColor=#e6efff>
    <p style="margin:10 20; ">1,500,000 shares, consisting of
      1,000,000 outstanding shares of common stock owned by selling stockholders
      and 500,000 shares issuable upon the exercise of warrants held by the
      selling stockholders. This number represents 10.13% of our current
      outstanding common stock, on a fully diluted basis<SUP>(1)</SUP>.
  <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin:10 20; ">Common stock outstanding before the offering
<BR><BR><BR></TD>
    <TD align=left width="50%">
    <p style="margin:10 20; ">14,312,731 shares <BR><BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin:10 20; ">Common stock outstanding after the
      offering, assuming all warrants are exercised for cash. <BR></TD>
    <TD align=left width="50%" bgColor=#e6efff>
    <p style="margin:10 20; ">14,812,731 shares <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin:10 20; ">Proceeds to us <BR></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; " align=left width="50%">
    <p style="margin:10 20; ">We
      will not receive any proceeds from the sale of common stock covered by
      this prospectus. We will, however, receive approximately $1.81 million
      from the exercise of the warrant held by the selling stockholder, if
      exercised for cash. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin:10 20; ">Trading Symbol </TD>
    <TD align=left width="50%" bgColor=#e6efff style="border-top-style: none; border-top-width: medium">
    <p style="margin:10 20; ">NUIN.OB </TD></TR></TABLE>
<P align=justify style="margin-left: 20; margin-right: 20">(1) Based on 14,312,731 shares of our common stock issued and
outstanding as of January 25, 2010. </P>
<P align=justify style="margin-left: 20; margin-right: 20"><B>Risk Factors</B> </P>
<P align=justify style="margin-left: 20; margin-right: 20">In operating our business, we have faced and will continue to
face significant challenges. Our ability to successfully operate our business is
subject to numerous risks as discussed more fully in the section titled &#147;Risk
Factors.&#148; For example: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-left: 20; margin-right: 20">Our current business is significantly based on a single product, Chinese
  Golden Grass;
  <LI>
  <p style="margin-left: 20; margin-right: 20">Our inability to grow and harvest sufficient Cordyceps Militaris to
  satisfy our production requirements could reduce our sales and negatively
  affect our results of operations;
  <LI>
  <p style="margin-left: 20; margin-right: 20">Evaluating our business and prospects based only on our past results may
  be difficult; and
  <LI>
  <p style="margin-left: 20; margin-right: 20">We are subject to risks of conducting business in China. </LI></UL>
<P align=justify style="margin-left: 20; margin-right: 20">Any of the above risks could materially and adversely affect
our business, financial position and results of operations. An investment in our
common stock involves risks. You should carefully read and consider the
information set forth in &#147;Risk Factors&#148; and all other information set forth in
this prospectus before investing in our common stock. </P>
<P align=center>5</P>
</div>
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<P align=center><B>Summary Consolidated Financial Information </B></P>
<P align=justify style="margin-left: 20; margin-right: 20">The following summary consolidated statement of income data for
the years ended December 31, 2008 and 2007 and the consolidated balance sheet
data as of December 31, 2008 and 2007 are derived from our audited consolidated
financial statements included in this prospectus. The summary consolidated
statement of income data for the periods ended September 30, 2009 and 2008 and
the consolidated balance sheet data as of September 30, 2009 are derived from
our unaudited consolidated financial statements included in this prospectus.
Such unaudited financial information includes all adjustments, consisting of
only normal recurring accruals, which our management considers necessary for the
fair presentation of our financial position and results of operations for such
interim periods. The data set forth below should be read in conjunction with
&#147;Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations&#148; and our consolidated financial statements and related notes
appearing elsewhere in this prospectus. Our historical results are not
necessarily indicative of our results for any future periods.</P>
<div align="center">
  <center>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="95%" border=1>

  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20"><B>STATEMENT OF</B> <BR><B>INCOME</B> </TD>
    <TD align=center colSpan=2><B>Nine Months Ended</B>
      <BR><B>September 30,</B> </TD>
    <TD align=center colSpan=2><B>Years Ended</B> <BR><B>December
      31,</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20"><BR></TD>
    <TD align=center width="15%"><B><U>2009</U></B> <BR><B>(Unaudited)</B> </TD>
    <TD align=center width="15%"><B><U>2008</U></B> <BR><B>(Unaudited)</B> </TD>
    <TD align=center width="15%"><B><U>2008</U></B> <BR></TD>
    <TD align=center width="15%">
    <p style="margin-right: 20"><B><U>2007</U></B> <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin-left: 20">Revenues </TD>
    <TD align=right width="15%" bgColor=#e6efff>$11,549,244 </TD>
    <TD align=right width="15%" bgColor=#e6efff>$10,167,285 </TD>
    <TD align=right width="15%" bgColor=#e6efff>12,989,760 </TD>
    <TD align=right width="15%" bgColor=#e6efff>
    <p>9,194,589 </TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20">Operating expenses </TD>
    <TD align=right width="15%">1,224,928 </TD>
    <TD align=right width="15%">964,658 </TD>
    <TD align=right width="15%">1,643,671 </TD>
    <TD align=right width="15%">
    <p>507,401 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin-left: 20">Operating income </TD>
    <TD align=right width="15%" bgColor=#e6efff>6,591,290 </TD>
    <TD align=right width="15%" bgColor=#e6efff>5,623,489 </TD>
    <TD align=right width="15%" bgColor=#e6efff>6,741,141 </TD>
    <TD align=right width="15%" bgColor=#e6efff>
    <p>5,175,618 </TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20">Income taxes </TD>
    <TD align=right width="15%">891,220 </TD>
    <TD align=right width="15%">774,996 </TD>
    <TD align=right width="15%">974,653 </TD>
    <TD align=right width="15%">
    <p>85,243 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin-left: 20">Net income </TD>
    <TD align=right width="15%" bgColor=#e6efff>5,743,167 </TD>
    <TD align=right width="15%" bgColor=#e6efff>4,871,099 </TD>
    <TD align=right width="15%" bgColor=#e6efff>3,719,049 </TD>
    <TD align=right width="15%" bgColor=#e6efff>
    <p>5,172,528 </TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20">Basic and Diluted Earnings <BR>Per Share </TD>
    <TD align=right width="15%"><BR>$0.44 </TD>
    <TD align=right width="15%"><BR>$0.41 </TD>
    <TD align=right width="15%"><BR>$0.003 </TD>
    <TD align=right width="15%">
    <p><BR>$0.004 </TD></TR></TABLE></center>
</div>
<BR>
<div align="center">
  <center>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="95%" border=1>

  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20"><B>BALANCE SHEET DATA</B> </TD>
    <TD align=center><B>As of September 30,</B> </TD>
    <TD align=center colSpan=2><B>As of December 31,</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20"><BR></TD>
    <TD align=center width="15%"><B><U>2009</U></B> <BR><B>(Unaudited)</B> </TD>
    <TD align=center width="15%"><B><U>2008</U></B> <BR></TD>
    <TD align=center width="15%"><B><U>2007</U></B> <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin-left: 20">Working capital </TD>
    <TD align=center width="15%" bgColor=#e6efff>$6,059,262 </TD>
    <TD align=center width="15%" bgColor=#e6efff>$402,853 </TD>
    <TD align=center width="15%" bgColor=#e6efff>$-4,715,811 </TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20">Current assets </TD>
    <TD align=center width="15%">16,440,077 </TD>
    <TD align=center width="15%">10,664,249 </TD>
    <TD align=center width="15%">3,083,655 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin-left: 20">Total assets </TD>
    <TD align=center width="15%" bgColor=#e6efff>29,781,860 </TD>
    <TD align=center width="15%" bgColor=#e6efff>24,751,220 </TD>
    <TD align=center width="15%" bgColor=#e6efff>17,193,088 </TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20">Current liabilities </TD>
    <TD align=center width="15%">10,380,815 </TD>
    <TD align=center width="15%">10,261,396 </TD>
    <TD align=center width="15%">7,799,466 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin-left: 20">Total liabilities </TD>
    <TD align=center width="15%" bgColor=#e6efff>10,380,815 </TD>
    <TD align=center width="15%" bgColor=#e6efff>11,139,282 </TD>
    <TD align=center width="15%" bgColor=#e6efff>9,442,266 </TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="margin-left: 20">Stockholders&#146; equity </TD>
    <TD align=center width="15%">$19,401,045 </TD>
    <TD align=center width="15%">$13,611,938 </TD>
    <TD align=center width="15%">$7,750,822 </TD></TR></TABLE>
  </center>
</div>
<P align=center>6</P>
</div>
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<P align=center><B>RISK FACTORS </B></P>
<P align=justify><I>The shares of our common stock being offered for resale by
the selling stockholders are highly speculative in nature, involve a high degree
of risk and should be purchased only by persons who can afford to lose the
entire amount invested in the common stock. Before purchasing any of the shares
of common stock, you should carefully consider the following factors relating to
our business and prospects. You should pay particular attention to the fact that
we conduct all of our operations in China and are governed by a legal and
regulatory environment that in some respects differs significantly from the
environment that may prevail in the U.S. and other countries. If any of the
following risks actually occurs, our business, financial condition or operating
results will suffer, the trading price of our common stock could decline, and
you may lose all or part of your investment. </I></P>
<P align=justify><B>RISKS RELATED TO OUR BUSINESS </B></P>
<P align=justify><B><I>The recent financial crisis could negatively affect our
business, results of operations, and financial condition. </I></B></P>
<P align=justify>The recent credit crisis and turmoil in the global financial
system may have an impact on our business and our financial condition, and we
may face challenges if conditions in the financial markets do not improve. Our
ability to access the capital markets may be restricted at a time when we would
like, or need, to raise capital, which could have an impact on our flexibility
to react to changing economic and business conditions. In addition, these
economic conditions also impact levels of consumer spending, which have recently
deteriorated significantly and may remain depressed for the foreseeable future.
Consumer purchases of discretionary items, including our Chinese Golden Grass,
generally decline during recessionary periods and other periods where disposable
income is adversely affected. If demand for our products fluctuates as a result
of economic conditions or otherwise, our revenue and gross margin could be
harmed.</P>
<P align=justify><B><I>Our current business is significantly based on a single
product, Chinese Golden Grass, which currently accounts for over 75 percent of
our revenues, and we may not be able to general significant revenue if this
product fails.</I></B> </P>
<P align=justify>Approximately 75.32% of our sales for the nine months ended
September 30, 2009 comes from a single product, Chinese Golden Grass, and our
business may suffer a material adverse impact if this product fails. If we
experience difficulties or obstacles in the manufacture and sale of Chinese
Golden Grass, we may not be able to generate significant revenues, our business
may fail and you would lose all or part of your investment in our company.</P>
<P align=justify><B><I>We may not be able to grow and harvest sufficient
Cordyceps Militaris to satisfy our production requirements and any decline in
the amount or quality of Cordyceps Militaris could reduce our sales and
negatively affect our results of operations, financial condition and business
prospects. </I></B></P>
<P align=justify>Our Chinese Golden Grass business and financial results
significantly depend on maintaining a consistent and cost-effective supply of
Cordyceps Militaris. The availability, size and quality of Cordyceps Militaris
for the production of our products are subject to risks inherent to growing,
such as size, quality, and yield fluctuation caused by technical problems of
growing, pest and disease problems, and other factors beyond our control.
Because all Cordyceps Militaris used to produce our Chinese Golden Grass
products are grown by us, we may not be able to locate in a timely manner any
third party suppliers who could provide us with sufficient materials to meet our
production needs when our self-supply faces significant fluctuations in the
availability of Cordyceps Militaris. Therefore, any interruptions to or decline
in the amount or quality of our Cordyceps Militaris supply could materially
disrupt our production and adversely affect our business and financial condition
and financial prospects. </P>
<P align=justify><B><I>Our sales and reputation may be affected by product
liability claims, litigation, product recalls, or adverse publicity in relation
to our products. </I></B></P>
<P align=justify>The sale of products for human consumption involves an inherent
risk of injury to consumers. We face risks associated with product liability
claims, litigation, or product recalls, if our products cause injury, or become
adulterated or misbranded. Our products are subject to product tampering, and to
contamination risks, such as mold, bacteria, insects, and other pests, and
off-flavor contamination during the various stages of the procurement,
production, transportation and storage processes. If any of our products were to
be tampered with, or become tainted in any of these respects and we were unable
to detect this, our products could be subject to product liability claims or
product recalls. We cannot predict what impact such product liability claims or
resulting negative publicity would have on our business or on our brand image.
The successful assertion of product liability claims against us could result in potentially significant monetary damages, diversion
of management resources and require us to make significant payments and incur
substantial legal expenses. We do not have product liability insurance and have
not made provisions for potential product liability claims. Therefore, we may
not have adequate resources to satisfy a judgment if a successful claim is
brought against us. Even if a product liability claim is not successfully
pursued to judgment by a claimant, we may still incur substantial legal expenses
defending against such a claim. Finally, serious product quality concerns could
result in governmental action against us, which, among other things, could
result in the suspension of production or distribution of our products, loss of
certain licenses, or other governmental penalties. A widespread product recall
could result in significant loss due to the cost of conducting a product recall
including destruction of inventory and the loss of sales resulting from the
unavailability of the product for a period of time. In addition. product
liability claims and product recalls could have a material adverse effect on the
demand for our products and on our business goodwill and reputation. Adverse
publicity could result in a loss of consumer confidence in our products.</P>
<P align=center>7 </P>
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<P align=justify><B><I>We compete in an industry that is brand-conscious, and
unless we are able to establish and maintain brand name recognition our sales
may be negatively impacted.</I></B> </P>
<P align=justify>Our business is substantially dependent upon awareness and
market acceptance of our products and brand by our targeted consumers. In
addition, our business depends on acceptance by our suppliers and consumers of
our brand. Although we believe that we have made progress towards establishing
market recognition for our brand &#147;<font lang="ZH-CN" style="font-size: 10.0pt; font-family: SimSun; color: black">&#24069;&#20159;&#19996;&#26041;&#31070;</font>&#148; in the Chinese Golden Grass products
industry, it is too early in the product life cycle of the brand to determine
whether our products and brand will achieve and maintain satisfactory levels of
acceptance by our customers. </P>
<P align=justify><B><I>We compete in an industry characterized by rapid changes
in consumer preferences, so our inability to continue developing new products to
satisfy our consumers' changing preferences would have a material adverse effect
on our sales volumes. </I></B></P>
<P align=justify>Our success depends on our ability to anticipate, gauge and
react in a timely and effective manner to changes in consumer spending patterns
and product preferences. We must continually work to develop, produce and market
new products, maintain and enhance the recognition of our brands, achieve a
favorable mix of products, and refine our approach as to how and where we market
and sell our products. While we plan to devote considerable effort and resources
to shape, analyze and respond to consumer preferences, consumer spending
patterns and preferences cannot be predicted with certainty and can change
rapidly. Our failure to adapt our product offering to respond to such changes
may result in reduced demand and lower prices for our products, resulting in a
material adverse effect on our sales volumes, sales and profits.</P>
<P align=justify>Our current market distribution and penetration is limited as
compared with the potential market and so our initial views as to customer
acceptance of a particular product can be erroneous, and there can be no
assurance that true market acceptance will ultimately be achieved. In addition,
customer preferences are also affected by factors other than taste. If we do not
adjust to respond to these and other changes in customer preferences, our sales
may be adversely affected. </P>
<P align=justify><B><I>Expansion of our business may put added pressure on our
management and operational infrastructure impeding our ability to meet any
potential increased demand for the products that we sell and possibly hurting
our future operating results. </I></B></P>
<P align=justify>Our business plan is to significantly grow our operations to
meet anticipated growth in demand for the products that we sell, and by the
introduction of new product offerings. Growth in our business may place a
significant strain on our personnel, management, financial systems and other
resources. The evolution of our business also presents numerous risks and
challenges, including: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>our ability to successfully and rapidly expand sales to potential new
  distributors in response to potentially increasing demand; <BR>
  <LI>the costs associated with such growth, which are difficult to quantify,
  but could be significant; and <BR>
  <LI>rapid technological change. </LI></UL>
<P align=center>8 </P>
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<P align=justify>To accommodate any such growth and compete effectively, we may
need to obtain additional funding to improve information systems, procedures and
controls and expand, train, motivate and manage our employees, and such funding
may not be available in sufficient quantities, if at all. If we are not able to
manage these activities and implement these strategies successfully to expand to
meet any increased demand, our operating results could suffer. </P>
<P align=justify><B><I>Due to our rapid growth in recent years, our past results
may not be indicative of our future performance and evaluating our business and
prospects may be difficult. </I></B></P>
<P align=justify>Our business has grown and evolved rapidly in recent years. We
may not be able to achieve similar growth in future periods, and our historical
operating results may not provide a meaningful basis for evaluating our
business, financial performance and prospects. Moreover, our ability to achieve
satisfactory production results at higher volumes is unproven. Therefore, you
should not rely on our past results or our historical rate of growth as an
indication of our future performance. </P>
<P align=justify><B><I>We depend heavily on key personnel, and turnover of key
employees and senior management could harm our business.</I></B> </P>
<P align=justify>Our future business and results of operations depend in
significant part upon the continued contributions of our key technical and
senior management personnel, including Lianyun Han, our chief executive officer
and chairperson, and Daniel K. Lee, our chief financial officer. The expertise
of management and technical innovation of the company give it a strong
competitive advantage. We do not maintain key person insurance on these
individuals. The loss of any of these key employees&#146; services or any of our
other management poses a risk to our business. We may not be able to attract or
retain qualified management on acceptable terms in the future due to the intense
competition for qualified personnel in our industry and as a result, our
business could be adversely affected.</P>
<P align=justify><B><I>Our inability to protect our trademarks, patent and trade
secrets may prevent us from successfully marketing our products and competing
effectively. </I></B></P>
<P align=justify>Failure to protect our intellectual property could harm our
brands and our reputation, and adversely affect our ability to compete
effectively. Further, enforcing or defending our intellectual property rights,
including our trademarks, patents, copyrights, know how and trade secrets, could
result in the expenditure of significant financial and managerial resources. We
produce, market and sell our products using the brand &#147;<font lang="ZH-CN" style="font-size: 10.0pt; font-family: SimSun; color: black">&#24069;&#20159;&#19996;&#26041;&#31070;</font>&#148; We regard our
intellectual property, particularly our trademark, know how and trade secrets to
be of considerable value and importance to our business and our success. We rely
on a combination of patent, trademark, trade secrecy laws, and contractual
provisions to protect our intellectual property rights. There can be no
assurance that the steps taken by us to protect these proprietary rights will be
adequate or that third parties will not infringe or misappropriate our patent,
trademark, trade secrets or similar proprietary rights. In addition, there can
be no assurance that other parties will not assert infringement claims against
us, and we may have to pursue litigation against other parties to assert our
rights. Any such claim or litigation could be costly and we may lack the
resources required to defend against such claims. In addition, any event that
would jeopardize our proprietary rights or any claims of infringement by third
parties could have a material adverse affect on our ability to market or sell
our brands, and profitably exploit our products. </P>
<P align=justify><B><I>We may be exposed to potential risks relating to our
internal controls over financial reporting and our ability to have those
controls attested to by our independent auditors.</I></B> </P>
<P align=justify>As directed by Section 404 of the Sarbanes-Oxley Act of 2002,
or SOX 404, the SEC adopted rules requiring public companies to include a report
of management on the company&#146;s internal controls over financial reporting in
their annual reports, including Form 10-K. In addition, the independent
registered public accounting firm auditing a company&#146;s financial statements must
also attest to the operating effectiveness of the company&#146;s internal controls.
Since we just completed the acquisition of New Resources on December 23, 2008,
we did not evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2008 in order to allow our management to report on
our internal controls on a consolidated basis as required by these requirements
of SOX 404. Under current law, we are subject to these requirements beginning
with our annual report for the fiscal year ended December 31, 2007, although the
auditor attestation is not required until our annual report for the fiscal year
ending December 31, 2010, assuming our filing status remains as a smaller
reporting company. We can provide no assurance that we will comply with all of
the requirements imposed thereby. There can be no assurance that we will receive
a positive attestation from our independent auditors. In the event we identify
significant deficiencies or material weaknesses in our internal controls that we
cannot remediate in a timely manner or we are unable to receive a positive attestation from our independent auditors with respect to our
internal controls, investors and others may lose confidence in the reliability
of our financial statements.</P>
<P align=center>9 </P>
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<P align=justify><B><I>We do not carry any business interruption insurance,
third-party liability insurance for our production facilities or insurance that
covers the risk of loss of our products in shipment. </I></B></P>
<P align=justify>Operation of our facilities involves many risks, including
equipment failures, natural disasters, industrial accidents, power outages,
labor disturbances and other business interruptions. Furthermore, if any of our
products are faulty, then we may become subject to product liability claims or
we may have to engage in a product recall. We do not carry any business
interruption insurance, product recall or third-party liability insurance for
our production facilities or with respect to our products to cover claims
pertaining to personal injury or property or environmental damage arising from
defects in our products, product recalls, accidents on our property or damage
relating to our operations. As a result, we may be required to pay for financial
and other losses, damages and liabilities, including those caused by natural
disasters and other events beyond our control, out of our own funds, which could
have a material adverse effect on our business, financial condition and results
of operations.</P>
<P align=justify><B><I>We may be exposed to liabilities under the Foreign
Corrupt Practices Act, and any determination that we violated the Foreign
Corrupt Practices Act could have a material adverse effect on our
business.</I></B> </P>
<P align=justify>We are subject to the Foreign Corrupt Practice Act, or the
FCPA, and other laws that prohibit improper payments or offers of payments to
foreign governments and their officials and political parties by U.S. persons
and issuers as defined by the statute for the purpose of obtaining or retaining
business. We have operations, agreements with third parties and make sales in
China, which may experience corruption. Our activities in China create the risk
of unauthorized payments or offers of payments by one of the employees,
consultants, sales agents or distributors of our company, because these parties
are not always subject to our control. It is our policy to implement safeguards
to discourage these practices by our employees. Also, our existing safeguards
and any future improvements may prove to be less than effective, and the
employees, consultants, sales agents or distributors of our Company may engage
in conduct for which we might be held responsible. Violations of the FCPA may
result in severe criminal or civil sanctions, and we may be subject to other
liabilities, which could negatively affect our business, operating results and
financial condition. In addition, the government may seek to hold our Company
liable for successor liability FCPA violations committed by companies in which
we invest or that we acquire. </P>
<P align=justify><B>RISKS RELATED TO DOING BUSINESS IN CHINA</B> </P>
<P align=justify><B><I>Adverse changes in political and economic policies of the
PRC government could impede the overall economic growth of China, which could
reduce the demand for our products and damage our business.</I></B> </P>
<P align=justify>We conduct substantially all of our operations and generate all
of our revenue in China. Accordingly, our business, financial condition, results
of operations and prospects are affected significantly by economic, political
and legal developments in China. The PRC economy differs from the economies of
most developed countries in many respects, including: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>a higher level of government involvement; <BR>
  <LI>a early stage of development of the market-oriented sector of the economy;
  <BR>
  <LI>a rapid growth rate; <BR>
  <LI>a higher level of control over foreign exchange; and <BR>
  <LI>the allocation of resources. </LI></UL>
<P align=justify>As the PRC economy has been transitioning from a planned
economy to a more market-oriented economy, the PRC government has implemented
various measures to encourage economic growth and guide the allocation of
resources. While these measures may benefit the overall PRC economy, they may
also have a negative effect on us.</P>
<P align=justify>Although the PRC government has in recent years implemented
measures emphasizing the utilization of market forces for economic reform, the
PRC government continues to exercise significant control over economic growth in
China through the allocation of resources, controlling the payment of
foreign currency-denominated obligations, setting monetary policy and imposing
policies that impact particular industries or companies in different ways.</P>
<P align=center>10 </P>
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<P align=justify>Any adverse change in economic conditions or government
policies in China could have a material adverse effect on the overall economic
growth in China, which in turn could lead to a reduction in demand for our
services and consequently have a material adverse effect on our business and
prospects.</P>
<P align=justify><B><I>Uncertainties with respect to the PRC legal system could
limit the legal protections available to you and us.</I></B> </P>
<P align=justify>We conduct substantially all of our business through our
operating subsidiaries in the PRC. Our operating subsidiaries are generally
subject to laws and regulations applicable to foreign investments in China and,
in particular, laws applicable to foreign-invested enterprises. The PRC legal
system is based on written statutes, and prior court decisions may be cited for
reference but have limited precedential value. Since 1979, a series of new PRC
laws and regulations have significantly enhanced the protections afforded to
various forms of foreign investments in China. However, since the PRC legal
system continues to rapidly evolve, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws,
regulations and rules involve uncertainties, which may limit legal protections
available to you and us. In addition, any litigation in China may be protracted
and result in substantial costs and diversion of resources and management
attention. In addition, all of our executive officers and all of our directors
are residents of China and not of the United States, and substantially all the
assets of these persons are located outside the United States. As a result, it
could be difficult for investors to affect service of process in the United
States or to enforce a judgment obtained in the United States against our
Chinese operations and subsidiaries. </P>
<P align=justify><B><I>If we are found to have failed to comply with applicable
laws, we may incur additional expenditures or be subject to significant fines
and penalties. </I></B></P>
<P align=justify>Our operations are subject to PRC laws and regulations
applicable to us. However, many PRC laws and regulations are uncertain in their
scope, and the implementation of such laws and regulations in different
localities could have significant differences. In certain instances, local
implementation rules and/or the actual implementation are not necessarily
consistent with the regulations at the national level. Although we strive to
comply with all the applicable PRC laws and regulations, we cannot assure you
that the relevant PRC government authorities will not later determine that we
have not been in compliance with certain laws or regulations. Our failure to
comply with applicable PRC laws and regulations could subject us to
administrative penalties and injunctive relief, as well as civil remedies,
including fines, injunctions and recalls of our products. It is possible that
changes to such laws or more rigorous enforcement of such laws or with respect
to our current or past practices could have a material adverse effect on our
business, operating results and financial condition.</P>
<P align=justify><B><I>The PRC government exerts substantial influence over the
manner in which we must conduct our business activities.</I></B> </P>
<P align=justify>The PRC government has exercised and continues to exercise
substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by
changes in its laws and regulations, including those relating to taxation,
import and export tariffs, environmental regulations, land use rights, property
and other matters. We believe that our operations in China are in material
compliance with all applicable legal and regulatory requirements. However, the
central or local governments of the jurisdictions in which we operate 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. </P>
<P align=justify>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 or joint ventures.
</P>
<P align=justify><B><I>Restrictions on currency exchange may limit our ability
to receive and use our sales revenue effectively.</I></B> </P>
<P align=justify>All our sales revenue and expenses are denominated in RMB.
Under PRC law, the RMB is currently convertible under the &#147;current account,&#148;
which includes dividends and trade and service-related foreign exchange
transactions, but not under the &#147;capital account,&#148; which includes foreign direct
investment and loans. Currently, our PRC operating subsidiaries may purchase foreign currencies for settlement of
current account transactions, including payments of dividends to us, without the
approval of the State Administration of Foreign Exchange, or SAFE, by complying
with certain procedural requirements. However, the relevant PRC government
authorities may limit or eliminate our ability to purchase foreign currencies in
the future. Since a significant amount of our future revenue will be denominated
in RMB, any existing and future restrictions on currency exchange may limit our
ability to utilize revenue generated in RMB to fund our business activities
outside China that are denominated in foreign currencies. </P>
<P align=center>11 </P>
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<P align=justify>Foreign exchange transactions by our PRC operating subsidiaries
under the capital account continue to be subject to significant foreign exchange
controls and require the approval of or need to register with PRC government
authorities, including SAFE. In particular, if our PRC operating subsidiaries
borrow foreign currency through loans from us or other foreign lenders, these
loans must be registered with SAFE, and if we finance the subsidiaries by means
of additional capital contributions, these capital contributions must be
approved by certain government authorities, including the Ministry of Commerce,
or MOFCOM, or their respective local counterparts. These limitations could
affect their ability to obtain foreign exchange through debt or equity
financing. </P>
<P align=justify><B><I>Fluctuations in exchange rates could adversely affect our
business and the value of our securities.</I></B> </P>
<P align=justify>The value of our common stock will be indirectly affected by
the foreign exchange rate between U.S. dollars and RMB and between those
currencies and other currencies in which our sales may be denominated.
Appreciation or depreciation in the value of the RMB relative to the U.S. dollar
would affect our financial results reported in U.S. dollar terms without giving
effect to any underlying change in our business or results of operations.
Fluctuations in the exchange rate will also affect the relative value of any
dividend we issue in the future as well as earnings from, and the value of, any
U.S. dollar-denominated investments we make in the future.</P>
<P align=justify>Since July 2005, the RMB has no longer been pegged to the U.S.
dollar. Although the People's Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange
rate, the RMB may appreciate or depreciate significantly in value against the
U.S. dollar in the medium to long term. Moreover, it is possible that in the
future PRC authorities may lift restrictions on fluctuations in the RMB exchange
rate and lessen intervention in the foreign exchange market. </P>
<P align=justify>Very limited hedging transactions are available in China to
reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. While we may enter into hedging transactions in
the future, the availability and effectiveness of these transactions may be
limited, and we may not be able to successfully hedge our exposure at all. In
addition, our foreign currency exchange losses may be magnified by PRC exchange
control regulations that restrict our ability to convert RMB into foreign
currencies. </P>
<P align=justify><B><I>Restrictions under PRC law on our PRC subsidiaries'
ability to make dividends and other distributions could materially and adversely
affect our ability to grow, make investments or acquisitions that could benefit
our business, pay dividends to you, and otherwise fund and conduct our
businesses. </I></B></P>
<P align=justify>Substantially all of our revenues are earned by our PRC
subsidiaries. However, PRC regulations restrict the ability of our PRC
subsidiaries to make dividends and other payments to its offshore parent
company. PRC legal restrictions permit payments of dividend by our PRC
subsidiaries only out of their accumulated after-tax profits, if any, determined
in accordance with PRC accounting standards and regulations. Our PRC
subsidiaries are also required under PRC laws and regulations to allocate at
least 10% of our annual after-tax profits determined in accordance with PRC GAAP
to a statutory general reserve fund until the amounts in said fund reaches 50%
of our registered capital. Allocations to these statutory reserve funds can only
be used for specific purposes and are not transferable to us in the form of
loans, advances or cash dividends. Any limitations on the ability of our PRC
subsidiaries to transfer funds to us could materially and adversely limit our
ability to grow, make investments or acquisitions that could be beneficial to
our business, pay dividends and otherwise fund and conduct our business.</P>
<P align=justify><B><I>Under the New EIT Law, we may be classified as a
&#147;resident enterprise&#148; of China. Such classification will likely result in
unfavorable tax consequences to us and our non-PRC stockholders. </I></B></P>
<P align=justify>China passed a new Enterprise Income Tax Law, or the New EIT
Law, and its implementation regulations, both of which became effective on
January 1, 2008. Under the New EIT Law, an enterprise established outside of
China with &#147;de facto management bodies&#148; within China is considered a &#147;resident
enterprise,&#148; meaning that it can be treated in a manner similar to a Chinese
domestic enterprise for enterprise income tax purposes. The implementing rules
of the New EIT Law define de facto management as &#147;substantial and
overall management and control over the production and operations, personnel,
accounting, and properties&#148; of the enterprise. On April 22, 2009, the State
Administration of Taxation issued the Notice Concerning Relevant Issues
Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated
Offshore as Resident Enterprises pursuant to Criteria of de facto Management
Bodies, or the Notice, further interpreting the application of the New EIT Law
and its implementation with respect to non-Chinese enterprises or group
controlled offshore entities. Pursuant to the Notice, an enterprise incorporated
in an offshore jurisdiction and controlled by a Chinese enterprise or group will
be classified as a &#147;non-domestically incorporated resident enterprise&#148; if (i)
its senior management in charge of daily operations reside or perform their
duties mainly in China; (ii) its financial or personnel decisions are made or
approved by bodies or persons in China; (iii) substantial assets and properties,
accounting books, corporate chops, board and shareholder minutes are kept in
China; and (iv) at least half of its directors with voting rights or senior
management often resident in China. A resident enterprise would be generally
subject to the uniform 25% enterprise income tax rate as to its worldwide
income. Substantially all of our management is currently based in China.
Therefore, we may be treated as a Chinese resident enterprise for enterprise
income tax purposes. The tax consequences of such treatment are currently
unclear, as they will depend on how local tax authorities apply or enforce the
New EIT Law or the implementation regulations. </P>
<P align=center>12</P>
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<P align=justify>In addition, under the New EIT Law and implementation
regulations, PRC income tax at the rate of 10% is applicable to dividends
payable to investors that are &#147;non-resident enterprises&#148; (and that do not have
an establishment or place of business in the PRC, or that have such
establishment or place of business but the relevant income is not effectively
connected with the establishment or place of business) to the extent that such
dividends have their source within the PRC unless there is an applicable tax
treaty between the PRC and the jurisdiction in which an overseas holder resides
which reduces or exempts the relevant tax. Similarly, any gain realized on the
transfer of shares by such investors is also subject to the 10% PRC income tax
if such gain is regarded as income derived from sources within the PRC. If we
are considered a PRC &#147;resident enterprise&#148;, it is unclear whether the dividends
we pay with respect to our shares, or the gain you may realize from the transfer
of our shares, would be treated as income derived from sources within the PRC
and be subject to PRC tax. If we are required under the New EIT Law to withhold
PRC income tax on our dividends payable to our foreign shareholders, or if you
are required to pay PRC income tax on the transfer of your shares, the value of
your investment in our shares may be materially and adversely affected. </P>
<P align=justify><B><I>If the China Securities Regulatory Commission, or CSRC,
or another PRC regulatory agency determines that CSRC approval is required in
connection with the reverse acquisition of New Resources, the reverse
acquisition may be unwound, or we may become subject to penalties. </I></B></P>
<P align=justify>On August 8, 2006, six PRC regulatory agencies, including the
CSRC, promulgated the Provisions Regarding Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, or the M&amp;A Rule, which became effective on
September 8, 2006. The M&amp;A Rule, among other things, requires that an
offshore company controlled by PRC companies or individuals that have acquired a
PRC domestic company for the purpose of listing the PRC domestic company's
equity interest on an overseas stock exchange must obtain the approval of the
CSRC prior to the listing and trading of such offshore company's securities on
an overseas stock exchange. On September 21, 2006, the CSRC, pursuant to the
M&amp;A Rule, published on its official web site procedures specifying documents
and materials required to be submitted to it by offshore companies seeking CSRC
approval of their overseas listings.</P>
<P align=justify>We do not believe that the M&amp;A Rule concerning the CSRC
approval for acquisition of a PRC domestic company by an offshore company
controlled by PRC companies or individuals applies to our reverse acquisition of
New Resources because neither Nutrastar International Inc. nor New Resources are
a &#147;Special Purpose Vehicle&#148; or an &#147;offshore company controlled by PRC companies
or individuals&#148; as defined in the M&amp;A Rule. If the CSRC or another PRC
governmental agency subsequently determines that we must obtain CSRC approval
prior to the completion of the reverse acquisition, the reverse acquisition may
be unwound and we may face regulatory actions or other sanctions from the CSRC
or other PRC regulatory agencies. These regulatory agencies may impose fines and
penalties on our operations in China and limit our operating privileges in
China, or take other actions that could have a material adverse effect on our
business, financial condition, results of operations, reputation and prospects,
as well as the trading price of our shares.</P>
<P align=justify><B><I>If we do not fulfill our obligation to pay the transfer
price for the equity interest of Heilongjiang Shuaiyi, then we may be subject to
fines and prohibitions imposed by relevant PRC authorities that could have a
material adverse effect on our business.</I></B> <B></B></P>
<P align=center>13 </P>
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<P align=justify>On July 28, 2008, our subsidiary, New Resources entered into an
equity transfer agreement with the founders of Heilongjiang Shuaiyi to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB 60 million
(approximately $8.8 million). On November 24, 2008, Heilongjiang Shuaiyi
obtained the Certificate of Approval for Establishment of Enterprises of Foreign
Investment issued by Heilongjiang Provincial Government and a new business
license was issued to Heilongjiang Shuaiyi on December 1, 2008. According to the
M&amp;A Rule, the equity interest transfer price should be paid in full within
three months commencing from the issuance of the new business license to
Heilongjiang Shuaiyi. If the transfer price is not paid by this date, we may
apply to the relevant PRC regulatory agency for an extension of up to one year
from the date of the issuance of the license; provided, however, that 60% of the
transfer price will be required to be paid within six months from such date. On
March 10, 2009, we obtained the approval from the relevant PRC regulatory agency
allowing us to make the payment by December 1, 2009. On January 4, 2010, the
relevant PRC regulatory agency further extended the payment due date to June 30,
2010. However, if we are unable to make the transfer payment in full by the June
30, 2010 deadline we may subject to fines or penalties imposed by the PRC
regulatory agency. In addition, we may not be permitted to exercise any
decision-making rights as a shareholder in Heilongjiang Shuaiyi or to
consolidate Heilongjiang Shuaiyi&#146;s financial results into our financial
statements, both of which result would have a material adverse effect on our
business.</P>
<P align=justify><B><I>The M&amp;A Rule establishes more complex procedures for
some acquisitions of Chinese companies by foreign investors, which could make it
more difficult for us to pursue growth through acquisitions in China.
</I></B></P>
<P align=justify>The M&amp;A Rule establishes additional procedures and
requirements that could make some acquisitions of Chinese companies by foreign
investors more time-consuming and complex, including requirements in some
instances that the PRC Ministry of Commerce be notified in advance of any
change-of-control transaction and in some situations, require approval of the
PRC Ministry of Commerce when a foreign investor takes control of a Chinese
domestic enterprise. In the future, we may grow our business in part by
acquiring complementary businesses, although we do not have any plans to do so
at this time. The M&amp;A Rule also requires PRC Ministry of Commerce anti-trust
review of any change-of-control transactions involving certain types of foreign
acquirers. Complying with the requirements of the M&amp;A Rule to complete such
transactions could be time-consuming, and any required approval processes,
including obtaining approval from the PRC Ministry of Commerce, may delay or
inhibit our ability to complete such transactions, which could affect our
ability to expand our business or maintain our market share.</P>
<P align=justify><B><I>The implementation of the new PRC employment contract law
and increases in the labor costs in China may hurt our business and
profitability.</I></B> </P>
<P align=justify>A new employment contract law became effective on January 1,
2008 in China. It imposes more stringent requirements on employers in relation
to entry into fixed-term employment contracts, recruitment of temporary
employees and dismissal of employees. In addition, under the newly promulgated
Regulations on Paid Annual Leave for Employees, which also became effective on
January 1, 2008, employees who have worked continuously for more than one year
are entitled to paid vacation ranging from 5 to 15 days, depending on the length
of the employee&#146;s service. Employees who waive such vacation entitlements at the
request of the employer will be compensated for three times their normal daily
salaries for each vacation day so waived. As a result of the new law and
regulations, our labor costs may increase. There is no assurance that disputes,
work stoppages or strikes will not arise in the future. Increases in the labor
costs or future disputes with our employees could damage our business, financial
condition or operating results. </P>
<P align=justify><B><I>Any outbreak of the Swine Flu (H1N1), severe acute
respiratory syndrome, or SARS, the Avian Flu, or another widespread public
health problem in the PRC could adversely affect our operations.</I></B> </P>
<P align=justify>There have been recent outbreaks of the highly pathogenic Swine
Flu, caused by the H1N1 virus, in certain regions of the world, including parts
of China, where all of our manufacturing facilities are located and where all of
our sales occur. Our business is dependent upon our ability to continue to
manufacture and distribute our products, and an outbreak of the Swine Flu, or a
renewed outbreak of SARS, the Avian Flu, or another widespread public health
problem in China, could have a negative effect on our operations. Any such
outbreak could have an impact on our operations as a result of: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>quarantines or closures of our manufacturing or distribution facilities or
  the retail outlets, which would severely disrupt our operations, </LI>
  <LI>the sickness or death of our key officers and employees, and <BR>
  <LI>a general slowdown in the Chinese economy. </LI></UL>
<P align=center>14 </P>
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<P align=justify>Any of the foregoing events or other unforeseen consequences of
public health problems could adversely affect our operations. </P>
<P align=justify><B><I>You may have difficulty enforcing judgments against us.
</I></B></P>
<P align=justify>We are a Nevada holding company and most of our assets are
located outside of the United States. Most of our current operations are
conducted in the PRC. In addition, most of our directors and officers are
nationals and residents of countries other than the United States. A substantial
portion of the assets of these persons is located outside the United States. As
a result, it may be difficult for you to effect service of process within the
United States upon these persons. It may also be difficult for you to enforce in
U.S. courts judgments on the civil liability provisions of the U.S. federal
securities laws against us and our officers and directors, most of whom are not
residents in the United States and the substantial majority of whose assets are
located outside of the United States. In addition, there is uncertainty as to
whether the courts of the PRC would recognize or enforce judgments of U.S.
courts. Courts in China may recognize and enforce foreign judgments in
accordance with the requirements of the PRC Civil Procedures Law based on
treaties between China and the country where the judgment is made or on
reciprocity between jurisdictions. China does not have any treaties or other
arrangements that provide for the reciprocal recognition and enforcement of
foreign judgments with the United States. In addition, according to the PRC
Civil Procedures Law, courts in the PRC will not enforce a foreign judgment
against us or our directors and officers if they decide that the judgment
violates basic principles of PRC law or national sovereignty, security or the
public interest. So it is uncertain whether a PRC court would enforce a judgment
rendered by a court in the United States.</P>
<P align=justify><B>RISKS RELATED TO THE MARKET FOR OUR STOCK GENERALLY</B> </P>
<P align=justify><B><I>Our common stock is quoted on the OTC Bulletin Board
which may have an unfavorable impact on our stock price and liquidity.</I></B>
</P>
<P align=justify>Our common stock is quoted on the OTC Bulletin Board. The OTC
Bulletin Board is a significantly more limited market than the New York Stock
Exchange or Nasdaq system. The quotation of our shares on the OTC Bulletin Board
may result in a less liquid market available for existing and potential
stockholders to trade shares of our common stock, could depress the trading
price of our common stock and could have a long-term adverse impact on our
ability to raise capital in the future. </P>
<P align=justify><B><I>The market price of our common stock is volatile, leading
to the possibility of its value being depressed at a time when you may want to
sell your holdings.</I></B> </P>
<P align=justify>The market price of our common stock is volatile, and this
volatility may continue. Numerous factors, many of which are beyond our control,
may cause the market price of our common stock to fluctuate significantly. In
addition to market and industry factors, the price and trading volume for our
common stock may be highly volatile for specific business reasons. Factors such
as variations in our revenues, earnings and cash flow, announcements of new
investments, cooperation arrangements or acquisitions, and fluctuations in
market prices for our products could cause the market price for our shares to
change substantially.</P>
<P align=justify>Securities class action litigation is often instituted against
companies following periods of volatility in their stock price. This type of
litigation could result in substantial costs to us and divert our management&#146;s
attention and resources.</P>
<P align=justify>Moreover, the trading market for our common stock will be
influenced by research or reports that industry or securities analysts publish
about us or our business. If one or more analysts who cover us downgrade our
common stock, the market price for our common stock would likely decline. If one
or more of these analysts cease coverage of us or fail to regularly publish
reports on us, we could lose visibility in the financial markets, which, in
turn, could cause the market price for our common stock or trading volume to
decline.</P>
<P align=justify>Furthermore, securities markets may from time to time
experience significant price and volume fluctuations for reasons unrelated to
operating performance of particular companies. These market fluctuations may
adversely affect the price of our common stock and other interests in our
company at a time when you want to sell your interest in us. </P>
<P align=center>15 </P>
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<P align=justify><B><I>We may be subject to penny stock regulations and
restrictions and you may have difficulty selling shares of our common
stock.</I></B> </P>
<P align=justify>The SEC has adopted regulations which generally define
so-called &#147;penny stocks&#148; to be an equity security that has a market price less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exemptions. If our common stock becomes a &#147;penny stock&#148;, we may
become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule.
This rule imposes additional sales practice requirements on broker-dealers that
sell such securities to persons other than established customers and &#147;accredited
investors&#148; (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. As a result, this rule may
affect the ability of broker-dealers to sell our securities and may affect the
ability of purchasers to sell any of our securities in the secondary market.
</P>
<P align=justify>For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. Disclosure is
also required to be made about sales commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock. </P>
<P align=justify>There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest. </P>
<P align=justify><B><I>Certain provisions of our Articles of Incorporation may
make it more difficult for a third party to effect a change-of-control.
</I></B></P>
<P align=justify>Our Articles of Incorporation authorizes our board of directors
to issue up to 1,000,000 shares of preferred stock. The preferred stock may be
issued in one or more series, the terms of which may be determined at the time
of issuance by the board of directors without further action by the
stockholders. These terms may include preferences as to dividends and
liquidation, conversion rights, redemption rights and sinking fund provisions.
The issuance of any preferred stock could diminish the rights of holders of our
common stock, and therefore could reduce the value of such common stock. In
addition, specific rights granted to future holders of preferred stock could be
used to restrict our ability to merge with, or sell assets to, a third party.
The ability of our board of directors to issue preferred stock could make it
more difficult, delay, discourage, prevent or make it more costly to acquire or
effect a change-in-control, which in turn could prevent our stockholders from
recognizing a gain in the event that a favorable offer is extended and could
materially and negatively affect the market price of our common stock.</P>
<P align=center>16 </P>
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<P align=center><B>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS </B></P>
<P align=justify>We have made statements under the captions &#147;Prospectus
Summary,&#148; &#147;Risk Factors,&#148; &#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations,&#148; and &#147;Business&#148; and in other sections of
this prospectus that are forward-looking statements. In some cases, you can
identify these statements by forward-looking words such as &#147;may,&#148; &#147;might,&#148;
&#147;will,&#148; &#147;should,&#148; &#147;expect,&#148; &#147;plan,&#148; &#147;anticipate,&#148; &#147;believe,&#148; &#147;estimate,&#148;
&#147;predict,&#148; &#147;potential,&#148; or &#147;continue,&#148; the negative of these terms, and other
comparable terminology, although not all forward-looking statements contain
these identifying words. These forward-looking statements, which are subject to
risks, uncertainties, and assumptions, may include projections of our future
financial performance based on our growth strategies and anticipated trends in
our business. These statements are only predictions based on our current
expectations and projections about future events. There are important factors
that could cause our actual results, level of activity, performance, or
achievements to differ materially from the results, level of activity,
performance, or achievements expressed or implied by the forward-looking
statements. Those factors include, but are not limited to, the highly
competitive nature of the markets in which we sell our products, changes in
demand for our products and services, our ability to develop new products and
services, competitive pressures, changes in laws and regulations governing our
business and the other factors discussed under the caption &#147;Risk Factors.&#148; </P>
<P align=justify>Although we believe the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
level of activity, performance, or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy or completeness of any of
these forward-looking statements. You should not rely upon forward-looking
statements as predictions of future events. We are under no duty to update any
of these forward-looking statements after the date of this prospectus to conform
our prior statements to actual results or revised expectations. </P>
<P align=center><B>USE OF PROCEEDS </B></P>
<P align=justify>We will not receive proceeds from the sales by the selling
stockholders. If the warrants are exercised for cash, then we will receive the
proceeds of payable by the selling stockholders upon exercise of the warrants.
We will use these proceeds, if received, for general working capital purposes.
</P>
<P align=center><B>BUSINESS </B></P>
<P align=justify><B><I>Business Overview </I></B></P>
<P align=justify>We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading Chinese Golden Grass grower and
producer in China. We specialize in developing, processing, marketing and
distributing a variety of agricultural and nutraceutical products consisting of
Chinese Golden Grass, organic and specialty food products. In
addition, we plan to produce and market other products developed from Cordyceps
Militaris within the coming months and years, including specialty beverage
products as indicated in more detail below. </P>
<P align=justify>Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in north-eastern mountainous China. It is a precious
ingredient in traditional Chinese medicine, as Cordyceps Militaris is widely
believed in China to offer high medical and health benefits by nourishing the
<I>yin, </I>boosting the <I>yang, </I>and invigorating the meridians of the
lungs and kidneys. According to Georges Halpern's <I>Healing Mushrooms,
</I>certain research has shown that Cordyceps Militaris may boost our immune
system, and can be used as a supplement for the purposes of combating certain
effects of fatigue and aging, as well as reducing blood pressure, the
occurrences of certain tumors, and combating arteriosclerosis and certain
gastrointestinal disorders. In addition, Cordyceps Militaris has significantly
high economic values. According to Halpern<I>, </I>wild Cordyceps Militaris can
cost as much as $10,000 per kilogram. Due to the extremely sensitive growing
conditions of Cordyceps Militaris, it is very difficult to grow the plant in a
man-made environment. Through several years of laboratory tests, we developed
the technology to commercially grow and produce Cordyceps Militaris in 2006. We
generated 75.32% and 68.46% of our revenues from Chinese Golden Grass for the
nine months ended September 30, 2009 and for the fiscal year of 2008,
respectively. We believe that we own 19% of the world wide market share in the
cultivated Chinese Golden Grass industry. We plan to continue to focus on
Chinese Golden Grass, which is our fastest growing product line with the
greatest market demand and a significantly high profit margin.</P>
<P align=center>17 </P>
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<P align=center><IMG src="forms1x23x1.jpg" border=0 width="377" height="263"> </P>
<P align=justify>We also sell organic and specialty food products through our
subsidiary, Harbin Shuaiyi, which was formed in 2001. After years of
development, we believe that we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.</P>
<P align=justify><B>Our Industry</B></P>
<P align=justify>The nutraceutical industry is currently made up of many small-
and medium-sized companies that manufacture and distribute products generally
intended to, or marketed for the purpose of maintaining, and sometimes
improving, health and general well being. According to China Enterprises
Association, there are currently over 3,000 manufacturers of nutraceutical
products in China, with an annual production value of over $6.25 billion. Of
these manufacturers, large enterprises with registered capital of over $12.5
million only account for 1.45%; medium-sized enterprises with registered capital
under $12.5 million, but over $6.25 million, make up 38%; and workshop-style
enterprises with registered capital below $12,500 make up 12.5% of the total
number of manufacturers.</P>
<P align=justify>Widespread economic development in China has not only increased
the disposable income of Chinese consumers, it has also lead to an increase in
consumer awareness of the risks of dietary imbalances and the importance of
maintaining appropriate levels of vitamins and minerals in the human body. Along
with a growing middle class, all of these facts have rapidly increased China&#146;s
480 million urban consumers&#146; demand for nutraceutical products. According to
<I>China Personal Health &amp; Supplemental Industry Survey 2005</I>, the sales
of nutraceutical products in China are expected to reach RMB 70 billion
(approximately $8.75 billion) in 2009, with a compounded annual growth rate of
15.24% . We believe that the next era of nutrition will focus on naturally
occurring properties provided from plants, fruits, and vegetables, which support
good health.<B> </B></P>
<P align=justify>Because of the rarity and high prices of the wild collected
variety, attempts have long been made to cultivate Cordyceps Militaris. By the
mid-1980s, the majority of Cordyceps Militaris available in the worldwide
marketplace were artificially cultivated. Because of the development of modern
biotechnology-based cultivation methods, the availability of this previously
rare health supplement has greatly increased in the last 20 years. The demand
for Cordyceps Militaris has also compounded exponentially, in this same time
frame, partly because of the opening of China to trade with the West in the
1970s, exposing many more people around the world to the concepts and practices
of traditional Chinese medicine. As Cordyceps Militaris has always been highly
revered in traditional Chinese medicine, we believe that with increased exposure
to traditional Chinese medicine, the demand for this plant has also increased.
Such an increase has lead to overharvesting of the wild stocks and a subsequent
shortage of wild collected varieties of Cordyceps Militaris. International
markets for Cordyceps Militaris are mainly in the United States, Canada, Japan,
Korea, Hong Kong and Southeast Asia. The European and Australian markets are
also emerging. According to <I>Market Survey of Cordyceps Militaris</I> <I>2008,
</I>published by China Market Monitoring Center in 2008, the current
international market demand for Cordyceps Militaris is about 1,000 tons a year,
while the Chinese domestic market demand is about 500 tons a year with an annual
growth rate of over 13%. With about 50 Cordyceps Militaris manufacturers in
China having an aggregate production capacity of only 250 tons a year, there is
a big gap between supply and demand and therefore a great potential for our
Chinese Golden Grass market.</P>
<P align=center>18 </P>
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<P align=justify><B>Our Competitive Strengths</B></P>
<P align=justify>We believe that our success to date and potential for future
growth can be attributed to a combination of our strengths, including the
following:</P>
<UL style="TEXT-ALIGN: justify">
  <LI><B><I>High-end niche products. </I></B>We sell organic and specialty food
  products and Chinese Golden Grass products that the followers of traditional
  Chinese medicine believe have high nutrient concentration, potential health
  benefits and high value. Our products are positioned in the high-end market as
  premium healthy food and are distinguished from the common nutraceutical
  products in the market. <BR>
  <LI><B><I>Leading market position and significantly high margin. </I></B>We
  believe we have established ourselves as a dominant player in China&#146;s Chinese
  Golden Grass industry. We believe that we currently own approximately 19% of
  world market of Chinese Golden Grass. By successfully commercializing our
  Cordyceps Militaris planting technology, we believe that we have achieved
  economies of scale and accordingly significantly high margin that no other
  material competitor can match in the near future. <BR>
  <LI><B><I>Leading-edge R&amp;D team. </I></B>Our research and development team
  has a strong and extensive technology background and has been an early
  participant in the Chinese Golden Grass market. Currently we have 21
  technicians in our R&amp;D department. The head of our research and
  development team, Mr. Lichen Wang, is a lead expert in the field of edible
  fungus in China. Mr. Wang graduated with a Bachelor&#146;s degree in edible fungus
  and has served as the deputy director of several research institutes of edible
  fungus in Northeast China. <BR>
  <LI><B><I>Experienced management team with a strong track record. </I></B>Our
  management team has extensive operating experience and industry knowledge.
  Lianyun Han, our founder and chief executive officer, has more than 10 years
  experience in operational management and business development. Daniel K. Lee,
  our chief financial officer, has auditing, accounting and financial management
  experience in U.S. public companies. We believe that our management team&#146;s
  experience and capabilities have contributed greatly to our significant growth
  in the past three years. </LI></UL>
<P align=justify><B>Our Growth Strategy</B></P>
<P align=justify>As a leading nutraceutical producer in China, we believe we are
well positioned to capitalize on future industry growth in China. We are
dedicated to providing healthy and high nutritional products to our consumers.
We will implement the following strategic plans to take advantage of industry
opportunities and our competitive strengths:</P>
<UL style="TEXT-ALIGN: justify">
  <LI><B><I>Focus on brand development</I></B><B>. </B>With intense price
  competition among many similar or identical products in the industry, we
  believe that building brand awareness is the primary means to generate and
  sustain profitable growth in the future. We believe that developing close
  cooperative relationships with research centers of well-known universities in
  China and globally is key to building brand equity. We also market our
  products through an integrated marketing program that includes advertising in
  relevant media outlets, attending trade shows such as Harbin International
  Fair for Trade and Economic Corporation and Beijing Agriculture Exposition and
  offering seminars and lectures to local communities regarding the products and
  their heath benefits. <BR>
  <LI><B><I>Introducing new products</I></B><B>. </B>We constantly evaluate our
  products and seek to adapt to changing market conditions by updating our
  products to reflect new trends in consumer preferences. We endeavor to expand
  our market presence by introducing additional competitive nutraceutical
  products to our product offerings. Our new products under development include
  specialty beverage products. <BR>
  <LI><B><I>Increase production capacity. </I></B>Our existing production lines
  of Chinese Golden Grass have been running at close to full capacity while the
  market demand for our existing products continues to increase. We plan to
  develop an additional 4.1 million square meters to grow Cordyceps Militaris
  with a designed annual production capacity of 65 tons by the end of 2010. We
  also own 75 buildings in our company compound and only 10 of them are currently used to plant
  Cordyceps Militaris. We plan to convert more buildings into biotechnologically
  controlled cultivation plants to grow and process Cordyceps Militaris.<BR>
  </LI></UL>
<P align=center>19 </P>
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<UL style="TEXT-ALIGN: justify">
  <LI><B><I>Further expand our distribution network to increase the prevalence
  of our products nationwide. </I></B>Our current sales depend heavily on the
  sales of our large-pack products to pharmaceutical companies. To support our
  rapid growth in sales, we plan to further expand our distribution network by
  selling our small-pack products through drug stores, supermarkets and
  franchise stores. We have one-year contracts with our major distributors which
  normally extend for one more year by the end of the contracts. We maintain
  constant communications with these distributors to keep us informed regarding
  consumer preferences and market trends in order to develop new products. We
  also organize monthly product promotion meetings with the distributors to
  increase the sales of small package products. <BR>
  <LI><B><I>Technology innovation. </I></B>We believe that the development of
  new technology is critical to our success. We will continuously improve the
  quality of our existing and future products through new technologies. We
  expect to maintain our long-term partnership with Chinese universities and
  research institutes in order to develop new technologies. </LI></UL>
<P align=justify><B>Our Products and Production Process</B></P>
<P align=justify><B><I>Chinese Golden Grass </I></B></P>
<P align=justify>Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in the north-eastern mountainous regions of China. As a
precious ingredient in traditional Chinese medicine, Cordyceps Militaris is
widely believed in China to offer high medical and health benefits by nourishing
the <I>yin, </I>boosting the <I>yang, </I>and invigorating the meridians of the
lungs and kidneys. Due to the extremely sensitive growing conditions of
Cordyceps Militaris, it is very difficult to grow the plants in man-made
environments. Through several years laboratory tests, we developed the
technology to commercially grow and produce Cordyceps Militaris in 2006. Our
production process primarily includes planting, purifying and packaging.</P>
<P align=justify>Our present production capacity of Chinese Golden Grass is
approximately 55 tons annually. We generated 75.32% and 68.46% of our revenues
from Chinese Golden Grass for the nine months ended September 30, 2009 and for
the fiscal year of 2008, respectively. We believe that we own approximately 19%
worldwide market share in the entire cultivated Chinese Golden Grass industry.
We plan to continue to focus on Chinese Golden Grass, which is our fastest
growing product with the greatest market demand and a significantly high profit
margin. To achieve this end, we plan to increase our annual production capacity
of 65 tons by the end of 2010.</P>
<P align=justify><B><I>Organic and Specialty Food</I></B></P>
<P align=justify>Growth in domestic demand for organic products has been driven
by rising incomes in China. Through our indirect subsidiary, Harbin Shuaiyi, we
act as either a sales agent or a distributor to market and sell organic and
specialty food products supplied by third-party producers. These products mainly
include Northeast Peculiar Rice. Northeast Peculiar Rice is grown in accordance
with organic product standards established by the Chinese Ministry of
Agriculture. To qualify as &#147;organic,&#148; food must be produced in an environment
which relies upon natural resources, without the use of conventional pesticides,
artificial fertilizers, in an appropriate ecological environment, and must
undergo a series of scientific and technological quality control processes. Our
Northeast Peculiar Rice is rich in protein, fiber fats, amino acids and calcium,
iron, zinc, selenium and other elements and vitamins. After years of
development, we believe we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.</P>
<P align=justify><B><I>New products under development
</I></B><B></B><B><I></I></B></P>
<P align=justify>We plan to further diversify our Cordyceps Militaris based
product mix to cater to different customer tastes and preferences. Currently, we
have the following two products under development. In 2010, we will be targeting
mass consumer markets by introducing two specialty beverage products with the
health benefits of enhancing immunity, reducing fatigue, enhancing circulations,
among other benefits derived from our Cordyceps Militaris.</P>
<P align=center>20 </P>
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<UL style="TEXT-ALIGN: justify">
  <LI><I>Cordycepin</I>. Cordycepin is the major bioactive compound of Cordyceps
  Militaris. Cordycepin has been used as raw materials in various nutraceutical
  products, cosmetics and drugs worldwide. According to Georges Halpern&#146;s
  <I>Healing Mushrooms</I>, Cordycepin is medicinally used to treat bacterial
  infections such as tuberculosis and leprosy as well as possibly inhibiting HIV
  replication. <BR>
  <LI><I>Specialty Beverage Products</I>. This convenient and delicious Chinese
  traditional healthcare cereal beverage has various nutritional ingredients of
  Cordyceps Militaris, including Cordycepin and polysaccharides. We expect to
  begin manufacturing and selling this product by the first half of 2010.
</LI></UL>
<P align=justify><B>Marketing and Sales</B></P>
<P align=justify>Currently, we have 115 experienced marketing personnel who are
responsible for market research, promotion and advertisement. We strengthen our
market presence by employing various types of marketing strategies. We
participate in trade shows such as Harbin International Fair for Trade and
Economic Cooperation and Beijing Agriculture Exposition and offer seminars and
lectures to local communities regarding the health benefits of our products.
These activities help to promote our reputation and name recognition in the
industry.</P>
<P align=justify>Our sales depend heavily on the sales of our large-pack
products to pharmaceutical companies. To support our rapid growth in sales, we
plan to further expand our distribution network by selling our small-pack
products through drug stores, supermarkets and franchise stores.</P>
<P align=justify><B>Raw Materials and Suppliers</B></P>
<P align=justify>Our raw materials primarily consist of carbamide, wheat,
glucose, citric acid, bitter salt, peptone, and pupa powder. The price for such
material fluctuates depending upon market conditions. However, since we have
long-term suppliers and clients, the influence of material price fluctuation is
not currently material to the Company.</P>
<P align=justify>We have established long-term relationships with our key
suppliers. However, we do not have long term supply contracts and we do not
exclusively rely on our key suppliers. We have adopted a dual supplier system
for raw materials. Therefore, if our primary suppliers cannot supply us with our
raw material for any reason, we are able to acquire raw material from another
supplier. All of our suppliers must meet our quality standards and delivery
requirements consistently in order to remain on our approved supplier list. If
deliveries are delayed repeatedly, we terminate the partnership with such
supplier.</P>
<P align=justify>The flexible sourcing arrangements are designed to ensure the
stable supply of raw materials and promote healthy competition among our
suppliers. We believe our supplier arrangements encourage our suppliers to
provide high quality raw materials timely and efficiently.</P>
<P align=justify><B><I>Our Major Suppliers in 2008 </I></B><B></B></P>
<P align=justify>The following table lists top suppliers of our raw materials in
2008:</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left  >&nbsp;</TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=center width="14%"><B>Purchasing</B> </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left  >&nbsp;</TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=center width="14%"><B>value</B> </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center  ><STRONG>Rank </STRONG></TD>
    <TD align=left width="35%" ><B>Company Name</B> </TD>
    <TD align=center width="14%"><B>Unit (Kg)</B> </TD>
    <TD align=center width="14%"><B>in 2008 ($)</B> </TD>
    <TD align=center width="14%"><B>Location</B> </TD>
    <TD align=center width="14%"><B>Material</B> </TD></TR>
  <TR>
    <TD align=center  >&nbsp;</TD>
    <TD width="35%" >&nbsp; </TD>
    <TD width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center bgcolor="#E6EFFF"  >1 </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Harbin Zhenfengyuan
      Bio-technology Co., Ltd </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">13,865 </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">448,539 </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">Harbin </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">Peptone </TD></TR>
  <TR>
    <TD align=center bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=center width="14%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=center width="14%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=center width="14%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=center width="14%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF"  >&nbsp;</TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">11,264 </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">Pupa Powder </TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF"  >&nbsp;</TD>
    <TD width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF"  >&nbsp;</TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">11,720 </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">Vitamin-C </TD></TR></TABLE></DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=center >2 </TD>
    <TD align=left width="35%" >Nehe Laocai Grain Depot. </TD>
    <TD align=center width="14%">351,980 </TD>
    <TD align=center width="14%">125,209 </TD>
    <TD align=center width="14%">Nehe </TD>
    <TD align=center width="14%">Wheat </TD></TR>
  <TR vAlign=top>
    <TD align=center bgcolor="#E6EFFF" >3 </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Zhaoyuan Xinan Rice Co., Ltd. </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">100,000 </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">48,935 </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">Zhaoyuan </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">Rice </TD></TR>
  <TR vAlign=top>
    <TD align=center >4 </TD>
    <TD align=left width="35%" >Harbin Jiancheng Fine Chemical
      Plant </TD>
    <TD align=center width="14%">13,512 </TD>
    <TD align=center width="14%">32,859 </TD>
    <TD align=center width="14%">Harbin </TD>
    <TD align=center width="14%">Glucose </TD></TR>
  <TR vAlign=top>
    <TD align=center >&nbsp; </TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=center width="14%">9,230 </TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=center width="14%">Citric acid, </TD></TR>
  <TR vAlign=top>
    <TD align=center >&nbsp; </TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=center width="14%">1,000 </TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=center width="14%">Bitter salt </TD></TR>
  <TR vAlign=top>
    <TD align=center bgcolor="#E6EFFF" >5 </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Zhaoyuan Xinzhan Yuanxiang Goods
      and </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">80,000 </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">32,239 </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">Zhaoyuan </TD>
    <TD align=center width="14%" bgcolor="#E6EFFF">Corn </TD></TR>
  <TR vAlign=top>
    <TD align=center bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Materials Co., Ltd. </TD>
    <TD align=left width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="14%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR>
    <TD align=center bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="14%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="14%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center >6 </TD>
    <TD align=left width="35%" >Daqing Qingzhong Seed Co., Ltd.
    </TD>
    <TD align=center width="14%">60,700 </TD>
    <TD align=center width="14%">14,852 </TD>
    <TD align=center width="14%">Daqing </TD>
    <TD align=center width="14%">Potato </TD></TR></TABLE>
<P align=center>21 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_27></A><B><br>
Our Major Customers </B>
<P align=justify>The following table provides information on our major clients
in fiscal year 2008. </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD align=center colSpan=5><B>MAJOR CLIENTS IN 2008</B></TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="35%" >&nbsp; </TD>
    <TD width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="35%" >&nbsp; </TD>
    <TD width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=left width="20%">&nbsp; </TD>
    <TD align=center width="20%"><B>Sales</B> </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=left width="20%">&nbsp; </TD>
    <TD align=center width="20%"><B>(in Millions of </B></TD>
    <TD align=center width="20%" ><STRONG>Percentage of</STRONG>
    </TD></TR>
  <TR vAlign=top>
    <TD align=left style="border-bottom-style: solid; border-bottom-width: 1" ><B>No.</B> </TD>
    <TD align=left width="35%" style="border-bottom-style: solid; border-bottom-width: 1" ><B>Name</B> </TD>
    <TD align=left width="20%" style="border-bottom-style: solid; border-bottom-width: 1"><B>Description of Client</B> </TD>
    <TD align=center width="20%" style="border-bottom-style: solid; border-bottom-width: 1"><B>US Dollars)</B> </TD>
    <TD align=center width="20%" style="border-bottom-style: solid; border-bottom-width: 1"><B>Total Sales</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" style="border-top-style: solid; border-top-width: 1" >1 </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" style="border-top-style: solid; border-top-width: 1" >&nbsp;Si Chuan Ai Da Biotech Co.
      Ltd. </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF" style="border-top-style: solid; border-top-width: 1">Health Products Producer </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF" style="border-top-style: solid; border-top-width: 1">1.079 </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF" style="border-top-style: solid; border-top-width: 1">8.31% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">in China </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >2 </TD>
    <TD align=left width="35%" >Hangzhou KangYuanTang Ganoderma
      Lucidum </TD>
    <TD align=left width="20%">Health Products Producer </TD>
    <TD align=center width="20%">1.052 </TD>
    <TD align=center width="20%">8.09% </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="35%" >Co., Ltd. </TD>
    <TD align=left width="20%">in China </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="35%" >&nbsp; </TD>
    <TD width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >3 </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Zhejiang Yinlong Trading Company
    </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">Trading company in China </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">1.043 </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">8.03% </TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >4 </TD>
    <TD align=left width="35%" >Beijing Ruichenboji Technology
      Development </TD>
    <TD align=left width="20%">Trading company in China </TD>
    <TD align=center width="20%">0.935 </TD>
    <TD align=center width="20%">7.2% </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="35%" >Co., Ltd. </TD>
    <TD align=left width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=left width="20%">&nbsp;</TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >5 </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Disha Pharmaceutical Co., Ltd.
</TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">Pharmaceutical Products </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">0.913 </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">7.02% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">Producer in China </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >6 </TD>
    <TD align=left width="35%" >Xi&#146;an Yizhiliu Pharmaceutical
      Co., Ltd </TD>
    <TD align=left width="20%">Pharmaceutical Products </TD>
    <TD align=center width="20%">0.911 </TD>
    <TD align=center width="20%">7.01%&#183; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=left width="20%">Producer in China </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=left width="20%">&nbsp;</TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >7 </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Zhejiang Wanfeng Group
      Pharmaceutical Co., </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">Pharmaceutical Products </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">0.728 </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">5.6% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Ltd. </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">Producer in China </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >8 </TD>
    <TD align=left width="35%" >General Hospital of Shandong CAPF
    </TD>
    <TD align=left width="20%">Pharmaceutical Products </TD>
    <TD align=center width="20%">0.546 </TD>
    <TD align=center width="20%">4.2% </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="35%" >&nbsp; </TD>
    <TD align=left width="20%">&nbsp;</TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >9 </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >Beijing Green Grass Tang Biotech
      Co., Ltd. </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">Sales Agent of the Company</TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">0.133 </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">1.02% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="35%" bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD align=left width="20%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=center width="20%" bgcolor="#E6EFFF">&nbsp; </TD></TR></TABLE></DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>10 </TD>
    <TD align=left width="35%">Shandong Linyi Hongyun Trading Company </TD>
    <TD align=left width="20%">Sales Agent of the Company </TD>
    <TD align=center width="20%">0.121 </TD>
    <TD align=center width="20%">0.93% </TD></TR></TABLE>
<P align=center>22 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_28></A><BR>
<P align=justify><B>Our Competition</B></P>
<P align=justify>Most of our competitors for sales of Chinese Golden Grass
products are small-sized local producers and generally have a much lower
production capacity. Compared to these competitors, we believe we have a much
higher production capacity and more advanced growing and production technology.
Our major competitors in China include Heilongjiang Xinyisheng Pharmaceutical
Co., Ltd., Liangshan County Ganoderma and Cordyceps Sci-Tech Development Co.,
Ltd., Jiangsu Xuzhou Kangyuan Cordyceps Biology Co., Ltd., Xuzhou Baofu
Cordyceps Co., Ltd. and Jinzhou Cordyceps Militaris Co., Ltd.</P>
<P align=justify><B>Research and Development</B></P>
<P align=justify>Our research and development activities focus on developing new
products and new technologies. We currently have 21 employees dedicated to
research and development. Since 2003, we have also maintained a close
cooperation relationship with China Institute of Science, one of the most
prestigious academic institutions of scientific and technological research in
China, to improve commercially growing Cordyceps Militaris.</P>
<P align=justify>As described below, on April 10, 2006, we spent RMB 30 million
(approximately $4.4 million) in acquiring the technologies of Cordyceps
Militaris cultivation from Mr. Runjiao Wang. In 2007 and 2008, our research and
development expenses were insignificant.</P>
<P align=justify><B>Intellectual Property</B></P>
<P align=justify>We currently have the following patents pending approval:</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="18%">&nbsp; </TD>
    <TD align=center width="14%"><B>Patent No. /</B> </TD>
    <TD align=center width="14%"><B>Expiration</B> </TD>
    <TD align=left width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left><B>Patent Name</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=center
      width="18%"><B>Patent type</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=center
      width="14%"><B>Application No.</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=center
      width="14%"><B>Date</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=center
      width="14%"><B>Status</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Technology of Using Plastic Ware to
      Cultivate <BR>Cordyceps Militaris <BR></TD>
    <TD align=center width="18%" bgColor=#e6efff>Invention <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>200810064305.3 <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>N/A <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>Pending <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Planting Cordyceps militaris by the method
      of&nbsp;<BR>making liquid spawn<BR></TD>
    <TD align=center width="18%">Invention <BR><BR></TD>
    <TD align=center width="14%">200810064705.4 <BR><BR></TD>
    <TD align=center width="14%">N/A <BR><BR></TD>
    <TD align=center width="14%">Pending <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Formulation of Cordyceps Militaris and
      Green Bean&nbsp; Paste Beverage <BR></TD>
    <TD align=center width="18%" bgColor=#e6efff>Invention <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>200810064387.1 <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>N/A <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>Pending <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Formulation of Cordyceps Militaris and
      Corn&nbsp;<BR>Beverage <BR></TD>
    <TD align=center width="18%">Invention <BR><BR></TD>
    <TD align=center width="14%">200810064389.0 <BR><BR></TD>
    <TD align=center width="14%">N/A <BR><BR></TD>
    <TD align=center width="14%">Pending <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Formulation of Cordyceps Militaris and
      Millet&nbsp;<BR>Beverage <BR></TD>
    <TD align=center width="18%" bgColor=#e6efff>Invention <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>200810064390.3 <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>N/A <BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>Pending <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Formulation of Cordyceps Militaris and Red
      Bean&nbsp;<BR>Paste Beverage </TD>
    <TD align=center width="18%">Invention <BR></TD>
    <TD align=center width="14%">200810064388.6 <BR></TD>
    <TD align=center width="14%">N/A <BR></TD>
    <TD align=center width="14%">Pending <BR></TD></TR></TABLE></DIV>
<P align=justify>On April 10, 2006, Daqing Shuaiyi entered into an exclusive
licensing agreement with Mr. Runjiao Wang, pursuant to which Mr. Wang agreed to
grant Daqing Shuaiyi an exclusive right to use the cultivation technology of Cordyceps Militaries that Mr. Wang developed. According to this licensing
agreement, Daqing Shuaiyi is allowed to use this technology exclusively in China
for ten years beginning on April 10, 2006. In consideration of the rights
granted to Daqing Shuaiyi under this licensing agreement, Daqing Shuaiyi agreed
to pay Mr. Wang a licensing fee in an amount of RMB 30 million (approximately $4.4
million). In addition, Daqing Shuaiyi has the right of first refusal with
respect to the cultivation technology when the licensing agreement expires.</P>
<P align=center>23 </P>
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noShade SIZE=5>
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<P align=justify>We have applied for the trademark of &#147;<font lang="ZH-CN" style="font-size: 10.0pt; font-family: SimSun">&#24069;&#20159;&#19996;&#26041;&#31070;</font>&#148; with the Trademark
Office of the State Administration for Industry and Commerce of China. Under
Chinese laws, we are allowed to use &#147;<font lang="ZH-CN" style="font-size: 10.0pt; font-family: SimSun">&#24069;&#20159;&#19996;&#26041;&#31070;</font>&#148; for the sales and marketing of our
products even if our trademark application is still pending. Once our
application is approved, the trademark will have a term of ten years and may be
continually renewed thereafter.</P>
<P align=justify>We rely on trade secret protection and confidentiality
agreements to protect our proprietary information and knowhow. Our management
and each of our research and development personnel have entered into a standard
confidentiality agreement, which includes a clause acknowledging that all
inventions, designs, trade secrets, works of authorship, developments and other
processes generated by them on our behalf are our property, and assigning to us
any ownership rights that they may claim in those works. Despite our
precautions, it may be possible for third parties to obtain and use, without our
consent, intellectual property that we own or are licensed to use. Unauthorized
use of our intellectual property by third parties, and the expenses incurred in
protecting our intellectual property rights, may adversely affect our business.
See &#147;Risk factors&#151;Risks Related to Our Business&#151;Our inability to
protect our trademarks, patent and trade secrets may prevent us from
successfully marketing our products and competing effectively.&#148;</P>
<P align=justify><B>Regulation</B></P>
<P align=justify>Because our operating subsidiaries are located in the PRC, we
are regulated by the national and local laws of the PRC. Currently only the
general rules of commerce in China are applicable to us.</P>
<P align=justify>We are also subject to the PRC&#146;s foreign currency regulations.
The PRC government has controlled Renminbi reserves primarily through direct
regulation of the conversion of Renminbi into other foreign currencies. Although
foreign currencies, which are required for &#147;current account&#148; transactions, can
be bought freely at authorized PRC banks, the proper procedural requirements
prescribed by PRC law must be met. At the same time, PRC companies are also
required to sell their foreign exchange earnings to authorized PRC banks and the
purchase of foreign currencies for capital account transactions still requires
prior approval of the PRC government.</P>
<P align=justify><B>Our Employees</B></P>
<P align=justify>As of December 31, 2009, we employed a total of 302 full-time
employees. The following table sets forth the number of our employees by
function as of December 31, 2009.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>FUNCTION</B>
</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="50%"><B>NUMBER OF EMPLOYEES</B> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Capital Department </TD>
    <TD align=center width="50%" bgColor=#e6efff>5 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Sales Department </TD>
    <TD align=center width="50%">132</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Production Department </TD>
    <TD align=center width="50%" bgColor=#e6efff>121 </TD></TR>
  <TR vAlign=top>
    <TD align=left>R&amp;D Department </TD>
    <TD align=center width="50%">21 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Financial Department </TD>
    <TD align=center width="50%" bgColor=#e6efff>13 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Administrative Office </TD>
    <TD align=center width="50%">10 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>TOTAL</B> </TD>
    <TD align=center width="50%" bgColor=#e6efff>302</TD></TR></TABLE>
<P align=justify>Our employees are not represented by a labor organization or
covered by a collective bargaining agreement. We have not experienced any work
stoppages.</P>
<P align=center>24 </P>
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<P align=justify>We are required under PRC law to make contributions to the
employee benefit plans at specified percentages of the after-tax profit. In
addition, we are required by the PRC law to cover employees in China with
various types of social insurance. We believe that we are in material compliance
with the relevant PRC laws.</P>
<P align=justify><B>Seasonality</B></P>
<P align=justify>The production and sale of our primary product, Chinese Golden
Grass, historically have not been subject to seasonal variations.</P>
<P align=justify><B>Insurance</B></P>
<P align=justify>We do not have any business liability, interruption or
litigation insurance coverage for our operations in China. Insurance companies
in China offer limited business insurance products. While business interruption
insurance is available to a limited extent in China, we have determined that the
risks of interruption, cost of such insurance and the difficulties associated
with acquiring such insurance on commercially reasonable terms make it
impractical for us to have such insurance. Therefore, we are subject to business
and product liability exposure. See &#147;Risk Factors &#150; We do not carry any business
interruption insurance, third-party liability insurance for our production
facilities or insurance that covers the risk of loss of our products in
shipment.&#148;</P>
<P align=justify><B>Litigation</B></P>
<P align=justify>From time to time, we may become involved in various lawsuits
and legal proceedings, which arise, in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will
have a material adverse affect on our business, financial condition or operating
results. </P>
<P align=center><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
<BR>AND RESULTS OF OPERATIONS </B></P>
<P align=justify>We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading Chinese Golden Grass grower and
producer in China. We specialize in developing, processing, marketing and
distributing a variety of agricultural and nutraceutical products consisting of
Chinese Golden Grass, organic and specialty food products. In addition, we plan
to produce and market other products developed from Cordyceps Militaris within
the coming months and years, including specialty beverage products. </P>
<P align=justify>Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. We sell our products through an extensive nationwide
sales and distribution network covering four provinces and eight cities in
China. Our Chinese Golden Grass products are grown and processed by our
indirect, wholly-owned subsidiary, Daqing Shuaiyi, and are mainly sold to
pharmaceutical companies for further processing into drugs and nutraceutical
products. We generated approximately 91.34% of our revenues from sales of
Chinese Golden Grass during the third quarter of 2009. We believe that we own
approximately 19% worldwide market share in the entire cultivated Chinese Golden
Grass industry. </P>
<P align=justify>We also sell organic and specialty food products through our
subsidiary, Harbin Shuaiyi, which was formed in 2001. After years of
development, we believe that we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China. </P>
<P align=justify>Our sales revenue grew by 41.3% in the fiscal year ended
December 31, 2008 to approximately $12.98 million, from approximately $9.19
million for 2007. Our gross margin for 2008 was 64.6%. </P>
<P align=justify><B>Industry Wide Factors that are Relevant to Our
Business</B></P>
<P align=justify>We expect several key demographic, healthcare, and lifestyle
trends to drive the growth of our business in the coming future:</P>
<UL style="TEXT-ALIGN: justify">
  <LI><B><I>Increased Focus on Healthy Living</I></B><B>: </B>Our management
  believes that as China becomes more affluent, its citizens are becoming more
  health conscious. They are leading more active lifestyles and becoming increasingly focused on healthy living,
  nutrition, and supplementation. According to <I>the Nutrition Business</I>
  <I>Journal</I>, a higher percentage of today&#146;s global population is involved
  to some degree in health and wellness than a few years ago. We believe that
  growth in the health supplements industry will continue to be driven by
  consumers who increasingly embrace health and wellness as a critical part of
  their lifestyles. <BR>
  </LI></UL>
<P align=center>25</P>
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<UL style="TEXT-ALIGN: justify">
  <LI><B><I>Aging Population</I></B><B>: </B>The average age of the Chinese
  population is increasing. According to <I>World Population</I> <I>Prospects:
  The 2004 Revision </I>(2005), the percentage of elderly persons in China is
  projected to triple between 2006 and 2050, from 8 percent to 24 percent, a
  total of 322 million people. We believe that these consumers are significantly
  more likely to use health supplements than younger persons and have higher
  levels of disposable income to pursue healthy lifestyles. <BR>
  <LI><B><I>Rising Healthcare Costs and Use of Preventive Measures</I></B><B>:
  </B>Healthcare related costs have increased substantially in China. A survey
  released by China&#146;s Ministry of Health found that the percentage of
  out-of-pocket health expenditures in China has increased from 35.7% in 1990 to
  55.5% in 2003. To reduce medical costs and avoid the complexities of dealing
  with the healthcare system, and given increasing incidence of medical problems
  and concern over the use and effects of prescription drugs, many consumers
  take preventive measures, including alternative medicines and nutritional
  supplements. </LI></UL>
<P align=justify><B>Taxation</B></P>
<P align=justify><B><I>United States</I></B></P>
<P align=justify>Nutrastar International Inc. is subject to United States tax at
a tax rate of 34%. No provision for income taxes in the United States has been
made as Nutrastar International Inc. had no income taxable in the United
States.</P>
<P align=justify><B><I>British Virgin Islands</I></B></P>
<P align=justify>New Resources was incorporated in the BVI. Under the current
law of the BVI, New Resources is not subject to income or capital gains tax. In
addition, dividend payments are not subject to withholding tax in the BVI. </P>
<P align=justify><B><I>PRC </I></B></P>
<P align=justify>In 2007, the PRC government promulgated the new Enterprise
Income Tax Law, or EIT Law, and the relevant implementation rules, which became
effective on January 1, 2008. Under the EIT Law and its implementation rules,
all domestic and foreign investment companies will be subject to a uniform
enterprise income tax at the rate of 25% and dividends from PRC subsidiaries to
their non-PRC shareholders will be subject to a withholding tax at a rate of
20%, which is further reduced to 10% by the implementation rules, if the non-PRC
shareholder is considered to be a non-PRC tax resident enterprise without any
establishment or place within China or if the dividends payable has no
connection with the non-PRC shareholder&#146;s establishment or place within China,
unless any such non-PRC shareholder&#146;s jurisdiction of incorporation has a tax
treaty with China that provides for a different withholding arrangement. In
addition, pursuant to the EIT Law, enterprises established under the laws of
non-PRC jurisdictions, but whose &#147;de facto management body&#148; is located in the
PRC, should be treated as resident enterprises for PRC tax purposes. However, it
is currently uncertain whether we may be deemed a resident enterprise, or how to
interpret whether any income or gain is derived from sources within China. See
&#147;Risk Factors - Under the New EIT Law, we may be classified as a &#147;resident
enterprise&#148; of China. Such classification will likely result in unfavorable tax
consequences to us and our non-PRC shareholders. If we, as a BVI company with
substantially all of our management located in China, were treated as a resident
enterprise for PRC tax purposes, we will be subject to PRC tax on our worldwide
income at the 25% uniform tax rate, which would have an impact on our effective
tax rate. </P>
<P align=justify>The EIT Law and the Implementing Rules also imposes a unified
EIT of 25% on both foreign invested enterprises and domestic enterprises,
effective January 1, 2008. As a result, our PRC subsidiaries were subject to the
EIT rates of 25% in both 2008 and 2009. </P>
<P align=justify><B>Results of Operations </B></P>
<P align=justify><U>Nine Months Ended September 30, 2009 Compared to Nine Months
Ended September 30, 2008</U></P>
<P align=center>26 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P align=justify>The following tables set forth key components of our results of
operations for the periods indicated, in dollars and as a percentage of revenue.
</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><B>Nine Months Ended</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><B>Nine Months Ended</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><B>September 30, 2009</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><B>September 30, 2008</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"><B>As a</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"><B>As a</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"><B>percentage of</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"><B>percentage of</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>In Thousands</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>revenues</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>In Thousands</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>revenues</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Revenues </TD>
    <TD align=left width="1%"  bgColor=#e6efff></TD>
    <TD align=right width="10%" bgColor=#e6efff>11,549 </TD>
    <TD align=left width="2%"  bgColor=#e6efff></TD>
    <TD align=left width="1%"  bgColor=#e6efff></TD>
    <TD align=right width="10%" bgColor=#e6efff>100 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD>
    <TD align=left width="1%"  bgColor=#e6efff></TD>
    <TD align=right width="10%" bgColor=#e6efff>10,167 </TD>
    <TD align=left width="2%"  bgColor=#e6efff></TD>
    <TD align=left width="1%"  bgColor=#e6efff></TD>
    <TD align=right width="10%" bgColor=#e6efff>100 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Cost of goods sold </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(3,733</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(32.3</TD>
    <TD align=left width="2%" >)% </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(3,579 </TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(35.2</TD>
    <TD align=left width="2%" >)% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Gross Profit </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>7,816 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>67.7 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>6,588 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>64.8 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Selling expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(281</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(2.4</TD>
    <TD align=left width="2%" >)% </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(138 </TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(1.4</TD>
    <TD align=left width="2%" >)% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>General and administrative expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(944</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(8.2</TD>
    <TD align=left width="2%"  bgColor=#e6efff>)% </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(827</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(8.1</TD>
    <TD align=left width="2%"  bgColor=#e6efff>)% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Income from operations </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">6,591 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">57.1 </TD>
    <TD align=left width="2%" >% </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">5,623 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">55.3 </TD>
    <TD align=left width="2%" >% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Other income and (expenses) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Interest income </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">50 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">0.4 </TD>
    <TD align=left width="2%" >% </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">19 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">0.18 </TD>
    <TD align=left width="2%" >% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Other
      income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>0.04 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Exchange loss </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(7</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(0.06</TD>
    <TD align=left width="2%" >)% </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Income before income tax </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>6,634 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>57.4 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>5,646 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>55.5 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Provision for income tax </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(891</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(7.7</TD>
    <TD align=left width="2%" >)% </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(775 </TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(7.6</TD>
    <TD align=left width="2%" >)% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>5,743 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>49.7 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4,871 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>47.9 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>%
</TD></TR></TABLE></DIV>
<P align=justify><I>Revenues</I>. Revenues increased approximately $1.3 million,
or 12.8%, to approximately $11.5 million for the nine months ended September 30,
2009, from approximately $10.2 million for the same period in 2008. This
increase was mainly attributable to the increase of our sales and output volume
of our product, Chinese Golden Grass, driven by the continued increase in market
demand for our products as well as the sales of our small package Chinese Golden
Grass products, which consisted a larger portion of our total revenues during
the nine months ended September 30, 2009 as compared to the same period last
year.<I> </I></P>
<P align=justify><I>Cost of Goods Sold. </I>Our cost of goods sold increased
approximately $0.15 million, or 4.2%, to approximately $3.73 million for the
nine months ended September 30, 2009, from approximately $3.58 million during
the same period in 2008. This increase was mainly due to the increase in our raw
materials and labor costs, which were generally in line with the increase in our
sales. As a percentage of revenues, the cost of goods sold decreased to 32.3%
during the nine moths ended September 30, 2009 from 35.2% in the same period in
2008. Such increase of gross margin was mainly attributable to the fact that a
larger portion of our total revenues was generated from our small package
Chinese Golden Grass products with higher unit selling price as compared to the
same period of 2008. Because the gross margin of small package products is
higher than that of larger package products, the percentage of cost of sales to
total sales revenue decreased during the nine months ended September 30, 2009.
</P>
<P align=justify><I>Gross Profit. </I>Our gross profit increased by
approximately $1.2 million, or 18.2%, to approximately $7.8 million for the nine
months ended September 30, 2009 from approximately $6.6 million during the same
period in 2008. Gross profit as a percentage of revenues, or gross margin, was
67.7% for the nine month ended September 30, 2009, an increase of 2.9% from
64.8% during the same period in 2008. Such percentage increase was mainly due to
the increased sales of our higher margin small package Chinese Golden Grass
products. </P>
<P align=justify><I>Selling Expenses</I> . Our selling expenses increased
approximately $0.14 million, or 100%, to approximately $0.28 million for the
nine months ended September 30, 2009 from approximately $0.14 million during the
same period in 2008. As a percentage of revenues, selling expenses increased to
2.4% for the nine months ended September 30, 2009 from 1.4% for the same period
in 2008. The increase in the amount and percentage of selling expenses was
mainly attributable to the increase of salaries and travelling expenses of our
sales representatives and more marketing activities to promote our products.
</P>
<P align=justify><I>General and Administrative Expenses</I> . General and
administrative expenses increased approximately $0.11 million, or 13.3%, to
approximately $0.94 million for the nine months ended September 30, 2009 from
approximately $0.83 million for the same period in 2008. As a percentage of
revenues, general and administrative expenses increased to 8.2% for the nine
months ended September 30, 2009 from 8.1% for the same period in 2008. The
increase in the amount of general and administrative expenses was mainly
attributable to the increase of services expenses associated with being a public
company during the nine months ended September 30, 2009. </P>
<P align=center>27</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_33></A>
<P align=justify><I>Income Before Income Tax</I> . Income before income tax
increased approximately $0.98 million, or 17.3%, to approximately $6.63 million
during the nine months ended September 30, 2009 from approximately $5.65 million
during the same period in 2008. As a percentage of revenues, income before
income tax increased to 57.4% during the nine months ended September 30, 2009
from 55.5% during the same period in 2008. The increase in income before income
tax is mainly attributable to the increase in our gross profit as a result of
the increase in our sales.<I> </I></P>
<P align=justify><I>Income Taxes</I>. Income tax increased approximately $0.11
million to approximately $0.89 million for the nine months ended September 30,
2009 from approximately $0.78 million for the same period in 2008. We paid more
tax in 2009 because of the increase in sales and taxable income. </P>
<P align=justify><I>Net Income</I> . Net income increased by approximately $0.87
million, or 17.9% to approximately $5.74 million for the nine months ended
September 30, 2009 from approximately $4.87 million for the same period of 2008,
as a result of the factors described above. </P>
<P align=justify><U>Fiscal Year ended December 31, 2008 Compared to Fiscal Year
Ended December 31, 2007</U></P>
<P align=justify>The following table summarizes the results of our operations
during the fiscal years ended December 31, 2008 and 2007, and provides
information regarding the dollar and percentage increase or (decrease) from the
fiscal year ended December 31, 2007 to the fiscal year ended December 31, 2008.
</P>
<P align=center>(All amounts, other than percentage, in thousands of US dollars)
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 height="241">

  <TR vAlign=top>
    <TD align=left height="16">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4 height="16"><B>Year Ended December 31, 2008</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4 height="16"><B>Year Ended December 31, 2007</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%" height="16"
    ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15"><B>As a</B> </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15"><B>percentage</B> </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15"><B>of</B> </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="10%" height="15"><B>As a percentage</B> </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="16">&nbsp; </TD>
    <TD align=left width="1%" height="16" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%" height="16"><B>In Thousands</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%" height="16"><B>revenues</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%" height="16"><B>In Thousands</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%" height="16"><B>of revenues</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%" height="16"
    ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Revenues </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">12,989 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">100% </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15" style="font-family: Times New Roman; font-size: 10pt">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">9,195 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">100</TD>
    <TD align=left width="2%"
bgColor=#e6efff height="15">%&nbsp;&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Cost of goods sold </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(4,605</TD>
    <TD align=left width="2%" height="15" >) </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(35.5% </TD>
    <TD align=left width="2%" height="15" style="font-family: Times New Roman; font-size: 10pt" >
    <font face="Times New Roman">)</font></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(3,512</TD>
    <TD align=left width="2%" height="15" >) </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(38.2</TD>
    <TD align=left width="2%" height="15" >)% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Gross Profit </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">8,384 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">64.5% </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15" style="font-family: Times New Roman; font-size: 10pt">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">5,683 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">61.8</TD>
    <TD align=left width="2%"
bgColor=#e6efff height="15">%&nbsp;&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Selling expenses </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(196</TD>
    <TD align=left width="2%" height="15" >) </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(1.5% </TD>
    <TD align=left width="2%" height="15" style="font-family: Times New Roman; font-size: 10pt" >
    <font face="Times New Roman">)</font></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(72</TD>
    <TD align=left width="2%" height="15" >) </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(0.8</TD>
    <TD align=left width="2%" height="15" >)% </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">General and administrative expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">(1,416</TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">(10.9% </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15" style="font-family: Times New Roman; font-size: 10pt">
    <font face="Times New Roman">)</font></TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">(436</TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">(4.7</TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">)% </TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Loss on disposal of fixed assets </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(31</TD>
    <TD align=left width="2%" height="15" >) </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(0.24% </TD>
    <TD align=left width="2%" height="15" style="font-family: Times New Roman; font-size: 10pt" >
    <font face="Times New Roman">)</font></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Income from operations </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">6,741 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">51.9% </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15" style="font-family: Times New Roman; font-size: 10pt">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">5,175 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">56.3</TD>
    <TD align=left width="2%"
bgColor=#e6efff height="15">%&nbsp;&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Other income and (expenses) </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" style="font-family: Times New Roman; font-size: 10pt" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">&nbsp; &nbsp; &nbsp; &nbsp;Interest income
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">30 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">0.23% </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15" style="font-family: Times New Roman; font-size: 10pt">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">53 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="15">0.58</TD>
    <TD align=left width="2%"
bgColor=#e6efff height="15">%&nbsp;&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; &nbsp; &nbsp; &nbsp;Other income </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">11 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">0.09% </TD>
    <TD align=left width="2%" height="15" style="font-family: Times New Roman; font-size: 10pt" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">52 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">0.6 </TD>
    <TD align=left width="2%" height="15" >%&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="1">&nbsp; &nbsp; &nbsp; &nbsp;Interest
      expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="1">&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff height="1">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="1">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="1">&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff height="1">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="1" style="font-family: Times New Roman; font-size: 10pt">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="1">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="1">(23</TD>
    <TD align=left width="2%"  bgColor=#e6efff height="1">) </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="1">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff height="1">(0.2</TD>
    <TD align=left width="2%"  bgColor=#e6efff height="1">)% </TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Exchange loss </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">(20</TD>
    <TD align=left width="2%" height="15" >) </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" style="font-family: Times New Roman; font-size: 10pt" height="15">
    (0.16% </TD>
    <TD align=left width="2%" style="font-family: Times New Roman; font-size: 10pt" height="15" >
    <font face="Times New Roman">)</font></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="10%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 height="24">

  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" height="15">&nbsp; &nbsp; &nbsp; &nbsp;Merger costs </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" height="15" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" height="15">(2,068</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" height="15" >) </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" height="15" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" height="15">(15.9% </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" height="15" style="font-family: Times New Roman; font-size: 10pt" >
    <font face="Times New Roman">)</font></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" height="15" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" height="15">&#151; </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" height="15" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" height="15" >&nbsp;</TD>
    <TD align=left width="10%" bgcolor="#E6EFFF" height="15">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" height="15" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Income before income tax </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">4,694 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">36.1% </TD>
    <TD align=left width="2%" height="15" style="font-family: Times New Roman; font-size: 10pt" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">5,257 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">57.2</TD>
    <TD align=left width="2%" height="15" >%&nbsp;&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" height="1">Provision for income tax </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" height="1" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" height="1">(975</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" height="1" >) </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" height="1" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" height="1">(7.5% </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" height="1" style="font-family: Times New Roman; font-size: 10pt" >
    <font face="Times New Roman">)</font></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" height="1" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" height="1">(85</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" height="1" >) </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" height="1" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" height="1">(0.9</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" height="1" >)% </TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Net income </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">3,719 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">28.6% </TD>
    <TD align=left width="2%" height="15" style="font-family: Times New Roman; font-size: 10pt" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">5,172 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="10%" height="15">56.3 </TD>
    <TD align=left width="2%" height="15" >%&nbsp;</TD></TR></TABLE>
<P align=center>28 </P>
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<P align=justify><I>Revenues</I>. Revenues increased approximately $3.8 million,
or 41.3%, to approximately $13.0 million in fiscal year 2008 from approximately
$9.2 million for 2007. This increase was mainly attributable to the increase of
our sales and output volume of our product, Chinese Golden Grass. At the same
time, the Company introduced its small package Chinese Golden Grass which has a
higher unit selling price in the second half of 2008.</P>
<P align=justify><I>Cost of Goods Sold</I>. Our cost of goods sold increased
approximately $1.1million, or 31.4%, to approximately $4.6 million in 2008 from
approximately $3.5 million in 2007. This increase was mainly due to the increase
of our sales. As a percentage of revenues, the cost of goods sold decreased to
35.5% in 2008 from 38.2 % in 2007. Such increase of gross margin was mainly
attributable to the increase of sales volume of small package products with
higher unit selling prices. Because the gross margin of small package products
is higher than big package products, the percentage of cost of sales to total
sales revenue decreased in 2008.</P>
<P align=justify><I>Gross Profit</I>. Our gross profit increased approximately
$2.7 million, or 47.4%, to approximately $8.4 million in 2008 from approximately
$5.7 million in 2007. Gross profit as a percentage of revenues was 64.5% in
2008, an increase of 2.8% from 61.8% in 2007. Such percentage increase was
mainly due to the fact that we increased the sales of our small package Chinese
Golden Grass products with higher unit selling prices.</P>
<P align=justify><I>Selling Expenses</I>. <I>S</I>elling expenses increased
approximately $0.12 million, or171%, to $0.19 million in 2008 from $0.07 million
in 2007. As a percentage of revenues, selling expenses increased to 1.5% in 2008
from 0.8% in 2007. The dollar increase of selling expenses was mainly
attributable to the increase of salaries and travelling expense of our sales
representatives and more marketing activities to promote our products.</P>
<P align=justify><I>General and Administrative Expenses</I>. General and
administrative expenses increased approximately $1 million, or 250%, to
approximately $1.4 million in 2008 from approximately $0.4 million in 2007. As a
percentage of revenues, general and administrative expenses increased to 10.9%
in 2008 from 4.7% in 2007. We increased our general and administrative expenses
as we incurred more professional fees during the going public process in
2008.</P>
<P align=justify><I>Merger Cost.</I> We incurred expenses related to our merger
during 2008 of approximately $2.07 million. In accordance with the requirements
of and guidance in Staff Accounting Bulletin No. 107 and SFAS 123(R), we charged
$1,693,326 to merger costs based on the grant-date fair value of the 91,088
shares of Series A Preferred Stock transferred by our majority shareholder to
our consultants in the merger. On December 23, 2008, the Company also entered
into a subscription agreement with Tan Zhen Investment Limited, pursuant to
which the Company issued and sold to such investor 20,168 shares of our Series A
Preferred Stock for $375,000, or $18.59 per share, which was expended on payment
of merger costs.</P>
<P align=justify><I>Income Before Income Tax</I>. Income before income tax
decreased approximately $0.6 million, or 11.3%, to approximately $4.7 million in
2008 from approximately $5.3 million in 2007. As a percentage of revenues,
income before income tax decreased to 36.1% in 2008 from 57.2% in 2007. The
decrease of income before income tax is mainly attributable to the increase of
the general and administrative expenses, including legal and audit fees during
the going public process. In addition, under US GAAP, the amount of preferred
stock that was issued to certain service providers as compensation for the
restructuring and related counseling was recorded in the profit and loss
adjustment.</P>
<P align=justify><I>Income Tax</I>. Income tax increased approximately $0.91
million to approximately $1 million in 2008 from approximately $0.09 million in
2007. We paid more tax in 2008 because of one of our subsidiaries, Daqing
Shuaiyi, was subject to a 12.5% income tax rate in 2008, while in 2007 it was
fully exempt from 33% income tax rate.</P>
<P align=justify><I>Net Income</I>. Net income decreased approximately $1.5
million, or 28.9%, to $3.7 million in 2008 from approximately $5.2 million in
2007, as a result of the factors described above.</P>
<P align=center>29 </P>
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<P align=justify><B><I>Business Segment Information </I></B></P>
<P align=justify>Our business operations can be categorized into two segments
based on the type of products we manufacture and sell, specifically (i) Chinese
Golden Grass, and (ii) other agricultural products.</P>
<P align=justify>For the nine months ended September 30, 2009, our sales revenue
from our Chinese Golden Grass was approximately $8.70 million, and our sales
revenue from our other agricultural products was approximately $2.85
million.</P>
<P align=justify>We grow and sell our Chinese Golden Grass through our
subsidiary, Daqing Shuaiyi. Our subsidiary, Harbin Shuaiyi is mainly engaged in
the business of selling our other agricultural products. </P>
<P align=justify>Additional information regarding our products can be found at
Note 16 in our unaudited consolidated financial statements for the nine-month
period ended September 30, 2009 contained in this prospectus.</P>
<P align=justify><B><I>Liquidity and Capital Resources</I></B><B> </B></P>
<P align=justify>As of September 30, 2009, we had cash and cash equivalents
(excluding restricted cash) of approximately $15.4 million. The following table
provides detailed information about our net cash flow for all financial
statement periods presented in this prospectus. </P>
<P align=center><B>Cash Flow</B> <BR>(All amounts in thousands of U.S.
dollars)<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><B>Nine Months Ended September 30,</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><B>Year Ended December 31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>2009</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>2008</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>2008</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>2007</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net cash provided by operating activities
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$ </TD>
    <TD align=right width="10%" bgColor=#e6efff>7,086 </TD>
    <TD align=left width="2%"  bgColor=#e6efff></TD>
    <TD align=left width="1%"  bgColor=#e6efff>$ </TD>
    <TD align=right width="10%" bgColor=#e6efff>4,592 </TD>
    <TD align=left width="2%"  bgColor=#e6efff></TD>
    <TD align=left width="1%"  bgColor=#e6efff>$ </TD>
    <TD align=right width="10%" bgColor=#e6efff>6,467 </TD>
    <TD align=left width="2%"  bgColor=#e6efff></TD>
    <TD align=left width="1%"  bgColor=#e6efff>$ </TD>
    <TD align=right width="10%" bgColor=#e6efff>4,503 </TD>
    <TD align=left width="2%"  bgColor=#e6efff></TD></TR>
  <TR vAlign=top>
    <TD align=left>Net cash provided by (used in) investing activities </TD>
    <TD align=left width="1%" ></TD>
    <TD align=right width="10%">(928 </TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" ></TD>
    <TD align=right width="10%">(891 </TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" ></TD>
    <TD align=right width="10%">744 </TD>
    <TD align=left width="2%" ></TD>
    <TD align=left width="1%" ></TD>
    <TD align=right width="10%">(9,327 </TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net cash provided by (used in) financing activities
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff></TD>
    <TD align=right width="10%" bgColor=#e6efff>62 </TD>
    <TD align=left width="2%"  bgColor=#e6efff></TD>
    <TD align=left width="1%"  bgColor=#e6efff></TD>
    <TD align=right width="10%" bgColor=#e6efff>6.5 </TD>
    <TD align=left width="2%"  bgColor=#e6efff></TD>
    <TD align=left width="1%"  bgColor=#e6efff></TD>
    <TD align=right width="10%" bgColor=#e6efff>(438 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff></TD>
    <TD align=right width="10%" bgColor=#e6efff>(1,015 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Net cash flow </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">6,236 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">3,955 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">7,050 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(5,170</TD>
    <TD align=left width="2%" >) </TD></TR></TABLE>
<P align=justify><U>Operating Activities</U></P>
<P align=justify>Net cash provided by operating activities was approximately
$7.09 million for the nine-month period ended September 30, 2009, which is an
increase of approximately $2.50 million from approximately $4.59 million net
cash provided by operating activities for the same period of 2008. The increase
of the cash provided by operating activities was mainly attributable to the
increases in our net profit and the decrease in our account receivables. </P>
<P align=justify>Net cash provided by operating activities was approximately
$6.5 million in fiscal year ended December 31, 2008, which is an increase of
approximately $2.0 million from approximately $4.5 million net cash provided by
operating activities in fiscal year ended December 31, 2007. Such increase of
net cash provided by operating activities was primarily attributable to the fact
that our depreciation, amortization and adjustment of merger cost were not
reflected in the cash outflow.</P>
<P align=justify><U>Investing Activities</U> </P>
<P align=justify>Our primary uses of cash for investing activities are payments
for the acquisition of property, plant and equipment.</P>
<P align=justify>Net cash used in investing activities for the nine-month period
ended September 30, 2009 was approximately $0.93 million, which is an increase
of approximately $0.04 million from net cash used in investing activities of
approximately $0.89 million for the same period of 2008. The increase of the
cash used in investing activities was mainly due to the payment to the original
shareholders of Heilongjiang Shuaiyi for the transfer of their equity interests
in Heilongjiang Shuaiyi to New Resources in connection with the Company&#146;s
restructuring.</P>
<P align=center>30 </P>
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<P align=justify>Net cash provided by investing activities was approximately
$0.74 million in fiscal year 2008, an increase of approximately $10.06 million
from approximately $9.32 million net cash used in investing activities in fiscal
year 2007. Such increase of net cash provided by investing activities was
primarily attributable to the sales of our idle fixed assets in an amount of
$1,151,411. </P>
<P align=justify><U>Financing Activities</U> </P>
<P align=justify>Net cash provided by financing activities for the nine-month
period ended September 30, 2009 was approximately $0.06 million, which is an
increase of approximately $0.05 million from approximately $0.01 million net
cash provided by financing activities for the same period of 2008. During the
nine months ended September 30, 2009, we borrowed approximately $0.06 million
from our Chairman, Lianyun Han as working capital of the Company. </P>
<P align=justify>Net cash used in financing activities for the fiscal year ended
December 31, 2008 was approximately $0.44 million as compared to approximately
$1.02 million used in financing activities in fiscal year 2007. The decrease of
the net cash used in financing activities was mainly attributable to the
proceeds of $427,449 we received from the issuance of preferred stock to certain
investors on December 23, 2008. </P>
<P align=justify>On December 17, 2009, we completed a private placement
transaction and sold 1,000,000 shares of our common stock to certain accredited
investors at $2.50 per share for a total of $2.5 million pursuant to a
securities purchase agreement, or the Securities Purchase Agreement. In
addition, we issued to each of the investors two warrants to purchase in
aggregate 500,000 shares of our common stock, including a Series A warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B warrant having a term of three years with an exercise price of $4.00
per share, both of which are subject to the usual adjustments for certain
corporate events. </P>
<P align=justify>We believe that our cash on hand, cash flow from operations as
well as the proceeds we received from the recent private placement transaction
will meet our expected capital expenditure and working capital for the next 12
months. However, we may in the future require additional cash resources due to
changed business conditions, implementation of our strategy to expand our
production capacity or other investments or acquisitions we may decide to
pursue. If our own financial resources are insufficient to satisfy our capital
requirements, we may seek to sell additional equity or debt securities or obtain
additional credit facilities. The sale of additional equity securities could
result in dilution to our stockholders. The incurrence of indebtedness would
result in increased debt service obligations and could require us to agree to
operating and financial covenants that would restrict our operations. Financing
may not be available in amounts or on terms acceptable to us, if at all. Any
failure by us to raise additional funds on terms favorable to us, or at all,
could limit our ability to expand our business operations and could harm our
overall business prospects.</P>
<P align=justify><B><I>Effects of Inflation</I></B> </P>
<P align=justify>Inflation and changing prices have not had a material effect on
our business and we do not expect that inflation or changing prices will
materially affect our business in the foreseeable future. However, our
management will closely monitor the price change and continually maintain
effective cost control in operations.</P>
<P align=justify><B><I>Off Balance Sheet Arrangements</I></B> </P>
<P align=justify>We do not have any off balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity or capital expenditures or capital resources that is
material to an investor in our securities.</P>
<P align=justify><B>Critical Accounting Policies </B></P>
<P align=justify><B><I>Principle of consolidation </I></B></P>
<P align=justify>These condensed consolidated financial statements include the
financial statements of Nutrastar International Inc. and its subsidiaries. All
significant inter-company balances or transactions have been eliminated on
consolidation. </P>
<P align=justify><B><I>Basis of preparation</I></B> </P>
<P align=center>31 </P>
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<P align=justify>These interim condensed consolidated financial statements are
unaudited. In the opinion of management, all adjustments and disclosures
necessary for a fair presentation of these interim condensed consolidated
financial statements have been included. The results reported in the condensed
consolidated financial statements for any interim periods are not necessarily
indicative of the results that may be reported for the entire year. The
accompanying condensed consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission and do not include all information and footnotes necessary for a
complete presentation of financial statements in conformity with accounting
principles generally accepted in the United States. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes included in the
Company&#146;s Annual Report on Form 10-K for the year ended December 31, 2008. </P>
<P align=justify><B><I>Use of estimates</I></B> </P>
<P align=justify>The preparation of these condensed consolidated financial
statements in conformity with generally accepted accounting principles requires
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the related disclosure of contingent assets and
liabilities at the date of these condensed consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period. The
Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances.
Accordingly, actual results may differ from these estimates under different
assumptions or conditions. </P>
<P align=justify><B><I>Foreign currency</I></B> </P>
<P align=justify>The Company uses United States dollars (&#147;US Dollar&#148; or &#147;US$&#148; or
&#147;$&#148;) for financial reporting purposes. However, the Company maintains the books
and records in its functional currency, Chinese Renminbi (&#147;RMB&#148;), being the
primary currency of the economic environment in which its operations are
conducted. In general, the Company translates its assets and liabilities into
U.S. dollars using the applicable exchange rates prevailing at the balance sheet
date, and the statement of income is translated at average exchange rates during
the reporting period. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the Company&#146;s financial statements
are recorded as accumulated other comprehensive income. </P>
<P align=justify>The exchange rates used to translate amounts in RMB into U.S.
Dollars for the purposes of preparing the consolidated financial statements were
as follows:- </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%"><U>As of September</U> </TD>
    <TD align=center width="15%"><U>As of December</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%"><U>30, 2009</U> </TD>
    <TD align=center width="15%"><U>31, 2008</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Balance sheet items, except for equity
      accounts </TD>
    <TD align=center width="15%" bgColor=#e6efff>US$1=RMB6.8290</TD>
    <TD align=center width="15%"  bgColor=#e6efff>US$1=RMB6.8346
    </TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="30%" colSpan=2><U>Three months ended September
      30,</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%"><U>2009</U> </TD>
    <TD align=center width="15%"><U>2008</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Items in the statements of income and cash
      flows </TD>
    <TD align=center width="15%" bgColor=#e6efff>US$1=RMB 6.8310 </TD>
    <TD align=center width="15%" bgColor=#e6efff>US$1=RMB 6.8390
</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="30%" colSpan=2><U>Nine months ended September
      30,</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%"><U>2009</U> </TD>
    <TD align=center width="15%"><U>2008</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Items in the statements of income and cash
      flows </TD>
    <TD align=center width="15%" bgColor=#e6efff>US$1=RMB6.8321</TD>
    <TD align=center width="15%"
    bgColor=#e6efff>US$1=RMB6.9921&nbsp;</TD></TR></TABLE>
<P align=justify><B><I>Research and development costs </I></B></P>
<P align=justify>Research and development costs are expensed to operations as
incurred. Research and development costs were $26,923 and $21,590 for the nine
months ended September 30, 2009 and 2008, respectively. Research and development
costs were $8,783 and $7,896 for the three months ended September 30, 2009 and
2008, respectively. </P>
<P align=justify><B><I>Advertising costs </I></B></P>
<P align=justify>The Company expenses all advertising costs as incurred.
Advertising costs charged to selling expenses were $1,098 and $83 for the nine
months ended September 30, 2009 and 2008, respectively. There were no any
advertising costs incurred for the three months ended September 30, 2009 and
2008 </P>
<P align=center>32 </P>
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<P align=justify><B><I>Shipping and handling costs </I></B></P>
<P align=justify>Substantially all costs of shipping and handling of products to
customers are included in selling expenses. Shipping and handling costs for the
nine months ended September 30, 2009 and 2008 were nil and $271, respectively.
There were no any shipping and handling costs incurred for the three months
ended September 30, 2009 and 2008 </P>
<P align=justify><B><I>Earnings per share </I></B></P>
<P align=justify>All per share data including earnings per share has been
retroactively restated to reflect the reverse acquisition on December 23, 2008
whereby the 689,390 shares of preferred stock issued by the Company (the nominal
acquirer) to the shareholder of New Resources (the nominal acquiree) are deemed
to be the number of shares outstanding for the period prior to the reverse
acquisition. For the period after the reverse acquisition, the number of shares
considered to be outstanding is the actual number of shares outstanding during
that period. </P>
<P align=justify>The Company effected a 1-for-114.59 Reverse Split of its common
stock and all outstanding shares of Series A Preferred Stock were automatically
converted to common stock. The weighted average number of shares for the
purposes of calculating the earnings per share has been retroactively adjusted
as if the Reverse Split took effect as of the beginning of the earliest period
presented. As holders of Series A Preferred Stock were entitled to vote with the
holders of common stock on all matters on a an as-converted to common stock
basis, basic and diluted earnings per share have been calculated and presented
on the basis that all shares of the Company&#146;s common stock and Series A
Preferred Stock are considered a single class and on an as-converted to common
stock basis before the Reverse Split. </P>
<P align=justify><B><I>Fair value measurements </I></B></P>
<P align=justify>ASC Topic 820, <I>Fair Value Measurement and Disclosures</I>,
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair
value hierarchy which requires classification based on observable and
unobservable inputs when measuring fair value. There are three levels of inputs
that may be used to measure fair value: </P>
<P align=justify><I>Level 1 </I>- Quoted prices in active markets for identical
assets or liabilities.</P>
<P align=justify><I>Level 2 </I>- Observable inputs other than Level 1 prices
such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the
assets or liabilities.</P>
<P align=justify><I>Level 3 </I>- Unobservable inputs that are supported by
little or no market activity and that are significant to the fair value of the
assets or liabilities. </P>
<P align=justify>The carrying values of cash and cash equivalents, trade
receivables and payables, and short-term debts approximate their fair values due
to their short maturities. </P>
<P align=justify>There were no assets and liabilities measured at fair value on
a nonrecurring basis as of September 30, 2009. </P>
<P align=justify><B><I>New Accounting Pronouncements</I></B> </P>
<P align=justify><U>New accounting pronouncement adopted</U> </P>
<P align=justify>In June 2009, the FASB established the FASB Accounting
Standards Codification<SUP>TM</SUP> (ASC) as the single source of authoritative
U.S generally accepted accounting principles (GAAP) recognized by the FASB to be
applied to nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission (&#147;SEC&#148;) under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. The ASC
superseded all previously existing non-SEC accounting and reporting standards,
and any prior sources of U.S. GAAP not included in the ASC or grandfathered are
not authoritative. New accounting standards issued subsequent to June 30, 2009
are communicated by the FASB through Accounting Standards Updates (ASUs). The
ASC did not change current U.S. GAAP but changes the approach by referencing
authoritative literature by topic (each a &#147;Topic&#148;) rather than by type of
standard. The ASC has been effective for the Company effective July 1, 2009.
Adoption of the ASC did not have a material impact on the Company&#146;s Condensed
Consolidated Financial Statements, but references in the Company&#146;s Notes to Consolidated Financial Statements to former FASB
positions, statements, interpretations, opinions, bulletins or other
pronouncements are now presented as references to the corresponding Topic in the
ASC. </P>
<P align=center>33</P>
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<P align=justify>Effective January 1, 2009, the first day of fiscal 2009, the
Company adopted FASB ASC 350-30 and ASC 275-10-50 (formerly FSP FAS 142-3,
&#147;Determination of the Useful Life of Intangible Assets&#148;), which amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142 ("SFAS 142"), &#147;Goodwill and Other Intangible Assets.&#148; The Company will
apply ASC 350-30 and ASC 275-10-50 prospectively to intangible assets acquired
subsequent to the adoption date. The adoption of these revised provisions had no
impact on the Company&#146;s Condensed Consolidated Financial Statements. </P>
<P align=justify>Effective January 1, 2009, the Company adopted FASB ASC
815-10-65 (formerly SFAS 161, &#147;Disclosures about Derivative Instruments and
Hedging Activities&#148;), which amends and expands previously existing guidance on
derivative instruments to require tabular disclosure of the fair value of
derivative instruments and their gains and losses., This ASC also requires
disclosure regarding the credit-risk related contingent features in derivative
agreements, counterparty credit risk, and strategies and objectives for using
derivative instruments. The adoption of this ASC did not have a material impact
on the Company&#146;s Condensed Consolidated Financial Statements. </P>
<P align=justify>During 2008, the Company adopted FASB ASC 820-10 (formerly FSP
FAS 157-2, "Effective Date of FASB Statement 157"), which deferred the
provisions of previously issued fair value guidance for nonfinancial assets and
liabilities to the first fiscal period beginning after November 15, 2008.
Deferred nonfinancial assets and liabilities include items such as goodwill and
other nonamortizable intangibles. Effective January 1, 2009, the Company adopted
the fair value guidance for nonfinancial assets and liabilities. The adoption of
FASB ASC 820-10 did not have a material impact on the Company&#146;s Condensed
Consolidated Financial Statements. </P>
<P align=justify>Effective January 1, 2009, the Company adopted FASB ASC
810-10-65 (formerly SFAS 160, "Noncontrolling Interests in Consolidated
Financial Statements &#151; an amendment of ARB No. 51"), which amends previously
issued guidance to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which
is sometimes referred to as minority interest, is an ownership interest in the
consolidated entity that should be reported as equity. Among other requirements,
this Statement requires that the consolidated net income attributable to the
parent and the noncontrolling interest be clearly identified and presented on
the face of the consolidated income statement. The adoption of the provisions in
this ASC did not have a material impact on the Company&#146;s Condensed Consolidated
Financial Statements. </P>
<P align=justify>Effective January 1, 2009, the Company adopted FASB ASC 805-10,
(formerly SFAS 141R, "Business Combinations"), which establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in an acquiree and the goodwill acquired. In addition,
the provisions in this ASC require that any additional reversal of deferred tax
asset valuation allowance established in connection with fresh start reporting
on January 7, 1998 be recorded as a component of income tax expense rather than
as a reduction to the goodwill established in connection with the fresh start
reporting. The Company will apply ASC 805-10 to any business combinations
subsequent to adoption. </P>
<P align=justify>Effective January 1, 2009, the Company adopted FASB ASC 805-20
(formerly FSP FAS 141R-1, "Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies"), which amends
ASC 805-10 to require that an acquirer recognize at fair value, at the
acquisition date, an asset acquired or a liability assumed in a business
combination that arises from a contingency if the acquisition-date fair value of
that asset or liability can be determined during the measurement period. If the
acquisition-date fair value of such an asset acquired or liability assumed
cannot be determined, the acquirer should apply the provisions of ASC Topic 450,
<I>Contingences</I>, to determine whether the contingency should be recognized
at the acquisition date or after such date. The adoption of ASC 805-20 did not
have a material impact on the Company&#146;s Condensed Consolidated Financial
Statements. </P>
<P align=justify>Effective July 1, 2009, the Company adopted FASB ASC 825-10-65
(formerly FASB Staff Position (&#147;FSP&#148;) No. FAS 107-1 and Accounting Principles
Board 28-1, "Interim Disclosures about Fair Value of Financial Instruments"),
which amends previous guidance to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. The adoption of FASB ASC 825-10-65
did not have a material impact on the Company&#146;s Condensed Consolidated Financial
Statements. </P>
<P align=center>34</P>
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<P align=justify>Effective July 1, 2009, the Company adopted FASB ASC 320-10-65
(formerly FSP FAS 115-2 and FAS 124-2, "Recognition and Presentation of
Other-Than-Temporary Impairments"). Under ASC 320-10-65, an other-than-temporary
impairment must be recognized if the Company has the intent to sell the debt
security or the Company is more likely than not will be required to sell the
debt security before its anticipated recovery. In addition, ASC 320-10-65
requires impairments related to credit loss, which is the difference between the
present value of the cash flows expected to be collected and the amortized cost
basis for each security, to be recognized in earnings while impairments related
to all other factors to be recognized in other comprehensive income. The
adoption of ASC 320-10-65 did not have a material impact on the Company&#146;s
Condensed Consolidated Financial Statements. </P>
<P align=justify>Effective July 1, 2009, the Company adopted FASB ASC 820-10-65
(formerly FSP FAS 157-4, "Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly"), which provides guidance on how to determine
the fair value of assets and liabilities when the volume and level of activity
for the asset or liability has significantly decreased when compared with normal
market activity for the asset or liability as well as guidance on identifying
circumstances that indicate a transaction is not orderly. The adoption of ASC
820-10-65 did not have a material impact on the Company&#146;s Condensed Consolidated
Financial Statements. </P>
<P align=justify>Effective July 1, 2009, the Company adopted FASB ASC 855-10
(formerly SFAS 165, &#147;Subsequent Events&#148;), which establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date,
but before financial statements are issued or are available to be issued.
Adoption of ASC 855-10 did not have a material impact on the Company&#146;s Condensed
Consolidated Financial Statements. </P>
<P align=justify><U>New accounting pronouncement to be adopted</U> </P>
<P align=justify>In December 2008, the FASB issued ASC 715, <I>Compensation &#150;
Retirement Benefits </I>(formerly FASB FSP FAS 132(R)-1, &#147;Employers&#146; Disclosures
about Postretirement Benefit Plan Assets&#148;), which expands the disclosure
requirements about plan assets for defined benefit pension plans and
postretirement plans. The Company is required to adopt these disclosure
requirements in the fourth quarter of 2009. It is expected the adoption of these
disclosure requirements will have no material effect on the Company&#146;s
Consolidated Financial Statements. </P>
<P align=justify>In June 2009, the FASB issued SFAS No. 166, &#147;Accounting for
Transfers of Financial Assets &#150; an amendment of FASB Statement No. 140,&#148; (not
yet reflected in FASB ASC). SFAS No. 166 limits the circumstances in which a
financial asset should be derecognized when the transferor has not transferred
the entire financial asset by taking into consideration the transferor&#146;s
continuing involvement. The standard requires that a transferor recognize and
initially measure at fair value all assets obtained (including a transferor&#146;s
beneficial interest) and liabilities incurred as a result of a transfer of
financial assets accounted for as a sale. The concept of a qualifying
special-purpose entity is removed from SFAS No. 140, &#147;Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities,&#148; along
with the exception from applying FIN 46(R), &#147;Consolidation of Variable Interest
Entities.&#148; The standard is effective for the first annual reporting period that
begins after November 15, 2009 (i.e. the Company&#146;s fiscal year beginning January
1, 2010), for interim periods within the first annual reporting period, and for
interim and annual reporting periods thereafter. Earlier application is
prohibited. It is expected the adoption of this Statement will have no material
effect on the Company&#146;s Consolidated Financial Statements. </P>
<P align=justify>In June 2009, the FASB issued SFAS No. 167, &#147;Amendments to FASB
Interpretation No. 46(R),&#148; (not yet reflected in FASB ASC). The standard amends
FIN No. 46(R) to require a company to analyze whether its interest in a variable
interest entity (&#147;VIE&#148;) gives it a controlling financial interest. A company
must assess whether it has an implicit financial responsibility to ensure that
the VIE operates as designed when determining whether it has the power to direct
the activities of the VIE that significantly impact its economic performance.
Ongoing reassessments of whether a company is the primary beneficiary are also
required by the standard. SFAS No. 167 amends the criteria to qualify as a
primary beneficiary as well as how to determine the existence of a VIE. The
standard also eliminates certain exceptions that were available under FIN No.
46(R). This Statement will be effective as of the beginning of each reporting
entity&#146;s first annual reporting period that begins after November 15, 2009 (i.e.
the Company&#146;s fiscal year beginning January 1, 2010), for interim periods within
that first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. Comparative disclosures will be
required for periods after the effective date. As such, the Company will adopt
this Statement for interim and annual periods ending after January 1, 2010. It
is expected the adoption of this Statement will have no material effect on the
Company&#146;s Consolidated Financial Statements. </P>
<P align=center>35 </P>
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<P align=justify>In August, 2009, the FASB issued ASC Update No. 2009-05
(&#147;Update 2009-05&#148;) to provide guidance on measuring the fair value of
liabilities under FASB ASC 820 (formerly SFAS 157, "Fair Value Measurements").
The Company is required to adopt Update 2009-05 in the fourth quarter of 2009.
It is expected the adoption of this Update will have no material effect on the
Company&#146;s Consolidated Financial Statements. </P>
<P align=justify>In October 2009, the FASB concurrently issued the following ASC
Updates: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>ASU No. 2009-14 - <I>Software (Topic 985): Certain Revenue Arrangements
  That Include Software Elements</I><BR>(formerly EITF Issue No. 09-3) <I>.
  </I>This standard removes tangible products from the scope of software revenue
  recognition guidance and also provides guidance on determining whether
  software deliverables in an arrangement that includes a tangible product, such
  as embedded software, are within the scope of the software revenue guidance.
  <BR>
  <LI>ASU No. 2009-13 - <I>Revenue Recognition (Topic 605): Multiple-Deliverable
  Revenue Arrangements</I><BR>(formerly EITF Issue No. 08-1). This standard
  modifies the revenue recognition guidance for arrangements that involve the
  delivery of multiple elements, such as product, software, services or support,
  to a customer at different times as part of a single revenue generating
  transaction. This standard provides principles and application guidance to
  determine whether multiple deliverables exist, how the individual deliverables
  should be separated and how to allocate the revenue in the arrangement among
  those separate deliverables. The standard also expands the disclosure
  requirements for multiple deliverable revenue arrangements. </LI></UL>
<P align=justify>These Accounting Standards Updates should be applied on a
prospective basis for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010, with earlier application
permitted. Alternatively, an entity can elect to adopt these standards on a
retrospective basis, but both these standards must be adopted in the same period
using the same transition method. The Company expects to apply this standard on
a prospective basis for revenue arrangements entered into or materially modified
beginning January 1, 2011. The Company is currently evaluating the potential
impact these standards may have on its financial position and results of
operations. </P>
<P align=justify>Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company&#146;s
Condensed Consolidated Financial Statements upon adoption. </P>
<P align=center><B>HISTORY AND CORPORATE STRUCTURE</B></P>
<P align=justify><B>General</B></P>
<P align=justify>We were originally incorporated in the State of Nevada on
December 22, 2002. On October 15, 2003, we acquired all the outstanding common
stock of YzApp Solutions Inc., a company under common control. We sold our
ownership in YzApp Solutions Inc. on December 3, 2008. Following incorporation,
we engaged in the business of developing software which allowed us to act as an
application service provider acting as a conduit between retailers and financial
institutions. Because this business was not successful, we were focused on the
identification of suitable businesses with which to enter into a business
opportunity or business combination until December 23, 2008, when we completed
our reverse acquisition of New Resources. As a result of our reverse acquisition
of New Resources, we are no longer a shell company and active business
operations were revived.</P>
<P align=justify>On May 19, 2009, we filed amended and restated articles of
incorporation with the Nevada Secretary of State to amend our articles of
incorporation to, among other things, (1) change our name from &#147;YzApp
International Inc.&#148; to &#147;Shuaiyi International New Resources Development Inc.,&#148;
(2) increase the total number of shares of common stock that we have the
authority to issue from 50,000,000 to 190,000,000 shares and (3) effect a
1-for-114.59 reverse split of our outstanding common stock. </P>
<P align=justify>On January 11, 2010, we changed our name to Nutrastar
International Inc. to more accurately reflect our marketing and branding
strategy and our products. Our common stock has been quoted on
the OTC Bulletin Board under the new symbol NUIN.OB since January 20, 2010. </P>
<P align=center>36 </P>
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<P align=justify><B>Background and History of New Resources and Heilongjiang
Shuaiyi</B></P>
<P align=justify>New Resources is a holding company, which was incorporated in
the BVI under the BVI Business Company Act on March 13, 2008. New Resources was
wholly-owned by New Zealand WAYNE's Investment Holdings Co., Ltd., or the
Shareholder, a BVI company, before the Company acquired New Resources on
December 23, 2008. </P>
<P align=justify>Heilongjiang Shuaiyi was established on July 11, 2006 under the
laws of the PRC. Heilongjiang Shuaiyi has two wholly-owned subsidiaries, Daqing
Shuaiyi and Harbin Shuaiyi. On July 28, 2008, pursuant to a restructuring plan
intended to ensure compliance with regulatory requirements of the PRC, the nine
original shareholders of Heilongjiang Shuaiyi, or the Founders, including the
Company&#146;s chairperson and chief executive officer, Lianyun Han, entered into an
equity transfer agreement, or the Equity Transfer Agreement with New Resources,
pursuant to which the Founders transferred all of their equity interests in
Heilongjiang Shuaiyi to New Resources for a purchase price of RMB 60 million
(approximately $8.8 million). As a result, New Resources became the 100% owner
of Heilongjiang Shuaiyi and, indirectly, Daqing Shuaiyi and Harbin Shuaiyi. On
November 24, 2008, Heilongjiang Shuaiyi obtained the Certificate of Approval for
Establishment of Enterprises of Foreign Investment issued by Heilongjiang
Provincial Government and a new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008.</P>
<P align=justify>On September 12, 2008, the Shareholder entered into separate
Earn-In Agreements with the Founders of Heilongjiang Shuaiyi, which entitle the
Founders to acquire a majority interest in the Shareholder upon the satisfaction
of the conditions set forth in the Earn-In Agreements. Pursuant to the Earn-In
Agreements, each Founder has an option to purchase shares of the Shareholder&#146;s
ordinary shares at a purchase price of $0.01 per share (the par value of the
Shareholder&#146;s ordinary shares), <I>provided </I>that the aggregate price with
respect to the shares eligible to be purchased relating to the satisfaction of
condition (4) below is the sum of $0.01 per share, multiplied the number of such
shares, plus $1,000, upon the satisfaction of each of the following conditions:
(1) six months have expired since the date of the Share Exchange Agreement,
<I>provided </I>that on or before that date, the Founder and Heilongjiang
Shuaiyi have entered into a binding employment agreement and the Founder is
employed by Heilongjiang Shuaiyi pursuant to that agreement on such date; (2)
the SEC has declared a registration statement filed by the Company under the
Securities Act effective, or investors who purchased common stock from the
Company pursuant to a securities purchase agreement being able to sell their
common stock under Rule 144; (3) Heilongjiang Shuaiyi and its subsidiaries have
achieved not less than $1,560,000 in after-tax net income, as determined under
United States generally accepted accounting principals, or US GAAP, for the six
months ended June 2009; and (4) Heilongjiang Shuaiyi has achieved not less than
$3,900,000 in pre-tax profits, as determined under US GAAP for the fiscal year
ending 2009. Notwithstanding the foregoing, for purposes of determining whether
or not the financial thresholds described above have been achieved, the purchase
of the shares by the Founder or any other person designated by the Founder shall
not be deemed to be an expense, charge, or other deduction from revenues of the
Company even though US GAAP may require contrary treatment. On February 12,
2009, each Founder and the Shareholder entered into an amendment to the Earn-In
Agreements, or the First Amendment, to amend the definition of the first
condition. As a result, pursuant to the First Amendment, in order to satisfy the
first condition for each Founder, only Ms. Lianyun Han needs to enter into a
binding employment agreement with Heilongjiang Shuaiyi within six months after
the share exchange transaction dated December 23, 2008.</P>
<P align=justify>Each Founder may purchase 25% of the total number of shares
that he or she is eligible to purchase under his or her Earn-In Agreement, as
amended, upon the satisfaction of each condition described above. The aggregate
number of shares eligible for purchase by all of the Founders under the Earn-In
Agreements is 100,000. Therefore, upon purchase of the above shares by the
Founders, the total number of outstanding shares of the Shareholder will be
100,001 and the Founders will be the controlling shareholders of the
Shareholder.</P>
<P align=justify>Pursuant to the Earn-in Agreement, as amended, the Shareholder
further agrees, among others, that throughout the exercise period of the Earn-in
Agreement, without the prior written approval of the Founders:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>it will not increase the number of authorized shares of the Shareholder&#146;s
  common stock, or any increased authorized shares will be deemed as part of the
  option shares that the Founders are entitled to acquire under the Earn-In
  Agreements; <BR>
  <LI>(ii) keeps available the services of current officers and employees of the
  Shareholder and Heilongjiang Shuaiyi; and </LI>
  <LI>(iii) New Resources and Heilongjiang Shuaiyi will not declare or pay any
  dividend or make any other distribution, nor do they repurchase, redeem or
  otherwise reacquire any equity of shares of capital stock or other securities.
  </LI></UL>
<P align=center>37 </P>
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<P align=justify>The sole purpose of the Earn-In Agreements is to enable
Founders to reacquire ultimate controlling legal ownership of Heilongjiang
Shuaiyi in compliance with regulatory requirements of China.</P>
<P align=justify>On December 8, 2008, Heilongjiang Shuaiyi entered into separate
loan agreement and promissory notes, or the Notes, with the Founders, pursuant
to which Heilongjiang Shuaiyi borrowed an aggregate of RMB 60 million
(approximately $8.8 million) from the Founders, which amount is exactly equal to
the proceeds that they are entitled to receive for the transfer of their
ownership of Heilongjiang Shuaiyi under the Equity Transfer Agreement. The Notes
bear no interest and are payable in successive equal yearly payments beginning
on the tenth anniversary of the Notes, December 8, 2018, and within the first
month of each year thereafter. The final payment is due on January 1, 2028. On
February 12, 2009, Heilongjiang Shuaiyi and the Founders amended the Notes,
pursuant to which the Founders subordinate any right to receive any payment with
respect to this loan to the payment or provision for payment in full of all
claims of all present and future creditors of Heilongjiang Shuaiyi. During and
after this restructuring plan, there has been no change to the composition of
the board of directors of Heilongjiang Shuaiyi. Heilongjiang Shuaiyi&#146;s board of
directors, chaired by Ms. Han, has continued to comprise representatives of the
Founders. Therefore, Heilongjiang Shuaiyi is still under the same operating and
management control of the Founders. Through this subordinated loan, the Founders
will not receive any cash amount, nor will there be any cash flow out of the
combined entity during the whole period from the date of the Equity Transfer
Agreement though the expiry of the Earn-in Agreements, at which time it is
expected that the Founders will have reacquired the ultimate legal controlling
ownership of Heilongjiang Shuaiyi.</P>
<P align=justify>The loan to Heilongjiang Shuaiyi by the Founders is an integral
and inseparable part of the restructuring plan and has the sole purpose of
achieving the restructuring in compliance with PRC regulations. Furthermore, by
providing the subordinated loan to Heilongjiang Shuaiyi and obtaining the
Shareholder&#146;s agreement on not declaring any dividend throughout the exercise
period of the Earn-in Agreements without the prior written approval of the
Founders, the Founders continue to bear the residual risks and rewards relating
to Heilongjiang Shuaiyi. As a result, this restructuring plan will be accounted
for as a recapitalization of Heilongjiang Shuaiyi with no adjustment to the
historical basis of the assets and liabilities of Heilongjiang Shuaiyi. New
Resources&#146; financial statements for the subsequent period in which the
restructuring occurred will report Heilongjiang Shuaiyi&#146;s results of operation
will be consolidated from the beginning of the first period presented in New
Resources&#146; financial statements as if the restructuring had occurred as of the
beginning of that period.</P>
<P align=justify>The following charts demonstrate the ownership information of
the relevant entities before and after the consummation of the restructuring
plan:</P>
<P align=justify><I>Before the Equity Transfer Agreement: </I></P>
<P align=center><IMG src="forms1x43x1.jpg" border=0 width="312" height="223"> </P>
<P align=center>38 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P align=justify><I>After the consummation of the restructuring plan </I></P>
<P align=center><IMG src="forms1x44x1.jpg" border=0 width="434" height="318"> </P>
<P align=justify><B><I>Acquisition of New Resources</I></B></P>
<P align=justify>On December 23, 2008, pursuant to a share exchange agreement,
or Share Exchange Agreement, we completed a reverse acquisition transaction of
New Resources whereby we issued to the Shareholder 689,390 shares of our Series
A Preferred Stock, constituting approximately 94% of our issued and outstanding
capital stock on a fully-diluted basis, in exchange for all of the issued and
outstanding capital stock of New Resources. New Resources thereby became our
wholly owned subsidiary and the Shareholder became our controlling
stockholder.</P>
<P align=justify>Immediately following closing of the reverse acquisition of New
Resources, the Shareholder transferred 176,529 of the 689,390 shares issued to
it under the share exchange to 14 individuals and entities, pursuant to a
securities allocation agreement that the Shareholder entered into with these
people on December 23, 2008. Among them, ten individuals and entities received
91,088 shares from the Shareholder for providing consulting services to New
Resources and its subsidiaries in assisting them to consummate the share
exchange transaction contemplated by the Share Exchange Agreement prior to
December 23, 2008. The remaining 85,441 shares were gifted from the Shareholder
to four individuals and entities who did not provide services to New Resources
or its subsidiaries.</P>
<P align=justify>Upon the closing of the reverse acquisition, Eugene M. Weiss,
our then sole director and officer, submitted a resignation letter pursuant to
which he resigned from all offices that he held effective immediately and from
his position as our director that became effective on January 12, 2009. Lianyun
Han was appointed to our board of directors effective as of the closing of the
reverse acquisition on December 23, 2008. In addition, our board of directors on
December 23, 2008 increased the size of our board of directors to five (5) and
appointed Nana Jiang, Chunming Zhang, John Jing Zhang and Xi Zhu to fill the
vacancies created by such increase, which appointments became effective upon the
effectiveness of the resignation of Mr. Weiss on January 12, 2009. In addition,
our executive officers were replaced by the New Resources executive officers
upon the closing of the reverse acquisition as indicated in more detail
below.</P>
<P align=justify>For accounting purposes, the share exchange transaction was
treated as a reverse acquisition with New Resources as the acquiror and the
Company as the acquired party. Unless the context suggests otherwise, when we
refer in this prospectus to business and financial information for periods prior to
the consummation of the reverse acquisition, we are referring to the business
and financial information of our subsidiary Heilongjiang Shuaiyi because
Heilongjiang Shuaiyi currently conducts all our business operations. </P>
<P align=center>39 </P>
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<P align=justify>The following chart reflects our organizational structure as of
the date of this prospectus:</P>
<P align=center><IMG src="forms1x45x1.jpg" border=0 width="609" height="356"> </P>
<P align=center><B>MANAGEMENT </B></P>
<P align=justify><B><I>Directors and Executive Officers </I></B></P>
<P align=justify>The following sets forth information about our directors and
executive officers as of the date of this prospectus: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      ><B>Name</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%"
    ><B>Age</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      width="56%"><B>Position</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Lianyun Han </TD>
    <TD align=center width="10%" bgColor=#e6efff >52 </TD>
    <TD align=left width="56%" bgColor=#e6efff>Chairperson, CEO and President
    </TD></TR>
  <TR vAlign=top>
    <TD align=left >Daniel K. Lee </TD>
    <TD align=center width="10%" >39 </TD>
    <TD align=left width="56%">Chief Financial Officer and Treasurer </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Hongbing Hua </TD>
    <TD align=center width="10%" bgColor=#e6efff >42 </TD>
    <TD align=left width="56%" bgColor=#e6efff>Chief Marketing Officer </TD></TR>
  <TR vAlign=top>
    <TD align=left >Nana Jiang </TD>
    <TD align=center width="10%" >31 </TD>
    <TD align=left width="56%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Chunming Zhang </TD>
    <TD align=center width="10%" bgColor=#e6efff >39 </TD>
    <TD align=left width="56%" bgColor=#e6efff>Director </TD></TR>
  <TR vAlign=top>
    <TD align=left >John Jing Zhang </TD>
    <TD align=center width="10%" >37 </TD>
    <TD align=left width="56%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Xi Zhu </TD>
    <TD align=center width="10%" bgColor=#e6efff >26 </TD>
    <TD align=left width="56%" bgColor=#e6efff>Director </TD></TR></TABLE>
<P align=justify><B>Lianyun Han.</B> Ms. Han has extensive experience in
operational management and business development. Ms. Han is the founder of our
company and has been our Chief Executive Officer, President and the chairperson
of our board of directors since the completion of the reverse acquisition of New
Resources on December 23, 2008. Ms. Han has been the chairman and chief
executive officer of our subsidiary Heilongjiang Shuaiyi since its formation in
2006. From 1998 to 2006, Ms. Han was the president of Heilongjiang Shuaiyi
Technology Development Co., Ltd., a company that is engaged in the business of
developing, manufacturing, marketing and selling high-tech agricultural
products. Ms. Han holds a Bachelor&#146;s degree in Chinese Language and Literature
from Harbin Normal University. </P>
<P align=justify><B>Daniel K. Lee.</B> Mr. Lee has extensive financial and
investment experience with U.S. financial institutions including Morgan Stanley
&amp; Co., Roth Capital Partners, Punk, Ziegel, &amp; Knoell. He is the
pioneering Wall Street analyst to first initiate equity research coverage on
leading US-listed Chinese companies in major food sectors including meat and
dairy processing, IT Services, nano-technology and real estate. His management
consulting and advisory experience encompasses European and Asian resort and hospitality, consumer
digital marketing and e-payment, aquaculture &amp; seafood, etc. Mr. Lee is a
Chartered Financial Analyst and a Certified Public Accountant. He has a M.S. in
Accountancy from Zicklin School of Baruch College and B.S. Economics from The
Wharton School of University of Pennsylvania majoring in Finance and
Multinational Management.</P>
<P align=center>40 </P>
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<P align=justify><B>Hongbing Hua.</B> Mr. Hua has over 15 years experience in
sales and marketing management. Prior to joining the Company, from 2003 to 2004,
Mr. Hua was the Project General Planning Principle of Wanglaoji Herbal Tea, JDB
Group, one of the largest herbal tea manufacturers in China. From 1998 to 2001,
he was the VP Sales &amp; Marketing of Beijing Huiyuan Beverage and Food Group
Co., Ltd., a leading company engaged in the manufacture and sales of juice and
other beverage products in China. Mr. Hua holds a Bachelor&#146;s degree in
international finance from Tianjin University. </P>
<P align=justify><B>Chunming Zhang.</B> Mr. Zhang has decades of working
experience in production management. Mr. Zhang became our director on January
12, 2009. Mr. Zhang joined Heilongjiang Shuaiyi in 2006 as the production
manager. From 1998 to 2006, Mr. Zhang was the vice president of Heilongjiang
Shuangyasha Boiler Factory. Mr. Zhang holds a Bachelor&#146;s degree in economics
from Northeast Agricultural University. </P>
<P align=justify><B>Nana Jiang.</B> Ms. Jiang became our director on January 12,
2009. Ms. Jiang joined Heilongjiang Shuaiyi in 2006 as the managing accountant.
From 1998 to 2006, Ms. Jiang was the managing accountant of Heilongjiang Shuaiyi
Technology Development Co., Ltd., a company that is engaged in the business of
developing, manufacturing, marketing and selling high-tech agricultural
products. Ms. Jiang holds a Bachelor&#146;s degree in English from Harbin Normal
University. </P>
<P align=justify><B>John Jing Zhang.</B> Mr. Zhang became our director on
January 12, 2009. Mr. Zhang currently serves as the chief executive officer of
JC Global Capital Partners, LLC, a financial consulting firm located in
Shanghai, China that specializes in cross-border capital market transactions.
Prior to funding JC Global Capital Partners, LLC in September 2006, from
September 2003 to August 2006, Mr. Zhang was the Managing Director of FirsTrust
Group, a US merchant bank headquartered in Atlanta, GA, where he was responsible
for its entire China operation. Prior to joining FirsTrust Group, Mr. Zhang held
senior positions in two U.S. corporations, ASI Computer Technology, Inc. and CTX
International, Inc., a company that engages in the business of manufacturing and
selling LCD Flat Panel Displays. Mr. Zhang is also an independent director of
China Kangtai Catcus Bio-tech, Inc. Mr. Zhang holds an MBA from Emory
University. </P>
<P align=justify><B>Xi Zhu.</B> Mr. Zhu became our director on January 12, 2009.
Mr. Zhu has years of experience in auditing and financial consulting. Currently
he is a Senior Financial Advisor for JINDU Investment, a financial consulting
firm that specializes in PIPE deals. Prior to JINDU Investment, Mr. Zhu was an
auditor of in the International Business Department at BDO Qingdao Branch. BDO
is a world wide network of public accounting firms, serving international
clients. Mr. Zhu was an Auditor Assistant of Foreign Investment Service in Shan
Dong De Sheng Accounting Firm from 2005 to 2006. Mr. Zhu holds a Bachelor&#146;s
degree in Administrative Management from Qingdao University. </P>
<P align=justify>There are no agreements or understandings for any of our
executive officers or director to resign at the request of another person and no
officer or director is acting on behalf of nor will any of them act at the
direction of any other person. </P>
<P align=justify>Directors are elected until their successors are duly elected
and qualified. </P>
<P align=justify><B><I>Board Composition and Committees </I></B></P>
<P align=justify>The board of directors is currently composed of five members,
Ms. Lianyun Han, Ms. Nana Jiang, Mr. Chunming Zhang, Mr. John Jing Zhang and Mr.
Xi Zhu. All Board action requires the approval of a majority of the directors in
attendance at a meeting at which a quorum is present. We may increase the size
of our board of directors in the future but have not determined the approximate
time to take such action. </P>
<P align=justify>We currently do not have standing audit, nominating or
compensation committees. Our board of directors handles the functions that would
otherwise be handled by each of the committees. We intend, however, to establish
an audit committee, a nominating committee and a compensation committee of the
board of directors as soon as practicable. We envision that the audit committee
will be primarily responsible for reviewing the services performed by our
independent auditors, evaluating our accounting policies and our system of
internal controls. The nominating committee would be primarily responsible for
nominating directors and setting policies and procedures for the nomination of
directors. The nominating committee would also be responsible for overseeing the
creation and implementation of our corporate governance policies and
procedures. The compensation committee will be primarily responsible for
reviewing and approving our compensation and benefit policies, including
compensation of executive officers. </P>
<P align=center>41</P>
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<P align=justify>Our board of directors has not made a determination as to
whether any member of our board is an audit committee financial expert. Upon the
establishment of an audit committee, the board will determine whether any of the
directors qualify as an audit committee financial expert. </P>
<P align=justify><B><I>Family Relationships </I></B></P>
<P align=justify>There is no family relationship among any of our officers or
directors. </P>
<P align=justify><B><I>Code of Ethics</I></B> </P>
<P align=justify>Our board of directors has adopted a code of ethics that
applies to Chief Executive Officer, President, Chief Financial Officer,
Principal Executive Officer, Principal Financial Officer, Principal Accounting
Officer, Controller and persons performing similar functions. The code of ethics
addresses, among other things, ethical conduct, conflicts of interest,
compliance with laws, regulations and policies, including disclosure
requirements under the federal securities laws, confidentiality, trading on
inside information, and reporting of violations of the code. A copy of the code
of ethics has been filed as Exhibit 14.1 to our Annual Report on Form 10-KSB
filed on November 20, 2007. We are in the process of building up the Company
website. Once our website is available, we will make the code of ethics
available on the website. Thereafter, any amendments or waivers to the code of
ethics will be posted on our website within four business days of such amendment
or waiver. Until such time, however, any amendments or waivers to our code of
ethics will be filed with the SEC in a Current Report on Form 8-K. </P>
<P align=justify><B><I>Involvement in Certain Legal Proceedings</I></B></P>
<P align=justify>To the best of our knowledge, none of our directors or
executive officers has been convicted in a criminal proceeding, excluding
traffic violations or similar misdemeanors, or has been a party to any judicial
or administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws, except for matters
that were dismissed without sanction or settlement. Except as set forth in our
discussion below in &#147;Transactions with Related Persons, Promoters and Certain
Control Persons; Corporate Governance,&#148; none of our directors, director nominees
or executive officers has been involved in any transactions with us or any of
our directors, executive officers, affiliates or associates which are required
to be disclosed pursuant to the rules and regulations of the SEC.<B> </B></P>
<P align=center><B>EXECUTIVE COMPENSATION </B></P>
<P align=justify><B><I>Summary Compensation Table &#150; 2009 and 2008</I></B>
<B></B></P>
<P align=justify>The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No executive
officer received total annual salary and bonus compensation in excess of
$100,000.</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=center width="18%">&nbsp; </TD>
    <TD align=center width="18%"><B>Salary</B> </TD>
    <TD align=center width="18%"><B>Bonus</B> </TD>
    <TD align=center width="18%"><B>Total</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left ><B>Name and Principal Position</B> </TD>
    <TD align=center width="18%"><B>Year</B> </TD>
    <TD align=center width="18%"><B>($)</B> </TD>
    <TD align=center width="18%"><B>($)</B> </TD>
    <TD align=center width="18%"><B>($)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Lianyun Han, <BR>CEO and
      President <SUP>(1)</SUP> </TD>
    <TD align=center width="18%" bgColor=#e6efff>2009 <BR>2008 </TD>
    <TD align=right width="18%" bgColor=#e6efff>12,000 <BR>12,000 </TD>
    <TD align=right width="18%" bgColor=#e6efff>3,000 <BR>3,000 </TD>
    <TD align=right width="18%" bgColor=#e6efff>15,000 <BR>15,000 </TD></TR>
  <TR vAlign=top>
    <TD align=left >Eugene M. Weiss, <BR>former President and
      Director<SUP>(2)</SUP> </TD>
    <TD align=center width="18%">2009 <BR>2008 </TD>
    <TD align=right width="18%">- <BR>- </TD>
    <TD align=right width="18%">- <BR>- </TD>
    <TD align=right width="18%">- <BR>- </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Joseph Meuse, <BR>former
      President and Director <SUP>(3)</SUP> </TD>
    <TD align=center width="18%" bgColor=#e6efff>2009 <BR>2008 </TD>
    <TD align=right width="18%" bgColor=#e6efff>- <BR>- </TD>
    <TD align=right width="18%" bgColor=#e6efff>- <BR>- </TD>
    <TD align=right width="18%" bgColor=#e6efff>- <BR>- </TD></TR>
  <TR vAlign=top>
    <TD align=left >Brian Jaggard, <BR>former CEO, President, CFO
      <BR>and Director <SUP>(4)</SUP> </TD>
    <TD align=center width="18%">2009 <BR><BR>2008 </TD>
    <TD align=right width="18%">- <BR><BR>- </TD>
    <TD align=right width="18%">- <BR><BR>- </TD>
    <TD align=right width="18%">- <BR><BR>- </TD></TR></TABLE></DIV>
<P align=center>42 </P>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>On December 23, 2008, we acquired New Resources in a
      reverse acquisition transaction that was structured as a share exchange
      and in connection with that transaction, Ms. Lianyun Han became our Chief
      Executive Officer, President and director. Prior to the effective date of
      the reverse acquisition, Ms. Han served at New Resources&#146; wholly owned
      subsidiary Heilongjiang Shuaiyi as its chairperson and chief executive
      officer. The annual, long term and other compensation shown in this table
      include the amount Ms. Han received from Heilongjiang Shuaiyi prior to the
      consummation of the reverse acquisition.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD>
      <P align=justify>Eugene M. Weiss resigned from all offices he held with us
      upon the closing of the reverse acquisition of New Resources on December
      23, 2008. Mr. Weiss was our director until January 12, 2009.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD>
      <P align=justify>Joseph Meuse resigned from his position as our President
      on August 8, 2008 and appointed Eugene Weiss as our sole officer and
      director.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(4) </TD>
    <TD>
      <P align=justify>Brian Jaggard resigned from his position as our President
      on August 1, 2008 and appointed Joseph Meuse as our sole officer and
      director.</P></TD></TR></TABLE>
<P align=justify><B>Employment Agreements </B></P>
<P align=justify>Our indirect subsidiary Heilongjiang Shuaiyi entered into an
employment agreement with our CEO and President, Ms. Lianyun Han. Ms. Han&#146;s
employment agreement has a five-year term beginning on December 7, 2008 and
ending on December 7, 2013. Ms. Han&#146;s employment agreement provides for a
monthly salary of approximately $1,000 and an annual bonus of approximately
$3,000. Ms. Han is subject to customary non-competition and confidentiality
covenants under the agreement. The employment agreement does not entitle Ms. Han
to severance payments or payments following a change in control. </P>
<P align=justify>On August 18, 2009, Heilongjiang Shuaiyi and Mr. Hongbin Hua
entered into an employment agreement. The term of the employment agreement is
for five years commencing on August 18, 2009. The employment agreement provides,
among other things, that Mr. Hua&#146;s annual base salary will be RMB 1,000,000
(approximately $147,000), or Annual Salary. During the term of the employment
agreement, if either party terminates the employment for any reason, the other
party will be entitled to the compensation equal to 30% of the Annual Salary
from the terminating party. The Employment Agreement also contains covenants
prohibiting Mr. Hua from disclosing any confidential information of the
Company.</P>
<P align=justify>On November 16, 2009, the Company, Heilongjiang Shuaiyi and Mr.
Daniel K. Lee entered into an employment agreement. The term of the employment
agreement is for three and half years commencing on November 16, 2009. The
employment agreement provides, among other things, that Mr. Lee&#146;s annual base
salary will be after-tax $120,000. During the term of the employment agreement,
if either party terminates the employment for any reason, a minimum of thirty
(30) days notice must be given in writing to the other party. The Employment
Agreement also contains covenants prohibiting Mr. Lee from disclosing any
confidential information of the Company.</P>
<P align=justify>On January 1, 2010, the Company and Mr. Lee entered into a
stock option agreement, or the Stock Option Agreement under the Company&#146;s 2009
Equity Incentive Plan. Pursuant to the terms of the Stock Option Agreement, Mr.
Lee was granted options, or the Options to purchase an aggregate 250,000 shares
of common stock of the Company, among which, an option to purchase 100,000
shares will be vested in 2011 with an exercise price of $7.00 per share, an
option to purchase 100,000 shares will be vested in 2012 with an exercise price
of $10.00 per share and an option to purchase 50,000 shares will be vested in
2013 with an exercise price of $10.00 per share. Each of the Options expires
three years after its respective vesting date. </P>
<P align=justify>According to the Stock Option Agreement, in the event Mr. Lee&#146;s
employment with the Company is terminated for any reason except for death or
disability, he may exercise the Options only to the extent that the Options
would have been exercisable on the termination date and no later than three
months after the termination date. If Mr. Lee&#146;s employment is terminated because
of his death or disability, the Options may be exercised only to the extent that
such Options would have been exercisable by Mr. Lee on the termination date and
must be exercised by Mr. Lee no later than twelve months after the termination
date. If Mr. Lee is terminated for cause, the Options will terminate
immediately. In no event will the Options be exercised later than December 31,
2015. </P>
<P align=center>43</P>
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<A name=page_49></A>
<P align=justify>On January 1, 2010, the Company also entered into a restricted
shares grant agreement, or the Restricted Shares Grant Agreement, under the
Company&#146;s 2009 Equity Incentive Plan with Mr. Lee. Pursuant to the terms of the
Restricted Shares Grant Agreement, the Company granted to Mr. Lee 140,000
restricted shares of the Company&#146;s common stock subject to the vesting schedule
therein. If Mr. Lee&#146;s service with the Company ceases for any reason other than
Mr. Lee&#146;s (a) death, (b) Disability, (c) Retirement, or (d) termination by the
Company without cause, any nonvested restricted shares will be automatically
forfeited to the Company. </P>
<P align=justify>We have not provided retirement benefits (other than a state
pension scheme in which all of our employees in China participate) or severance
or change of control benefits to our named executive officer. </P>
<P align=justify><B>Outstanding Equity Awards at Fiscal Year End </B></P>
<P align=justify>None of our executive officers received any equity awards,
including, options, restricted stock or other equity incentives during the
fiscal year ended December 31, 2009. </P>
<P align=justify><B>Compensation of Directors</B></P>
<P align=justify>The table below sets forth the compensation of our directors
for the fiscal year ended December 31, 2009: </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%"><B>Non-Equity </B></TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="14%"><B>Incentive Plan </B></TD>
    <TD align=center width="14%"><B>All Other </B></TD>
    <TD align=center width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="14%"><B>Fees Earned or </B></TD>
    <TD align=center width="14%"><B>Stock Awards </B></TD>
    <TD align=center width="14%"><B>Option Awards </B></TD>
    <TD align=center width="14%"><B>Compensation </B></TD>
    <TD align=center width="14%"><B>Compensation </B></TD>
    <TD align=center width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Name </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>Paid in Cash ($) </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>($) </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>($) </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>($) </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>($) </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>Total ($) </B></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Lianyun Han<SUP>(1) </SUP></TD>
    <TD align=right width="14%" bgColor=#e6efff>15,000 </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>15,000 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Nana Jiang </TD>
    <TD align=right width="14%">3,470 </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">3,470 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Chunming Zhang </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD></TR>
  <TR vAlign=top>
    <TD align=left>John Jing Zhang </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">- </TD>
    <TD align=right width="14%">- </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Xi Zhu </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD>
    <TD align=right width="14%" bgColor=#e6efff>- </TD></TR></TABLE></DIV>
<P align=justify><SUP>(1) </SUP>Ms. Han does not receive additional compensation
for her service as our director. The compensation disclosed herein is her
compensation for serving as our CEO and President as disclosed in the Summary
Compensation Table above. <B></B></P>
<P align=center><B>TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS; <BR>CORPORATE GOVERNANCE </B></P>
<P align=justify><B><I>Transactions with Related Persons </I></B></P>
<P align=justify>The following includes a summary of transactions since the
beginning of the 2009 fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved exceeded or
exceeds the lesser of $120,000 or one percent of the average of our total assets
at year-end for the last two completed fiscal years, and in which any related
person had or will have a direct or indirect material interest (other than
compensation described under &#147;Executive Compensation&#148;). We believe the terms
obtained or consideration that we paid or received, as applicable, in connection
with the transactions described below were comparable to terms available or the
amounts that would be paid or received, as applicable, in arm&#146;s-length
transactions.</P>
<UL style="TEXT-ALIGN: justify">
  <LI>On January 10, 2008, Daqing Shuaiyi entered into a land lease agreement
  with Heilongjiang Shuaiyi Technology Development Co., Ltd., pursuant to which
  Daqing Shuaiyi leased a land use right for 20 years over a 410,000 square
  meter tract on which it has nine factory buildings to grow and cultivate
  Chinese Golden Grass. <BR>
  <LI>On October 15, 2007, Heilongjiang Shuaiyi entered into a loan agreement
  with its wholly-owned subsidiary, Daqing Shuaiyi, pursuant to which
  Heilongjiang Shuaiyi agreed to loan RMB 35 million (approximately $5.1
  million) to Daqing Shuaiyi. The loan is non-interest bearing and unsecured.
  Daqing Shuaiyi is obligated under the loan agreement to pay off RMB 7
  million (approximately $1 million) by October 30 each year starting from 2008.
  The loan matures on October 15, 2012. <BR><BR>
  </LI></UL>
<P align=center>44 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<UL style="TEXT-ALIGN: justify">
  <LI>On September 12, 2008, the Shareholder entered into separate Earn-In
  Agreements with the Funders of Heilongjiang Shuaiyi, including our chairperson
  and chief executive officer, Lianyun Han. Pursuant to the Earn-In Agreements,
  each Founder has an option to purchase shares of the Shareholder&#146;s ordinary
  shares at a purchase price of $0.01 per share (the par value of the
  Shareholder&#146;s ordinary shares), <I>provided </I>that the aggregate price with
  respect to the shares eligible to be purchased relating to the satisfaction of
  condition (4) below is the sum of $0.01 per share, multiplied the number of
  such shares, plus $1,000, upon the satisfaction of each of the following
  conditions: (1) six months have expired since the date of the Share Exchange
  Agreement, <I>provided </I>that on or before that date, the Founder and
  Heilongjiang Shuaiyi have entered into a binding employment agreement and the
  Founder is employed by Heilongjiang Shuaiyi pursuant to that agreement on such
  date; (2) the SEC has declared a registration statement filed by the Company
  under the Securities Act effective, or investors who purchased common stock
  from the Company pursuant to a securities purchase agreement being able to
  sell their common stock under Rule 144; (3) Heilongjiang Shuaiyi and its
  subsidiaries have achieved not less than $1,560,000 in after-tax net income,
  as determined under US GAAP for the six months ended June 2009; and (4)
  Heilongjiang Shuaiyi has achieved not less than $3,900,000 in pre-tax profits,
  as determined under US GAAP for the fiscal year ending 2009. Notwithstanding
  the foregoing, for purposes of determining whether or not the financial
  thresholds described above have been achieved, the purchase of the shares by
  the Founder or any other person designated by the Founder shall not be deemed
  to be an expense, charge, or other deduction from revenues of the Company even
  though GAAP may require contrary treatment. Each Founder may purchase 25% of
  the total number of shares that he or she is eligible to purchase under his or
  her Earn-In Agreement upon the satisfaction of each condition described above
  and the aggregate number of shares eligible for purchase by all of the
  Founders under the Earn-In Agreements is 100,000. On February 12, 2009, each
  Founder and the Shareholder entered into the First Amendment to amend the
  definition of the first condition. As a result, pursuant to the First
  Amendment, in order to satisfy the first condition for each Founder, only Ms.
  Lianyun Han needs to enter into a binding employment agreement with
  Heilongjiang Shuaiyi within six months after the date of the Share Exchange
  Agreement. <BR>
  <LI>On December 8, 2008, Heilongjiang Shuaiyi entered into separate loan
  agreement and promissory notes, or the Notes, with the Founders, pursuant to
  which Heilongjiang Shuaiyi borrowed an aggregate of RMB 60 million
  (approximately $8.8 million) from the Founders, including from our chairperson
  and chief executive officer. The Notes bear no interest and are payable in
  successive equal yearly payments beginning on the tenth anniversary of the
  Notes, December 8, 2018, and within the first month of each year thereafter.
  The final payment is due on January 1, 2028. On February 12, 2009,
  Heilongjiang Shuaiyi and the Founders amended the Notes, pursuant to which the
  Shuaiyi Founders subordinate any right to receive any payment with respect to
  this loan to the payment or provision for payment in full of all claims of all
  present and future creditors of Heilongjiang Shuaiyi. <BR>
  <LI>On December 23, 2008, we entered into an amendment, or the Amendment, of
  that certain stock purchase agreement, or the SPA, dated August 6, 2008, by
  and among Allied China Investments, LLC, or ACI (formerly BMC Acquisitions
  Corp., LLC), Belmont Partners LLC, or Belmont, and the Company. ACI was our
  majority shareholder prior to our acquisition of New Resources pursuant to the
  Share Exchange Agreement on December 23, 2008. Pursuant to the SPA, the
  Company was required to issue to Belmont a number of shares of its common
  stock sufficient for Belmont to retain 1.1% ownership interest in the Company.
  Pursuant to the Amendment, ACI assumed the foregoing obligation of the Company
  and agreed to transfer its shares of the Company&#146;s common stock in order to
  satisfy such obligation. On the same day, we entered into a subscription
  agreement with ACI, pursuant to which we issued and sold to ACI 17,962 shares
  of our Series A Preferred Stock, par value $0.001, or the Series A Preferred
  Stock, for $52,530.50, or $2.92 per share. </LI></UL>
<P align=justify>Except as set forth in our discussion above, none of our
directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC. </P>
<P align=justify><B><I>Promoters and Certain Control Persons </I></B></P>
<P align=justify>We did not have any promoters at any time during the past five
fiscal years.</P>
<P align=center>45</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P align=justify><B><I>Parents of the Company</I></B></P>
<P align=justify>New Zealand WAYNE&#146;s Investment Holdings Co., Ltd. currently
owns 62.53% of Nutrastar International Inc. </P>
<P align=justify><B><I>Director Independence </I></B></P>
<P align=justify>We currently do not have any independent directors, as the term
&#147;independent&#148; is defined by the rules of the Nasdaq Stock Market. </P>
<P align=center><B>SELLING STOCKHOLDERS </B></P>
<P align=justify>This prospectus relates to the resale by the selling
stockholders named below from time to time of up to a total of 1,500,000 shares
of our common stock that were issued or are issuable to selling stockholders
pursuant to transactions exempt from registration under the Securities Act. All
of the common stock offered by this prospectus is being offered by the selling
stockholders for their own accounts. The selling stockholders are divided into
two categories: (1) investors from the private placement transaction; and (ii)
certain shareholder who received shares of our common stock before the private
placement transaction.</P>
<P align=justify><B><I>Private Placement Transaction</I></B></P>
<P align=justify>On December 17, 2009, we completed a private placement
transaction and sold 1,000,000 shares of our common stock to certain accredited
investors at $2.50 per share for a total of $2.5 million pursuant to a
securities purchase agreement, or the Securities Purchase Agreement. In
addition, we issued to each of the investors two warrants to purchase in
aggregate 500,000 shares of our common stock, including a Series A warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B warrant having a term of three years with an exercise price of $4.00
per share, both of which are subject to the usual adjustments for certain
corporate events. The shares underlying the warrants are being included in this
registration statement, but none of the warrants has been exercised.</P>
<P align=justify>Pursuant to the Securities Purchase Agreement, the Company
agreed to register the shares and the warrants within a pre-defined period. The
Company is subject to registration delay payments in cash in the amounts
prescribed by the Securities Purchase Agreement if it is unable to file the
registration statement, cause it to become effective or maintain its
effectiveness as required by the Securities Purchase Agreement. </P>
<P align=justify>In addition, pursuant to the Securities Purchase Agreement, the
majority stockholder of the Company, New Zealand WAYNE&#146;s Investment Holdings
Co., Ltd. agreed to place a total of 1,000,000 shares of the Company&#146;s common
stock held by it into escrow to secure the make good obligations described below
on behalf of the investors. Under the Securities Purchase Agreement, New Zealand
WAYNE&#146;s Investment Holdings Co., Ltd. agreed that: (i) in the event that the
Company&#146;s consolidated financial statements reflect less than $9,000,000 of
after-tax income for the fiscal year ending December 31, 2010, it will transfer
to the investors, on a pro rata basis, for no additional consideration, 500,000
shares of the Company common stock owned by it; and (ii) in the event that the
Company&#146;s consolidated financial statements reflect less than $11,000,000 of
after-tax net income for the fiscal year ending December 31, 2011, it will
transfer to the investors, on a pro rata basis, for no additional consideration,
500,000 shares of the Company&#146;s common stock owned by it. </P>
<P align=justify>The issuance of these shares of common stock and the warrants
was made in reliance upon exemptions provided by Section 4(2) of the Securities
Act for the offer and sale of securities not involving a public offering and
Regulation D promulgated thereunder. </P>
<P align=justify><B><I>Selling Stockholders </I></B></P>
<P align=justify>The following table sets forth certain information regarding
the selling stockholders and the shares offered by it in this prospectus.
Beneficial ownership is determined in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a selling stockholder and
the percentage of ownership of that selling stockholder, shares of common stock
and underlying shares of convertible preferred stock, options or warrants held
by that selling stockholder that are convertible or exercisable, as the case may
be, within 60 days of January 25, 2010 are included. Those shares, however, are
not deemed outstanding for the purpose of computing the percentage ownership of
any other selling stockholder. Each selling stockholder&#146;s percentage of
ownership in the following table is based upon 14,312,731 shares of common stock
outstanding as of January 25, 2010. </P>
<P align=center>46</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=justify>None of the selling stockholders has held a position as an
officer or director of the Company, nor has any material relationship of any
kind with us or any of our affiliates. All information with respect to share
ownership has been furnished by the selling stockholders. The shares being
offered are being registered to permit public secondary trading of the shares
and the selling stockholders may offer all or part of the shares owned for
resale from time to time. In addition, none of the selling stockholders has any
family relationships with our officers, directors or controlling stockholders.
Furthermore, no selling stockholder is a registered broker-dealer or an
affiliate of a registered broker-dealer.</P>
<P align=justify>The term &#147;selling stockholders&#148; also includes any transferees,
pledges, donees, or other successors in interest to the selling stockholders
named in the table below. To our knowledge, subject to applicable community
property laws, each person named in the table has sole voting and investment
power with respect to the shares of common stock set forth opposite such
person&#146;s name. We will file a supplement to this prospectus (or a post-effective
amendment hereto, if necessary) to name successors to any named selling
stockholder who is able to use this prospectus to resell the securities
registered hereby. </P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=center width="16%"><B>Shares</B> </TD>
    <TD align=center width="16%"><B>Shares of</B> </TD>
    <TD align=center width="16%"><B>Beneficial</B> </TD>
    <TD align=center width="16%"><B>Percentage of</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=center width="16%"><B>Beneficially</B> </TD>
    <TD align=center width="16%"><B>Common Stock</B> </TD>
    <TD align=center width="16%"><B>Ownership</B> </TD>
    <TD align=center width="16%"><B>Common Stock</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=center width="16%"><B>Owned Before</B> </TD>
    <TD align=center width="16%"><B>Included in</B> </TD>
    <TD align=center width="16%"><B>After the</B> </TD>
    <TD align=center width="16%"><B>Owned After</B> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      ><B>Name and Address</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="16%"><B>the Offering</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="16%"><B>Prospectus</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="16%"><B>Offering </B><B><SUP>(1)</SUP></B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="16%"><B>Offering </B><B><SUP>(2)</SUP></B> </TD></TR>
  <TR>
    <TD bgColor=#e6efff ><BR>Lead Success Investment
      Limited<SUP>(3)</SUP> <BR><BR>#1706 Hongyuan Tiancheng, Section <BR>B,
      Hulin Rd, Guli District, Fuzhou, <BR>China 350003 </TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>450,000<SUP>(3)</SUP>
      <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>450,000<SUP>(3)</SUP>
      <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>0 <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>3.11%
  <BR><BR><BR><BR></TD></TR>
  <TR>
    <TD ><BR>Chunlei Tang <BR><BR>9F Silver Tower, 218 Xizangnan
      Rd, <BR>Shanghai, China 200021 </TD>
    <TD align=center width="16%"><BR>132,353<SUP>(4)</SUP> <BR><BR><BR></TD>
    <TD align=center width="16%"><BR>132,353<SUP>(4)</SUP> <BR><BR><BR></TD>
    <TD align=center width="16%"><BR>0 <BR><BR><BR></TD>
    <TD align=center width="16%"><BR>* <BR><BR><BR></TD></TR>
  <TR>
    <TD bgColor=#e6efff ><BR>Dong Lin <BR><BR>Secondly Industrial
      Zone, Baishi, <BR>Sanxiang, Zhongshan City, <BR>Guangdong, China 528463
</TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>264,706<SUP>(5)</SUP>
      <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>264,706<SUP>(5)</SUP>
      <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>0 <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>1.84%
  <BR><BR><BR><BR></TD></TR>
  <TR>
    <TD ><BR>Hui Jiang <BR><BR>#18-8 Yaoditoudao Street, Daoli
      <BR>District, Harbin, China 150000 </TD>
    <TD align=center width="16%"><BR>176,472<SUP>(6)</SUP> <BR><BR><BR></TD>
    <TD align=center width="16%"><BR>176,472<SUP>(6)</SUP> <BR><BR><BR></TD>
    <TD align=center width="16%"><BR>0 <BR><BR><BR></TD>
    <TD align=center width="16%"><BR>1.23% <BR><BR><BR></TD></TR>
  <TR>
    <TD bgColor=#e6efff ><BR>Youliang Wang <BR><BR>Five Group,
      Tuanjie Street, <BR>Dongchang District, Tonghua, Jilin <BR>Province, China
      134000 </TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>264,706<SUP>(7)</SUP>
      <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>264,706<SUP>(7)</SUP>
      <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>0 <BR><BR><BR><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>1.84%
  <BR><BR><BR><BR></TD></TR>
  <TR>
    <TD ><BR>Yuehong Luan <BR><BR>No.1610, 59-1, Xidawang Road,
      <BR>Chaoyang District, Beijing, China <BR>100022 </TD>
    <TD align=center width="16%"><BR>211,763<SUP>(8)</SUP> <BR><BR><BR><BR></TD>
    <TD align=center width="16%"><BR>211,763<SUP>(8)</SUP> <BR><BR><BR><BR></TD>
    <TD align=center width="16%"><BR>0 <BR><BR><BR><BR></TD>
    <TD align=center width="16%"><BR>1.47% <BR><BR><BR><BR></TD></TR>
  <TR>
    <TD bgColor=#e6efff ><BR><B>TOTAL:</B> </TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>1,500,000 </TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>1,500,000 </TD>
    <TD align=center width="16%" bgColor=#e6efff><BR></TD>
    <TD align=center width="16%" bgColor=#e6efff><BR>10.13%
</TD></TR></TABLE></DIV>
<P align=center>47 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_53></A>
<P align=justify>* Less than 1%. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><SUP>(1) </SUP></TD>
    <TD>
      <P align=justify>Assumes that all securities offered are sold.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(2) </SUP></TD>
    <TD>
      <P align=justify>As of January 25, 2010, a total of 14,312,731 shares of
      our common stock are considered to be outstanding pursuant to SEC Rule
      13d-3(d)(1). For each beneficial owner above, any options exercisable
      within 60 days have been included in the denominator.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(3) </SUP></TD>
    <TD>
      <P align=justify>Includes 300,000 shares of our common stock and 150,000
      shares underlying the warrants to purchase shares of our common stock. Mr.
      Li Yi is the sole shareholder and director of Lead Success Investment
      Limited and has sole voting and investment control over the securities
      held by Lead Success Investment Limited.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(4) </SUP></TD>
    <TD>
      <P align=justify>Includes 88,235 shares of our common stock and 44,118
      shares underlying the warrants to purchase shares of our common
    stock.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(5) </SUP></TD>
    <TD>
      <P align=justify>Includes 176,470 shares of our common stock and 88,236
      shares underlying the warrants to purchase shares of our common
    stock.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(6) </SUP></TD>
    <TD>
      <P align=justify>Includes 117,648 shares of our common stock and 58,824
      shares underlying the warrants to purchase shares of our common
    stock.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(7) </SUP></TD>
    <TD>
      <P align=justify>Includes 176,470 shares of our common stock and 88,236
      shares underlying the warrants to purchase shares of our common
    stock.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(8) </SUP></TD>
    <TD>
      <P align=justify>Includes 141,177 shares of our common stock and 70,586
      shares underlying the warrant to purchase shares of our common
    stock.</P></TD></TR></TABLE>
<P align=justify>We will not receive any proceeds from the sale of any shares by
the selling stockholders but we will receive funds from the exercise of the
warrants held by the selling stockholders if and when those warrants are
exercised for cash. We have agreed to bear expenses incurred by the selling
stockholders that relate to the registration of the shares being offered and
sold by the selling stockholders, including the SEC registration fee and legal,
accounting, printing and other expenses of this offering. </P>
<P align=center><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT</B></P>
<P align=justify>The following table sets forth information regarding beneficial
ownership of our common stock as of January 25, 2010 (i) by each person who is
known by us to beneficially own more than 5% of our common stock; (ii) by each
of our officers and directors; and (iii) by all of our officers and directors as
a group. Unless otherwise specified, the address of each of the persons set
forth below is in care of Nutrastar International Inc., 7/F Jinhua Mansion, 41
Hanguang Street, Nangang District, Harbin 150080, People&#146;s Republic of
China.</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=center><U>Name &amp; Address of Beneficial </U></TD>
    <TD align=center width="20%"><U>Office, if Any </U></TD>
    <TD align=center width="20%"><U>Title of Class </U></TD>
    <TD align=center width="20%"><U>Amount &amp; Nature </U></TD>
    <TD align=center width="20%"><U>Percent of Class</U><U><SUP>(2)
    </SUP></U></TD></TR>
  <TR vAlign=top>
    <TD align=center><U>Owner </U></TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%">&nbsp; </TD>
    <TD align=center width="20%"><U>of Beneficial </U></TD>
    <TD align=center width="20%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%"><U>Ownership</U><U><SUP>(1) </SUP></U></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      colSpan=5><B>Officers and Directors</B></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Lianyun Han <BR><BR><BR><BR></TD>
    <TD align=left width="20%" bgColor=#e6efff>Chief Executive <BR>Officer,
      <BR>President, and <BR>Chairman <BR></TD>
    <TD align=center width="20%" bgColor=#e6efff>Common Stock <BR>$0.001 par
      value <BR><BR><BR></TD>
    <TD align=right width="20%" bgColor=#e6efff><BR><BR>8,949,424<SUP>(3)
      </SUP><BR><BR></TD>
    <TD align=right width="20%" bgColor=#e6efff><BR><BR>62.53% <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Daniel K. Lee <BR><BR><BR></TD>
    <TD align=left width="20%">Chief Financial <BR>Officer and <BR>Treasurer
      <BR></TD>
    <TD align=center width="20%">Common Stock <BR>$0.001 par value <BR><BR></TD>
    <TD align=right width="20%"><BR>15,000 <BR><BR></TD>
    <TD align=right width="20%"><BR>* <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Hongbin Hua <BR><BR></TD>
    <TD align=left width="20%" bgColor=#e6efff>Chief Marketing <BR>Officer
    <BR></TD>
    <TD align=center width="20%" bgColor=#e6efff>Common Stock <BR>$0.001 par
      value <BR></TD>
    <TD align=right width="20%" bgColor=#e6efff><BR>0 <BR></TD>
    <TD align=right width="20%" bgColor=#e6efff><BR>* <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>John Jing Zhang <BR></TD>
    <TD align=left width="20%">Director <BR></TD>
    <TD align=center width="20%">Common Stock <BR>$0.001 par value </TD>
    <TD align=right width="20%"><BR>543,899<SUP>(4)</SUP> </TD>
    <TD align=right width="20%"><BR>3.80% </TD></TR></TABLE></DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Chunming Zhang <BR><BR></TD>
    <TD align=left width="20%" bgColor=#e6efff>Director <BR><BR></TD>
    <TD align=center width="20%" bgColor=#e6efff>Common Stock <BR>$0.001 par
      value <BR></TD>
    <TD align=right width="20%" bgColor=#e6efff><BR>0 <BR></TD>
    <TD align=right width="20%" bgColor=#e6efff><BR>* <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Nana Jiang <BR><BR></TD>
    <TD align=left width="20%">Director <BR><BR></TD>
    <TD align=center width="20%">Common Stock <BR>$0.001 par value <BR></TD>
    <TD align=right width="20%"><BR>0 <BR></TD>
    <TD align=right width="20%"><BR>* <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Xi Zhu <BR><BR></TD>
    <TD align=left width="20%" bgColor=#e6efff>Director <BR><BR></TD>
    <TD align=center width="20%" bgColor=#e6efff>Common Stock <BR>$0.001 par
      value <BR></TD>
    <TD align=right width="20%" bgColor=#e6efff><BR>0 <BR></TD>
    <TD align=right width="20%" bgColor=#e6efff><BR>* <BR></TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>All officers and
      directors as a <BR>group (6 persons named above) <BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      width="20%"><BR><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="20%">Common Stock <BR>$0.001 par value <BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="20%"><BR>9,508,323 <BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="20%"><BR>66.43% <BR></TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center bgColor=#e6efff
    colSpan=5><B>5% Securities Holder</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>New Zealand WAYNE&#146;s <BR>Investment Holdings Co., Ltd.
      <BR>4/F, Yushan Plaza <BR>No.51 Yushan Road <BR>Harbin, China 150090 </TD>
    <TD align=left width="20%"><BR><BR><BR><BR></TD>
    <TD align=center width="20%">Common Stock <BR>$0.001 par value
    <BR><BR><BR></TD>
    <TD align=right width="20%"><BR><BR>8,949,424<SUP>(3)</SUP> <BR><BR></TD>
    <TD align=right width="20%"><BR><BR>62.53% <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin-top: 10">Lianyun Han <BR><BR><BR><BR><BR></TD>
    <TD align=left width="20%" bgColor=#e6efff>
    <p style="margin-top: 10">Chief Executive <BR>Officer,
      President, <BR>and Chairman <BR><BR><BR></TD>
    <TD align=center width="20%" bgColor=#e6efff>
    <p style="margin-top: 10">Common Stock <BR>$0.001 par
      value <BR><BR><BR><BR></TD>
    <TD align=right width="20%"
      bgColor=#e6efff>
    <p style="margin-top: 10"><BR><BR>8,949,424<SUP>(3)</SUP> <BR><BR><BR></TD>
    <TD align=right width="20%" bgColor=#e6efff>
    <p style="margin-top: 10"><BR><BR>62.53%
  <BR><BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Total Shares Owned by</B> <BR><B>Persons Named
      above:</B> </TD>
    <TD align=left width="20%"><BR></TD>
    <TD align=center width="20%">Common Stock <BR>$0.001 par value </TD>
    <TD align=right width="20%"><BR>9,508,323 </TD>
    <TD align=right width="20%"><BR>66.43% </TD></TR></TABLE>
<P align=center>48 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<P align=justify>* Less than 1%. </P>
<P align=justify><SUP>1</SUP>Beneficial ownership is determined in accordance
with the rules of the SEC and includes voting or investment power with respect
to the ordinary shares. </P>
<P align=justify><SUP>2 </SUP>A total of 14,312,731 shares of Common Stock as of
January 25, 2010 are considered to be outstanding pursuant to SEC Rule
13d-3(d)(1). For each beneficial owner above, any options exercisable within 60
days have been included in the denominator.</P>
<P align=justify><SUP>3 </SUP>Includes 8,949,424 shares of Common Stock owned by
New Zealand WAYNE&#146;s Investment Holdings Co., Ltd. Pursuant to the Earn-In
Agreement, dated September 12, 2008, as amended, the Founders, including Ms.
Han, have the options to acquire a majority interest in New Zealand WAYNE&#146;s
Investment Holdings Co., Ltd. upon the satisfaction of certain conditions set
forth in the Earn-In Agreement. Upon the passage of six months after the date of
Share Exchange Agreement, which was entered into among the Company, New
Resources, along with the subsidiaries of New Resources, including Heilongjiang
Shuaiyi, Daqing Shuaiyi and Harbin Shuaiyi, and New Zealand WAYNE&#146;s Investment
Holdings Co., Ltd., dated December 23, 2008, Ms. Han will own at least a
majority ownership of Investment Holdings if she exercises her option pursuant
to the Earn-In Agreement. Ms. Han may be deemed to be a beneficial owner of the
shares held by Investment Holdings. In addition, pursuant to the Securities
Purchase Agreement, dated December 17, 2009, New Zealand WAYNE&#146;s Investment
Holdings Co., Ltd., agreed by the Founders, placed a total of 1,000,000 shares
held by it into escrow that may be released to the investors in the event we do
not meet the performance thresholds for 2010 and 2011. </P>
<P align=justify><SUP>4 </SUP>Including 127,978 shares of Common Stock held by
his spouse.</P>
<P align=center><B>DESCRIPTION OF SECURITIES </B></P>
<P align=justify><B><I>Common Stock </I></B></P>
<P align=justify>We are authorized to issue up to f 190,000,000 <B></B>shares of
common stock. On May 19, 2009, we amended our articles of incorporation to effect a 1-for-114.59 reverse split of our
outstanding common stock.</P>
<P align=center>49 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=justify>Each outstanding share of common stock entitles the holder
thereof to one vote per share on all matters. Stockholders do not have
preemptive rights to purchase shares in any future issuance of our common stock.
The holders of shares of our common stock are entitled to dividends out of funds
legally available when and as declared by our board of directors. We have never
declared or paid cash dividends. Our board of directors does not anticipate
declaring a dividend in the foreseeable future. Should we decide in the future
to pay dividends, as a holding company, our ability to do so and meet other
obligations depends upon the receipt of dividends or other payments from our
operating subsidiaries and other holdings and investments. In addition, our PRC
operating subsidiaries, from time to time, may be subject to restrictions on its
ability to make distributions to us, including as a result of restrictive
covenants in loan agreements, restrictions on the conversion of local currency
into U.S. dollars or other hard currency and other regulatory restrictions.</P>
<P align=justify>All of the issued and outstanding shares of our common stock
are duly authorized, validly issued, fully paid and non-assessable. To the
extent that additional shares of our common stock are issued, the relative
interests of existing stockholders will be diluted. </P>
<P align=justify><B><I>Preferred Stock </I></B></P>
<P align=justify>We may issue up to 1,000,000 shares of preferred stock, par
value $0.001 per share, in one or more classes or series within a class as may
be determined by our board of directors, who may establish, from time to time,
the number of shares to be included in each class or series, may fix the
designation, powers, preferences and rights of the shares of each such class or
series and any qualifications, limitations or restrictions thereof. Any
preferred stock so issued by our board of directors may rank senior to the
common stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding up of us, or both.</P>
<P align=justify>On December 23, 2008, we issued 689,390 shares of our Series A
Preferred Stock to the Shareholder of New Resources. The total consideration for
the 689,390 shares of our Series A Preferred Stock is 50,000 shares of New
Resources, which is all the issued and outstanding capital stock of New
Resources. We did not receive any cash consideration in connection with the
share exchange. On December 23, 2008, we also issued and sold to ACI 17,962
shares of our Series A Preferred Stock for $52,530.50, or $2.92 per share. In
addition, on December 23, 2008, we issued and sold to Tan Zhen Investment
Limited 20,168 shares of our Series A Preferred Stock for $375,000, or $18.59
per share. </P>
<P align=justify>Following effectiveness of the reverse split and in accordance
with Section 6(a) of the Certificate of Designation of the Series A Preferred
Stock filed with the Nevada Secretary of State on December 22, 2008, all issued
and outstanding shares of the Series A Preferred Stock were automatically
converted into shares of common stock, on the basis of 17.45 shares of common
stock for each one share of Series A Preferred Stock, effective on May 29, 2009.
No shares of preferred stock are currently outstanding.</P>
<P align=justify><B><I>Warrant </I></B></P>
<P align=justify>In connection with our private placement which was closed on
December 17, 2009, we issued to each of the investors two warrants to purchase
in aggregate 500,000 shares of our common stock, including a Series A Warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B Warrant having a term of three years with an exercise price of $4.00
per share, both of which are subject to the usual adjustments for certain
corporate events. The shares underlying the warrants are being included in this
registration statement, but none of the warrants has been exercised.</P>
<P align=justify><B>Anti-takeover Effects of Our Articles of Incorporation and
By-laws</B> </P>
<P align=justify>Our Articles of Incorporation and Bylaws contain certain
provisions that may have anti-takeover effects, making it more difficult for or
preventing a third party from acquiring control of the Company or changing our
board of directors and management. Our Articles of Incorporation provide that
our board of directors may issue, without further stockholder approval, up to
1,000,000 shares of preferred stock, par value $0.001 per share, in one or more
classes or series within a class. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of our outstanding voting stock. According to our Bylaws and Articles
of Incorporation, neither the holders of our common stock nor the holders of our
preferred stock have cumulative voting rights in the election of our directors.
The combination of the present ownership by a few stockholders of a significant
portion of our issued and outstanding capital stock and lack of cumulative
voting makes it more difficult for other stockholders to replace our board of
directors or for a third party to obtain control of the Company by replacing our
board of directors. </P>
<P align=justify><B>Anti-takeover Effects of Nevada Law</B> </P>
<P align=justify><B><I>Business Combinations</I></B> </P>
<P align=center>50 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_56></A>
<P align=justify>The &#147;business combination&#148; provisions of Sections 78.411 to
78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada
corporation with at least 200 stockholders from engaging in various
&#147;combination&#148; transactions with any interested stockholder: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>for a period of three years after the date of the transaction in which the
  person became an interested stockholder, unless the transaction is approved by
  the board of directors prior to the date the interested stockholder obtained
  such status; or
  <LI>after the expiration of the three-year period, unless:
  <LI>the transaction is approved by the board of directors or a majority of the
  voting power held by disinterested stockholders, or
  <LI>if the consideration to be paid by the interested stockholder is at least
  equal to the highest of: (a) the highest price per share paid by the
  interested stockholder within the three years immediately preceding the date
  of the announcement of the combination or in the transaction in which it
  became an interested stockholder, whichever is higher, (b) the market value
  per share of common stock on the date of announcement of the combination and
  the date the interested stockholder acquired the shares, whichever is higher,
  or (c) for holders of preferred stock, the highest liquidation value of the
  preferred stock, if it is higher. </LI></UL>
<P align=justify>A &#147;combination&#148; is defined to include mergers or consolidations
or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in
one transaction or a series of transactions, with an &#147;interested stockholder&#148;
having: (a) an aggregate market value equal to 5% or more of the aggregate
market value of the assets of the corporation, (b) an aggregate market value
equal to 5% or more of the aggregate market value of all outstanding shares of
the corporation, or (c) 10% or more of the earning power or net income of the
corporation. </P>
<P align=justify>In general, an &#147;interested stockholder&#148; is a person who,
together with affiliates and associates, owns (or within three years, did own)
10% or more of a corporation's voting stock. The statute could prohibit or delay
mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire our company even though such a transaction may
offer our stockholders the opportunity to sell their stock at a price above the
prevailing market price. </P>
<P align=justify>Although we do not believe that we are currently subject to
these &#147;business combination&#148; provisions since we only have approximately 68
stockholders of record, there can be no assurance that in the future such
provisions will not apply to us. </P>
<P align=justify><B><I>Control Share Acquisitions</I></B> </P>
<P align=justify>The &#147;control share&#148; provisions of Sections 78.378 to 78.3793,
inclusive, of the NRS, which apply only to Nevada corporations with at least 200
stockholders, including at least 100 stockholders of record who are Nevada
residents, and which conduct business directly or indirectly in Nevada, prohibit
an acquiror, under certain circumstances, from voting its shares of a target
corporation's stock after crossing certain ownership threshold percentages,
unless the acquiror obtains approval of the target corporation's disinterested
stockholders. The statute specifies three thresholds: one-fifth or more but less
than one-third, one-third but less than a majority, and a majority or more, of
the outstanding voting power. Once an acquiror crosses one of the above
thresholds, those shares in an offer or acquisition and acquired within 90 days
thereof become &#147;control shares&#148; and such control shares are deprived of the
right to vote until disinterested stockholders restore the right. These
provisions also provide that if control shares are accorded full voting rights
and the acquiring person has acquired a majority or more of all voting power,
all other stockholders who do not vote in favor of authorizing voting rights to
the control shares are entitled to demand payment for the fair value of their
shares in accordance with statutory procedures established for dissenters'
rights. </P>
<P align=justify>Although we are not currently subject to these &#147;control share&#148;
provisions since we only have approximately 72 stockholders of record, there can
be no assurance that in the future such provisions will not apply to us. </P>
<P align=center>51 </P>
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<P align=justify><B><I>Transfer Agent and Registrar </I></B></P>
<P align=justify>Our independent stock transfer agent is Interwest Transfer
Company, Inc, located in 1981 E. Murray Holladay Road, Suite 100, Salt Lake
City, Utah 84117. Their phone number is (801) 272-9294 and facsimile number is
(801) 277-3147.</P>
<P align=center><B>MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
</B></P>
<P align=justify>Our common stock is quoted under the symbol &#147;NUIN.OB&#148; on the
OTC Bulletin Board but had not been traded in the OTC Bulletin Board except on a
limited and sporadic basis. The CUSIP number is 67060M 107. </P>
<P align=justify>The following table sets forth, for the periods indicated, the
high and low closing prices of our common stock. These prices reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may
not represent actual transactions. These prices have been adjusted to give
retroactive effect to the 1-for-114.59 reverse split of our common stock that
occurred on May 19, 2009. The last reported sale price of our common stock on
January 25, 2010 was $3.76 per share.</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="30%" colSpan=2>Closing Bid Prices <SUP>(1)</SUP>
    </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%">High </TD>
    <TD align=center width="15%">Low </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff colSpan=3><B><I>Year Ended December 31,
      2010</I></B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>1<SUP>st </SUP>Quarter (through January 25, 2010) </TD>
    <TD align=center width="15%">$5.00 </TD>
    <TD align=center width="15%">$3.70 </TD></TR>
  <TR>
    <TD bgColor=#e6efff colSpan=3><BR><B><I>Year Ended December 31,
      2009</I></B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>1<SUP>st </SUP>Quarter </TD>
    <TD align=center width="15%">$28.65 </TD>
    <TD align=center width="15%">$5.73 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>2<SUP>nd </SUP>Quarter </TD>
    <TD align=center width="15%" bgColor=#e6efff>$6.25 </TD>
    <TD align=center width="15%" bgColor=#e6efff>$5.73 </TD></TR>
  <TR vAlign=top>
    <TD align=left>3<SUP>rd </SUP>Quarter </TD>
    <TD align=center width="15%">$6.25 </TD>
    <TD align=center width="15%">$6.25 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>4<SUP>th </SUP>Quarter </TD>
    <TD align=center width="15%" bgColor=#e6efff>$6.25 </TD>
    <TD align=center width="15%" bgColor=#e6efff>$6.25 </TD></TR>
  <TR>
    <TD colSpan=3><BR><B><I>Year Ended December 31, 2008</I></B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>1<SUP>st </SUP>Quarter </TD>
    <TD align=center width="15%" bgColor=#e6efff>$13.75 </TD>
    <TD align=center width="15%" bgColor=#e6efff>$13.75 </TD></TR>
  <TR vAlign=top>
    <TD align=left>2<SUP>nd </SUP>Quarter </TD>
    <TD align=center width="15%">$13.75 </TD>
    <TD align=center width="15%">$13.75 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>3<SUP>rd </SUP>Quarter </TD>
    <TD align=center width="15%" bgColor=#e6efff>$13.75 </TD>
    <TD align=center width="15%" bgColor=#e6efff>$13.75 </TD></TR>
  <TR vAlign=top>
    <TD align=left>4<SUP>th </SUP>Quarter </TD>
    <TD align=center width="15%">$28.65 </TD>
    <TD align=center width="15%">$13.75 </TD></TR></TABLE></DIV>
<P align=justify>(1) The above table sets forth the range of high and low
closing bid prices per share of our common stock as reported by
<U>www.quotemedia.com</U> for the periods indicated. </P>
<P align=justify><B><I>Holders </I></B></P>
<P align=justify>On January 25, 2010, there were approximately 72 stockholders
of record of our common stock. The number of record holders does not include
persons who held our common stock in nominee or &#147;street name&#148; accounts through
brokers.</P>
<P align=justify><B><I>Dividends</I></B></P>
<P align=justify>We have never declared or paid a cash dividend. Any future
decisions regarding dividends will be made by our board of directors. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has complete discretion on whether to
pay dividends, subject to the approval of our stockholders. Even if our board of
directors decides to pay dividends, the form, frequency and amount will depend
upon our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
</P>
<P align=center>52 </P>
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<P align=justify><B><I>Securities Authorized for Issuance Under Equity
Compensation Plans </I></B></P>
<P align=justify>On June 3, 2009, our Board of Directors authorized the establishment of
the Shuaiyi International New Resources Development Inc. 2009 Equity Incentive
Plan, or the Plan, whereby we are authorized to issue shares of our Common Stock
to certain employees, consultants and directors. The maximum aggregate number of
shares of our common stock that may be issued under the Plan is 1,000,000
shares. The Plan, was approved by our shareholders on June 3, 2009. </P>
<P align=justify>On June 17, 2009, the Company granted to certain employees an
aggregate of 500,000 restricted shares pursuant to the Plan.</P>
<P align=justify>On January 1, 2010, as disclosed above, pursuant to the Plan,
the Company granted options to Mr. Daniel Lee to purchase an aggregate 250,000
shares of common stock of the Company, among which, an option to purchase
100,000 shares will be vested in 2011 with an exercise price of $7.00 per share,
an option to purchase 100,000 shares will be vested in 2012 with an exercise
price of $10.00 per share and an option to purchase 50,000 shares will be vested
in 2013 with an exercise price of $10.00 per share. Each of the Options expires
three years after its respective vesting date. </P>
<P align=justify>On January 1, 2010, pursuant to the Plan, the Company also
granted to Mr. Lee 140,000 restricted shares of the Company&#146;s common stock
subject to the vesting schedule therein. </P>
<P align=center><B>SHARES ELIGIBLE FOR FUTURE SALE </B></P>
<P align=justify>As of January 25, 2010, 14,312,731 shares of our common stock
were issued and outstanding. </P>
<P align=justify><B><I>Shares Covered by this Prospectus </I></B></P>
<P align=justify>All of the 1,500,000 shares being registered in this offering
may be sold without restriction under the Securities Act, so long as the
registration statement of which this prospectus is a part is, and remains,
effective. </P>
<P align=justify><B><I>Rule 144</I></B> </P>
<P align=justify>The SEC has recently adopted amendments to Rule 144 which
became effective on February 15, 2008 and apply to securities acquired both
before and after that date. Under these amendments, a person who has
beneficially owned restricted shares of our common stock or warrants for at
least six months is entitled to sell its securities provided that (1) such
person is not deemed to have been one of our affiliates at the time of, or at
any time during the three months preceding, a sale, (2) we are subject to the
Exchange Act reporting requirements for at least 90 days before the sale and (3)
if the sale occurs prior to satisfaction of a one-year holding period, we
provide current information at the time of sale. </P>
<P align=justify>Persons who have beneficially owned restricted shares of our
common stock or warrants for at least six months but who are our affiliates at
the time of, or at any time during the three months preceding, a sale, would be
subject to additional restrictions, by which such person would be entitled to
sell within any three-month period only a number of securities that does not
exceed the greater of: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>1% of the total number of securities of the same class then outstanding,
  which will equal approximately 143,127shares immediately after this offering;
  or <BR>
  <LI>the average weekly trading volume of such securities during the four
  calendar weeks preceding the filing of a notice on Form 144 with respect to
  such sale. </LI></UL>
<P align=justify><I>provided, </I>in each case, that we are subject to the
Exchange Act periodic reporting requirements for at least three months before
the sale. </P>
<P align=center>53</P>
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<P align=justify>However, since our shares are quoted on the OTC Bulletin Board,
which is not an &#147;automated quotation system,&#148; our stockholders will not be able
to rely on the market-based volume limitation described in the second bullet
above. If, in the future, our securities are listed on an exchange or quoted on
NASDAQ, then our stockholders would be able to rely on the market-based volume
limitation. Unless and until our stock is so listed or quoted, our stockholders
can only rely on the percentage based volume limitation described in the first
bullet above. </P>
<P align=justify>Such sales by affiliates must also comply with the manner of
sale, current public information and notice provisions of Rule 144. The selling
stockholders will not be governed by the foregoing restrictions when selling
their shares pursuant to this prospectus. </P>
<P align=justify>Historically, the SEC staff has taken the position that Rule
144 is not available for the resale of securities initially issued by companies
that are, or previously were, blank check companies, like us. The SEC has
codified and expanded this position in the amendments discussed above by
prohibiting the use of Rule 144 for resale of securities issued by any shell
companies (other than business combination related shell companies) or any
issuer that has been at any time previously a shell company. The SEC has
provided an important exception to this prohibition, however, if the following
conditions are met: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>the issuer of the securities that was formerly a shell company has ceased
  to be a shell company;
  <LI>the issuer of the securities is subject to the reporting requirements of
  Section 13 or 15(d) of the Exchange Act;
  <LI>the issuer of the securities has filed all Exchange Act reports and
  material required to be filed, as applicable, during the preceding 12 months
  (or such shorter period that the issuer was required to file such reports and
  materials), other than Current Reports on Form 8-K; and
  <LI>the least one year has elapsed from the time that the issuer filed current
  comprehensive disclosure with the SEC reflecting its status as an entity that
  is not a shell company. </LI></UL>
<P align=justify>As a result, it is likely that pursuant to Rule 144 our
stockholders, who were stockholders of ours prior to the reverse acquisition of
New Resources that concluded on December 23, 2008, were able to sell the their
shares of our common stock from and after December 31, 2009 (the one year
anniversary of our filing of the Current Report on Form 8-K reporting the
reverse acquisition of New Resources) without registration. </P>
<P align=center><B>PLAN OF DISTRIBUTION </B></P>
<P align=justify>The selling stockholders may, from time to time, sell, transfer
or otherwise dispose of any or all of their shares of common stock or interests
in shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices. </P>
<P align=justify>The selling stockholders may use any one or more of the
following methods when disposing of shares or interests therein: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>ordinary brokerage transactions and transactions in which the
  broker-dealer solicits purchasers; <BR>
  <LI>block trades in which the broker-dealer will attempt to sell the shares as
  agent, but may position and resell a portion of the block as principal to
  facilitate the transaction; <BR>
  <LI>purchases by a broker-dealer as principal and resale by the broker-dealer
  for its account; <BR>
  <LI>an exchange distribution in accordance with the rules of the applicable
  exchange; <BR>
  <LI>privately negotiated transactions; <BR>
  <LI>short sales effected after the date the registration statement of which
  this Prospectus is a part is declared effective by the SEC; <BR>
  <LI>through the writing or settlement of options or other hedging
  transactions, whether through an options exchange or otherwise; <BR>
  <LI>broker-dealers may agree with the selling stockholders to sell a specified
  number of such shares at a stipulated price per share; and </LI>
  <LI>a combination of any such methods of sale. </LI></UL>
<P align=center>54 </P>
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<P align=justify>The selling stockholders may, from time to time, pledge or
grant a security interest in some or all of the shares of common stock owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this Prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
</P>
<P align=justify>In connection with the sale of our common stock or interests
therein, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in
short sales of the common stock in the course of hedging the positions they
assume. The selling stockholders may also sell shares of our common stock short
and deliver these securities to close out their short positions, or loan or
pledge the common stock to broker-dealers that in turn may sell these
securities. The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction). </P>
<P align=justify>The aggregate proceeds to the selling stockholders from the
sale of the common stock offered by them will be the purchase price of the
common stock less discounts or commissions, if any. Each of the selling
stockholders reserves the right to accept and, together with their agents from
time to time, to reject, in whole or in part, any proposed purchase of common
stock to be made directly or through agents. We will not receive any of the
proceeds from this offering. </P>
<P align=justify>Broker-dealers engaged by the selling stockholders may arrange
for other broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchase of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
</P>
<P align=justify>The selling stockholders also may resell all or a portion of
the shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided that they meet the criteria and conform to the
requirements of that rule. </P>
<P align=justify>The broker-dealers or agents that participate in the sale of
the common stock or interests therein and the selling stockholders who are
affiliates of broker-dealers may be &#147;underwriters&#148; within the meaning of Section
2(11) of the Securities Act. Any discounts, commissions, concessions or profit
they earn on any resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling stockholders who are
&#147;underwriters&#148; within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act. We know
of no existing arrangements between any of the selling stockholders and any
other stockholder, broker, dealer, underwriter, or agent relating to the sale or
distribution of the shares, nor can we presently estimate the amount, if any, of
such compensation. See &#147;Selling Stockholders&#148; for description of any material
relationship that a stockholder has with us and the description of such
relationship. </P>
<P align=justify>To the extent required, the shares of our common stock to be
sold, the names of the selling stockholders, the respective purchase prices and
public offering prices, the names of any agents, dealer or underwriter, any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this
Prospectus. </P>
<P align=justify>In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states, the
common stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and
is complied with. </P>
<P align=justify>We have advised the selling stockholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this Prospectus (as it
may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the
prospectus delivery requirements of the Securities Act. The selling stockholders
may indemnify any broker-dealer that participates in transactions involving the
sale of the shares against certain liabilities, including liabilities arising
under the Securities Act. </P>
<P align=center>55</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=justify>We have agreed to pay certain fees and expenses incurred by us
incident to the registration of the shares. We have agreed to indemnify the
selling stockholders against liabilities, including liabilities under the
Securities Act and state securities laws, relating to the registration of the
shares offered by this Prospectus. </P>
<P align=center><B>LEGAL MATTERS </B></P>
<P align=justify>The validity of the common stock offered by this prospectus
will be passed upon for us by Holland &amp; Hart LLP, Reno, Nevada. </P>
<P align=center><B>EXPERTS </B></P>
<P align=justify>The audited consolidated financial statements of Nutrastar
International Inc. for the fiscal year ended December 31, 2008 included in this
prospectus and in the registration statement have been audited by AGCA, Inc.,
independent registered public accounting firm, to the extent and for the periods
sent forth in their respective reports appearing elsewhere herein and in the
registration statement, and are included in reliance on such reports, given the
authority of said firms as experts in auditing and accounting.</P>
<P align=justify>The audited consolidated financial statements of Heilongjiang
Shuaiyi New Energy Development Co., Ltd. for the fiscal year ended December 31, 2007
included in this prospectus and in the registration statement have been audited
by AGCA CPA Limited (formerly GC Alliance Limited), independent registered public accounting firm, to the
extent and for the periods sent forth in their respective reports appearing
elsewhere herein and in the registration statement, and are included in reliance
on such reports, given the authority of said firms as experts in auditing and
accounting.</P>
<P align=center><B>WHERE YOU CAN FIND MORE INFORMATION </B></P>
<P align=justify>We have filed with the SEC a registration statement on Form S-1
under the Securities Act with respect to the common stock offered in this
offering. This prospectus does not contain all of the information set forth in
the registration statement. For further information with respect to us and the
common stock offered in this offering, we refer you to the registration
statement and to the attached exhibits. With respect to each such document filed
as an exhibit to the registration statement, we refer you to such exhibit for a
more complete description of the matters involved. </P>
<P align=justify>You may inspect our registration statement and the attached
exhibits and schedules without charge at the public reference facilities
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may
obtain copies of all or any part of our registration statement from the SEC upon
payment of prescribed fees. You may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330. </P>
<P align=justify>Our SEC filings, including the registration statement and the
exhibits filed with the registration statement, are also available from the
SEC&#146;s website at www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC. </P>
<P align=center>56 </P>
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<P align=center><B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%"><B>Page</B> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="15%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>NUTRASTAR INTERNATIONAL INC. AND
      SUBSIDIARIES FINANCIAL STATEMENTS</B> <BR><B>FOR THE NINE-MONTH PERIOD
      ENDED SEPTEMBER 30, 2009 (UNAUDITED)</B> </TD>
    <TD align=left width="15%" bgColor=#e6efff><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Condensed Consolidated Balance Sheets as of September 30,
      2009 (Unaudited) and December 31, 2008 (Audited) </TD>
    <TD align=center width="15%">F-2 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Condensed Consolidated Statements of Income
      and Comprehensive Income (Unaudited) for the Three Months and Nine Months
      Ended September 30, 2009 and 2008 </TD>
    <TD align=center width="15%" bgColor=#e6efff>F-3 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Condensed Consolidated Statement of Stockholders&#146; Equity
      (Unaudited) for the Nine Months Ended September 30, 2009 </TD>
    <TD align=center width="15%">F-4 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Condensed Consolidated Statements of Cash
      Flows (Unaudited) for the Nine Months Ended September 30, 2009 and 2008
</TD>
    <TD align=center width="15%" bgColor=#e6efff>F-5 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Notes to Condensed Consolidated Financial Statements </TD>
    <TD align=center width="15%">F-7 </TD></TR>
  <TR>
    <TD bgColor=#e6efff><BR><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
      FINANCIAL STATEMENTS</B> <BR><B>FOR THE YEARS ENDED DECEMBER 31, 2008 AND
      2007</B> <BR></TD>
    <TD align=center width="15%" bgColor=#e6efff><BR><BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Reports of Independent Registered Public Accounting Firm
</TD>
    <TD align=center width="15%">F-19</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Consolidated Balance Sheets </TD>
    <TD align=center width="15%" bgColor=#e6efff>F-21</TD></TR>
  <TR vAlign=top>
    <TD align=left>Consolidated Statements of Income and Comprehensive Income
    </TD>
    <TD align=center width="15%">F-22</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Consolidated Statements of Stockholders&#146;
      Equity </TD>
    <TD align=center width="15%" bgColor=#e6efff>F-23</TD></TR>
  <TR vAlign=top>
    <TD align=left>Consolidated Statements of Cash Flows </TD>
    <TD align=center width="15%">F-24</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Notes to Consolidated Financial Statements
    </TD>
    <TD align=center width="15%" bgColor=#e6efff>F-25</TD></TR></TABLE>
<P align=center>F-1 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<font FACE="Times New Roman" SIZE="2">
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>CONDENSED CONSOLIDATED BALANCE SHEETS <BR></B>(AMOUNTS
EXPRESSED IN US DOLLAR)<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><B>As of</B> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="12%"><B>September 30,</B> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="12%"><B>December 31,</B> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2009</B> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2008</B> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="12%"><B>Unaudited</B> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="12%"><B>Audited</B> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center colSpan=6>
    <p style="text-indent: -10pt; margin-left: 10pt"><B><U>ASSETS</U></B>&nbsp;&nbsp; </TD>
    <TD align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">CURRENT ASSETS </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Cash and cash equivalents </TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="12%">&nbsp;15,434,465 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="12%">&nbsp;9,198,243 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Accounts receivable, net </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>362,880 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>283,822 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Other receivables </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">11,422 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">14,105 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Inventories </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>631,310 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>1,168,079 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; &nbsp;Total current assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">16,440,077 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">10,664,249 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">OTHER ASSETS </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Intangible assets, net </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">2,856,961 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">3,183,995 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Property, plant and equipment, net
</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>10,484,822 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>10,902,976 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; &nbsp;Total other assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">13,341,783 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">14,086,971 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; &nbsp;Total assets </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;29,781,860 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;24,751,220 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center colSpan=6>
    <p style="text-indent: -10pt; margin-left: 10pt"><B><U>LIABILITIES AND SHAREHOLDERS'
      EQUITY</U></B>&nbsp; </TD>
    <TD align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">CURRENT LIABILITIES </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Accounts payable </TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="12%">&nbsp;120,972 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="12%">&nbsp;3,206 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Other payables and accruals </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>484,851 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>472,959 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Payable for intangibles &#150; Current portion </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">878,606 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">877,886 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Income tax payable </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>83,167 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>119,486 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Due to related parties </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">77,409 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">8,998 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Acquisition payable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>8,735,810 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>8,778,861 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; &nbsp;Total current liabilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">10,380,815 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">10,261,396 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">NON-CURRENT LIABILITIES </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Payable for intangibles, net of current portion </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">877,886 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; &nbsp;Total liabilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>10,380,815 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>11,139,282 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">COMMITMENTS AND CONTINGENCIES (Note 15) </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">SHAREHOLDERS' EQUITY </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Preferred Stock, $0.001 par value, 1,000,000 shares
      authorized, none and 727,520 shares issued and outstanding </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">727 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Common stock, $0.001 par value,
      190,000,000 shares authorized, 13,297,731 and 11,746,041 shares issued and
      outstanding </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>13,298 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>11,746 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Additional paid-in capital </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">2,216,891 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">2,192,716 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Statutory reserves </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,923,755 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,326,239 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Retained earnings </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">14,277,395 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">9,131,744 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;Accumulated other comprehensive
      income </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>969,706 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>948,766 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; &nbsp;Total shareholders' equity </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">19,401,045 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">13,611,938 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; &nbsp;Total liabilities and shareholders' equity </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;29,781,860 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;24,751,220 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#ffffff>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD width="1%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="12%" bgColor=#ffffff>&nbsp; </TD>
    <TD width="2%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="1%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="12%" bgColor=#ffffff>&nbsp; </TD>
    <TD width="2%" bgColor=#ffffff>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center bgColor=#ffffff colSpan=6>See accompanying notes to
      condensed consolidated financial statements&nbsp; </TD>
    <TD align=center width="2%" bgColor=#ffffff>&nbsp;</TD></TR></TABLE>
<P align=center>F-2</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_6></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND<BR>COMPREHENSIVE INCOME (UNAUDITED) <BR></B>(AMOUNTS EXPRESSED IN US
DOLLAR) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><FONT size=2><B>For the Three Months</B> </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><FONT size=2><B>For the Nine Months</B>
      </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><FONT size=2><B>Ended September 30,</B> </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><FONT size=2><B>Ended September 30,</B>
      </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><FONT size=2><B>2009</B> </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><FONT size=2><B>2008</B> </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</TD>
    <TD align=center width="10%" style="border-bottom-style: solid; border-bottom-width: 1"><FONT size=2><B>2009</B> </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><FONT size=2><B>2008</B> </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Revenue </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>&nbsp;3,565,961
      </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>&nbsp;4,413,082
      </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff style="border-top-style: solid; border-top-width: 1"><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" bgColor=#e6efff style="border-top-style: solid; border-top-width: 1"><FONT size=2>&nbsp;11,549,244
      </FONT></TD>
    <TD align=right width="2%" bgColor=#e6efff>$</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>10,167,285
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Cost of goods sold </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>(793,101</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>(1,346,285</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>(3,733,026</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>(3,579,138</FONT></TD>
    <TD align=left width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Gross profit </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>2,772,860
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>3,066,797
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>7,816,218
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>6,588,147
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Selling expenses </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>(87,901</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>(88,985</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>(281,025</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>(137,904</FONT></TD>
    <TD align=left width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>General and administrative
      expenses </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>(330,660</FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>(258,361</FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>(943,903</FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>(826,754</FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Income from operations </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>2,354,299 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>2,719,451 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>6,591,290 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>5,623,489 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Other income (expenses):
      </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; &nbsp;Interest income </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>18,507 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>8,369 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>50,150 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"><FONT size=2>18,742 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>&nbsp; &nbsp;Exchange loss
      </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>(3,709</FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>- </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>(7,218</FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>- </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; &nbsp;Other </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>13 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>- </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>165 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>3,864 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Income before income tax
      </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>2,369,110
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>2,727,820
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>6,634,387
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>5,646,095
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Provision for income tax </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>(340,056</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>(361,336</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>(891,220</FONT></TD>
    <TD align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>(774,996</FONT></TD>
    <TD align=left width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Net income </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>2,029,054
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>2,366,484
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>5,743,167
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>4,871,099
    </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Other comprehensive income: </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>&nbsp; &nbsp;Foreign currency
      translation adjustment </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>25,251 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>144,928 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>20,940 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>1,170,908 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Total comprehensive income </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%"><FONT size=2>&nbsp;2,054,305 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%"><FONT size=2>&nbsp;2,511,412 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%"><FONT size=2>&nbsp;5,764,107 </FONT></TD>
    <TD align=right width="2%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%"><FONT size=2>6,042,007 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Earnings per share: </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; &nbsp;Basic </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>&nbsp;0.15 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>&nbsp;0.20 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>&nbsp;0.44 </FONT></TD>
    <TD align=right width="2%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>0.41 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>&nbsp; &nbsp;Diluted
</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>&nbsp;0.15 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>&nbsp;0.20 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>&nbsp;0.44 </FONT></TD>
    <TD align=right width="2%" bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>0.41 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Weighted average number of shares outstanding: </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%">&nbsp;</TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%">&nbsp;</TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%">&nbsp;</TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%">&nbsp;</TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>&nbsp; &nbsp;Basic </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>13,297,731 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>12,032,289 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>12,989,613 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff><FONT size=2>&nbsp;12,032,289 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; &nbsp;Diluted </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>13,297,731 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>12,032,289 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>12,989,613 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>&nbsp;12,032,289 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#ffffff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="10%" bgColor=#ffffff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="1%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="10%" bgColor=#ffffff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="1%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="10%" bgColor=#ffffff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="1%" bgColor=#ffffff>&nbsp;</TD>
    <TD width="10%" bgColor=#ffffff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgColor=#ffffff>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center bgColor=#ffffff colSpan=12><FONT size=2>See accompanying
      notes to condensed consolidated financial statements&nbsp; </FONT></TD>
    <TD align=center width="2%" bgColor=#ffffff>&nbsp;</TD></TR></TABLE>
<P align=center>F-3</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_7></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146;
EQUITY<BR>AND COMPREHENSIVE INCOME <BR></B>(AMOUNTS EXPRESSED IN US
DOLLAR) </P>
    <font size="2">
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD vAlign=bottom align=center>&nbsp; </TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Accumulated</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="17%" colSpan=4><B>Preferred Stock</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="17%" colSpan=4><B>Common Stock</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Additional</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Other</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=center>&nbsp; </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Number</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Number</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Paid-in</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Statutory</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Retained</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%"><B>Comprehensive</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=center width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=center>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>of Shares</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>Amount</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>of Shares</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>Amount</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>Capital</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>Reserves</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>Earnings</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>Income</B> </TD>
    <TD vAlign=bottom align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=center
    width="7%"><B>Total</B> </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgcolor="#e6efff">
    <p style="text-indent: -10pt; margin-left: 10pt">At December 31, 2008 (Audited) </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">727,520&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">$</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">727 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">11,746,041 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">$</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;11,746 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">$</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;2,192,716 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">$</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;1,326,239 $ </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">9,131,744&nbsp; </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">$</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">948,766 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">$</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;13,611,938 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left >
    <p style="text-indent: -10pt; margin-left: 10pt">Net income </TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >&nbsp;- </TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >-</TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >&nbsp;- </TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >- </TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >&nbsp;- </TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >-</TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >5,743,167 </TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >- </TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" >5,743,167</TD>
    <TD vAlign=bottom align=right width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left bgcolor="#e6efff" >
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff" >&nbsp;</TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgcolor="#e6efff">
    <p style="text-indent: -10pt; margin-left: 10pt">Foreign currency translation adjustment </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">20,940 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp;20,940 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">Comprehensive income </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">5,764,107 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left bgcolor="#e6efff">
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgcolor="#e6efff">
    <p style="text-indent: -10pt; margin-left: 10pt">Appropriation of statutory reserves </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">597,516 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">(597,516</TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">) </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">Conversion of preferred stock into common
      stock </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">(727,520</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">(727</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">12,695,223 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">12,695 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">(11,968</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left bgcolor="#e6efff">
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgcolor="#e6efff">
    <p style="text-indent: -10pt; margin-left: 10pt">1-for-114.59 Reverse Split </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">(11,643,533</TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">) </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">(11,643</TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">) </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">11,643 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left>
    <p style="text-indent: -10pt; margin-left: 10pt">Issuance of shares to employees and
      consultants under 2009 Equity Incentive Plan (Note 11) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">500,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">500 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">24,500 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="7%">25,000 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left bgcolor="#e6efff">
    <p style="text-indent: -10pt; margin-left: 10pt">&nbsp; </TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD vAlign=bottom align=right width="7%" bgcolor="#e6efff">&nbsp; </TD>
    <TD vAlign=bottom align=right width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom align=left bgcolor="#e6efff">
    <p style="text-indent: -10pt; margin-left: 10pt">At September 30, 2009 (Unaudited) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">13,297,731 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">&nbsp;13,298 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">&nbsp;2,216,891 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">&nbsp;1,923,755 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">$ </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">14,277,395 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">&nbsp;969,706 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#e6efff">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="7%" bgcolor="#e6efff">&nbsp;19,401,045 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  </TABLE>
<P align=center>See accompanying notes to condensed consolidated financial
statements </P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>4</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_8></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<BR></B>(AMOUNTS EXPRESSED IN US DOLLAR) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>For the Nine Months</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>Ended September 30,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2009</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2008</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>CASH FLOWS FROM OPERATING ACTIVITIES: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;Net income </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;5,743,167 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;4,871,099 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp;Adjustments to reconcile net income
      to cash provided by operating activities: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Share-based compensation expense </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">25,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Depreciation and
      amortization </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>756,396 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>840,337 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Loss from disposition of property,
      plant and equipment </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">636 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Impairment losses on
      trade and other receivables </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>5,567 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;Loss on write-down of inventories </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">123 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;(Increase) decrease in assets:
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounts receivable </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(78,790</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(784,792</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Deposits
      and other receivables </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>2,693 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>38,355 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Inventories </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">537,483 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(300,116</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Trade
      receivable due from related parties </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(7,963</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;&nbsp;&nbsp;Increase (decrease) in liabilities: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Accounts
      payable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>117,710 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(27,974</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Other payables and
      accruals </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">11,498 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(221,769</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Income
      tax payable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(36,400</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>178,285 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Trade payable due to
      related parties </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">6,751
    </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Net cash
      provided by operating activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>7,085,508 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>4,591,788 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>CASH FLOWS FROM INVESTING ACTIVITIES: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;Purchase of property, plant and equipment </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(31,689</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp;Purchase of intangible asset </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(1,266</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;Settlement of payable for intangibles </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(878,207</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(858,111</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp;Payment of acquisition payable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(50,269</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Net cash used in investing
      activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(928,476</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(891,066</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>CASH FLOWS FROM FINANCING ACTIVITIES: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp;Advances from related parties </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>61,621 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>6,541 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Net cash provided by financing
      activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">61,621 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">6,541
    </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#ffffff>Foreign currency translation
      adjustment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#ffffff>17,569 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#ffffff>247,722 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#ffffff>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#E6EFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#E6EFFF>INCREASE IN CASH AND CASH
      EQUIVALENTS </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#E6EFFF>6,236,222 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#E6EFFF>3,954,985 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#E6EFFF>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#ffffff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#ffffff>CASH AND CASH EQUIVALENTS, at
      the beginning of the period </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#ffffff>9,198,243 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#ffffff>2,148,348 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#ffffff>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#E6EFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#E6EFFF>CASH AND CASH EQUIVALENTS, at
      the end of the period </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#E6EFFF>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#E6EFFF>&nbsp;15,434,465 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#E6EFFF>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%"  bgColor=#E6EFFF>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="12%" bgColor=#E6EFFF>&nbsp;6,103,333 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#E6EFFF>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#ffffff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#ffffff>NON-CASH INVESTING AND
      FINANCING ACTIVITIES: <BR>&nbsp;Machinery acquired in exchange for
      issuance of capital </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#ffffff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#ffffff>&nbsp;- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#ffffff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#ffffff>&nbsp;1,282,234 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#ffffff>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#E6EFFF>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#E6EFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD vAlign=bottom align=left bgColor=#E6EFFF>SUPPLEMENTAL DISCLOSURE
      INFORMATION <BR>&nbsp;Income taxes paid </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#E6EFFF>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#E6EFFF>&nbsp;593,008 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#E6EFFF>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%"  bgColor=#E6EFFF>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="12%" bgColor=#E6EFFF>&nbsp;650,999 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#E6EFFF>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=bottom bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD vAlign=bottom width="12%" bgColor=#ffffff>&nbsp; </TD>
    <TD vAlign=bottom width="2%"  bgColor=#ffffff>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=bottom align=center bgColor=#ffffff colSpan=6>See accompanying
      notes to condensed consolidated financial statements&nbsp; </TD>
    <TD vAlign=bottom align=center width="2%"
    bgColor=#ffffff>&nbsp;</TD></TR></TABLE>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>5</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_9></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align=justify><B>NOTE 1 </B></P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><B>DESCRIPTION OF BUSINESS AND
ORGANIZATION </B></P>
<P align=justify>Shuaiyi International New Resources Development Inc. (&#147;the
Company&#148; or &#147;Shuaiyi International&#148;) was formerly known as YzApp International
Inc. and incorporated in the State of Nevada on December 22, 2002. On December
23, 2008, the Company completed a reverse acquisition of New Zealand WAYNE&#146;S New
Resources Development Co., Ltd. (&#147;New Resources&#148;). As a result of the reverse
acquisition of New Resources, the Company is no longer a shell company and
active business operations have been revived. </P>
<P align=justify>As of September 30, 2009, details of the subsidiaries of the
Company are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=center><FONT size=2>&nbsp; </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="18%"><FONT size=2>Domicile and date </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="18%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="18%"><FONT size=2>Percentage of </FONT></TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="18%"><FONT size=2>Principal </FONT></TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><FONT
      size=2>Subsidiaries&#146; names </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="18%"><FONT size=2>of incorporation </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="18%"><FONT size=2>Paid-up capital </FONT></TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="18%"><FONT size=2>effective ownership </FONT></TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="18%"><FONT size=2>activities </FONT></TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="18%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="18%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="18%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="18%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF"><FONT size=2>New Zealand WAYNE&#146;S
      <BR>New Resources Development Co.,
      Ltd <BR>(&#147;New Resources&#148;) </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="18%" bgcolor="#E6EFFF"><FONT size=2>British Virgin Islands <BR>March 13, 2008 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="18%" bgcolor="#E6EFFF"><FONT size=2>$50,000 </FONT></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="18%" bgcolor="#E6EFFF"><FONT size=2>100% </FONT></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="18%" bgcolor="#E6EFFF"><FONT size=2>Holding company of the other subsidiaries </FONT></TD></TR>
  <TR>
    <TD><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="18%"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="18%"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="18%"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="18%"><FONT size=2>&nbsp; </FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Heilongjiang Shuaiyi <BR>New Energy Development Co., Ltd
      <BR>(&#147;Heilongjiang Shuaiyi&#148;) </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="18%"><FONT size=2>People&#146;s Republic of China (&#147;PRC&#148;) <BR>July 11, 2006 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="18%"><FONT size=2>RMB60,000, 000 </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="18%"><FONT size=2>100% </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="18%"><FONT size=2>Principally engaged in investment holding </FONT></TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="18%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="18%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="18%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="18%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF"><FONT size=2>Daqing Shuaiyi <BR>Biomass Technology Co., Ltd. <BR>(&#147;Daqing Shuaiyi&#148;) </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="18%" bgcolor="#E6EFFF"><FONT size=2>PRC <BR>August
      8, 2005 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="18%" bgcolor="#E6EFFF"><FONT size=2>RMB10,000, 000 </FONT></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="18%" bgcolor="#E6EFFF"><FONT size=2>100% </FONT></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="18%" bgcolor="#E6EFFF"><FONT size=2>Growing and sales of Chinese Caterpillar Fungus, which is widely used for Chinese medicine </FONT></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="18%" >&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="18%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="18%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="18%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Harbin Shuaiyi Green and
      <BR>Specialty Food Trading LLP. <BR>(&#147;Harbin Shuaiyi&#148;) </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="18%"><FONT size=2>PRC
      <BR>May 18, 2001 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="18%"><FONT size=2>RMB1,500,00 0
      </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="18%"><FONT size=2>100%
      </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="18%"><FONT size=2>Sales of agricultural products
      </FONT></TD></TR></TABLE>
<P align=justify><STRONG>NOTE 2</STRONG></P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><STRONG>SUMMARIES OF SIGNIFICANT
ACCOUNTING POLICIES</STRONG> </P>
<P align=justify><B><I>Principle of consolidation </I></B></P>
<P align=justify>These condensed consolidated financial statements include the
financial statements of Shuaiyi International and its subsidiaries. All
significant inter-company balances or transactions have been eliminated on
consolidation. </P>
<P align=justify><B><I>Basis of preparation</I></B></P>
<P align=justify>These interim condensed consolidated financial statements are
unaudited. In the opinion of management, all adjustments and disclosures
necessary for a fair presentation of these interim condensed consolidated
financial statements have been included. The results reported in the condensed
consolidated financial statements for any interim periods are not necessarily
indicative of the results that may be reported for the entire year. The
accompanying condensed consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission and do not include all information and footnotes necessary for a
complete presentation of financial statements in conformity with accounting
principles generally accepted in the United States. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes included in the
Company&#146;s Annual Report on Form 10-K for the year ended December 31, 2008. </P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>6</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_10></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align=justify><B><I>Use of estimates</I></B></P>
<P align=justify>The preparation of these condensed consolidated financial
statements in conformity with generally accepted accounting principles requires
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the related disclosure of contingent assets and
liabilities at the date of these condensed consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period. The
Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances.
Accordingly, actual results may differ from these estimates under different
assumptions or conditions.</P>
<P align=justify><B><I>Foreign currency</I></B></P>
<P align=justify>The Company uses United States dollars (&#147;US Dollar&#148; or &#147;US$&#148; or
&#147;$&#148;) for financial reporting purposes. However, the Company maintains the books
and records in its functional currency, Chinese Renminbi (&#147;RMB&#148;), being the
primary currency of the economic environment in which its operations are
conducted. In general, the Company translates its assets and liabilities into
U.S. dollars using the applicable exchange rates prevailing at the balance sheet
date, and the statement of income is translated at average exchange rates during
the reporting period. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the Company&#146;s financial statements
are recorded as accumulated other comprehensive income.</P>
<P align=justify>The exchange rates used to translate amounts in RMB into U.S.
Dollars for the purposes of preparing the consolidated financial statements were
as follows:- </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%"><U>As of September 30, 2009</U> </TD>
    <TD align=center width="15%"><U>As of December 31, 2008</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Balance sheet items, except for equity accounts </TD>
    <TD align=center width="15%" bgcolor="#E6EFFF">US$1=RMB6.8290 </TD>
    <TD align=center width="15%" bgcolor="#E6EFFF">US$1=RMB6.8346 </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="15%">&nbsp; </TD>
    <TD width="15%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="30%" colSpan=2><U>Three months ended September
      30,</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%"><U>2009</U> </TD>
    <TD align=center width="15%"><U>2008</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Items in the statements of income and cash flows </TD>
    <TD align=center width="15%" bgcolor="#E6EFFF">US$1=RMB 6.8310 </TD>
    <TD align=center width="15%" bgcolor="#E6EFFF">US$1=RMB 6.8390 </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="15%">&nbsp; </TD>
    <TD width="15%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="30%" colSpan=2><U>Nine months ended September
      30,</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%"><U>2009</U> </TD>
    <TD align=center width="15%"><U>2008</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Items in the statements of income and cash flows </TD>
    <TD align=center width="15%" bgcolor="#E6EFFF">US$1=RMB6.8321 </TD>
    <TD align=center width="15%" bgcolor="#E6EFFF">US$1=RMB6.9921 </TD></TR></TABLE>
<P align=justify><B><I>Research and development costs </I></B></P>
<P align=justify>Research and development costs are expensed to operations as
incurred. Research and development costs were $26,923 and $21,590 for the nine
months ended September 30, 2009 and 2008, respectively. Research and development
costs were $8,783 and $7,896 for the three months ended September 30, 2009 and
2008, respectively. </P>
<P align=justify><B><I>Advertising costs </I></B></P>
<P align=justify>The Company expenses all advertising costs as incurred.
Advertising costs charged to selling expenses were $1,098 and $83 for the nine
months ended September 30, 2009 and 2008, respectively. There were no any
advertising costs incurred for the three months ended September 30, 2009 and
2008 </P>
<P align=justify><B><I>Shipping and handling costs </I></B></P>
<P align=justify>Substantially all costs of shipping and handling of products to
customers are included in selling expenses. Shipping and handling costs for the
nine months ended September 30, 2009 and 2008 were nil and $271, respectively.
There were no any shipping and handling costs incurred for the three months
ended September 30, 2009 and 2008 </P>
<P align=justify><B><I>Earnings per share </I></B></P>
<P align=justify>All per share data including earnings per share has been
retroactively restated to reflect the reverse acquisition on December 23, 2008
whereby the 689,390 shares of preferred stock issued by the Company (the nominal
acquirer) to the shareholder of New Resources (the nominal acquiree) are deemed
to be the number of shares outstanding for the period prior to the reverse
acquisition. For the period after the reverse acquisition, the number of shares
considered to be outstanding is the actual number of shares outstanding during
that period.</P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>7</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_11></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <br>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align=justify>As discussed in note 10, the Company effected a 1-for-114.59
Reverse Split of its common stock and all outstanding shares of Series A
Preferred Stock were automatically converted to common stock. The weighted
average number of shares for the purposes of calculating the earnings per share
has been retroactively adjusted as if the Reverse Split took effect as of the
beginning of the earliest period presented. As holders of Series A Preferred
Stock were entitled to vote with the holders of common stock on all matters on a
an as-converted to common stock basis, basic and diluted earnings per share have
been calculated and presented on the basis that all shares of the Company&#146;s
common stock and Series A Preferred Stock are considered a single class and on
an as-converted to common stock basis before the Reverse Split.</P>
<P align=justify><B><I>Fair value measurements </I></B></P>
<P align=justify>ASC Topic 820, <I>Fair Value Measurement and Disclosures</I>,
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair
value hierarchy which requires classification based on observable and
unobservable inputs when measuring fair value. There are three levels of inputs
that may be used to measure fair value:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left ><I>Level 1 </I>- </TD>
    <TD align=left width="92%">Quoted prices in active markets for identical
      assets or liabilities. </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="92%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left ><I>Level 2 </I>- </TD>
    <TD align=left width="92%">Observable inputs other than Level 1 prices
      such as quoted prices for similar assets or liabilities; quoted prices in
      markets that are not active; or other inputs that are observable or can be
      corroborated by observable market data for substantially the full term of
      the assets or liabilities. </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="92%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left ><I>Level 3 </I>- </TD>
    <TD align=left width="92%">Unobservable inputs that are supported by
      little or no market activity and that are significant to the fair value of
      the assets or liabilities. </TD></TR></TABLE>
<P align=justify>The carrying values of cash and cash equivalents, trade
receivables and payables, and short-term debts approximate their fair values due
to their short maturities.</P>
<P align=justify>There were no assets and liabilities measured at fair value on
a nonrecurring basis as of September 30, 2009.</P>
<P align=justify><B><I>Recent accounting pronouncement adopted </I></B></P>
<P align=justify>In June 2009, the FASB established the FASB Accounting
Standards Codification<SUP>TM</SUP> (ASC) as the single source of authoritative
U.S generally accepted accounting principles (GAAP) recognized by the FASB to be
applied to nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission (&#147;SEC&#148;) under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. The ASC
superseded all previously existing non-SEC accounting and reporting standards,
and any prior sources of U.S. GAAP not included in the ASC or grandfathered are
not authoritative. New accounting standards issued subsequent to June 30, 2009
are communicated by the FASB through Accounting Standards Updates (ASUs). The
ASC did not change current U.S. GAAP but changes the approach by referencing
authoritative literature by topic (each a &#147;Topic&#148;) rather than by type of
standard. The ASC has been effective for the Company effective July 1, 2009.
Adoption of the ASC did not have a material impact on the Company&#146;s Condensed
Consolidated Financial Statements, but references in the Company&#146;s Notes to
Consolidated Financial Statements to former FASB positions, statements,
interpretations, opinions, bulletins or other pronouncements are now presented
as references to the corresponding Topic in the ASC. </P>
<P align=justify>Effective January 1, 2009, the first day of fiscal 2009, the
Company adopted FASB ASC 350-30 and ASC 275-10-50 (formerly FSP FAS 142-3,
&#147;Determination of the Useful Life of Intangible Assets&#148;), which amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142 ("SFAS 142"), &#147;Goodwill and Other Intangible Assets.&#148; The Company will
apply ASC 350-30 and ASC 275-10-50 prospectively to intangible assets acquired
subsequent to the adoption date. The adoption of these revised provisions had no
impact on the Company&#146;s Condensed Consolidated Financial Statements. </P>
<P align=justify>Effective January 1, 2009, the Company adopted FASB ASC
815-10-65 (formerly SFAS 161, &#147;Disclosures about Derivative Instruments and
Hedging Activities&#148;), which amends and expands previously existing guidance on
derivative instruments to require tabular disclosure of the fair value of
derivative instruments
and their gains and losses., This ASC also requires disclosure regarding the credit-risk related contingent features in derivative agreements, counterparty credit risk, and strategies and objectives for using derivative instruments. The adoption of
this ASC did not have a material impact on the Company&#146;s Condensed Consolidated Financial Statements.</P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>8</P>
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noShade SIZE=5>



<A name="page_12"></A>

<P align="center">
<B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND SUBSIDIARIES <br>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align="justify">
During 2008, the Company adopted FASB ASC 820-10 (formerly FSP FAS 157-2, "Effective Date of FASB Statement 157"), which deferred the provisions of previously issued fair value guidance for nonfinancial assets and liabilities to the first fiscal
period beginning after November 15, 2008. Deferred nonfinancial assets and liabilities include items such as goodwill and other nonamortizable intangibles. Effective January 1, 2009, the Company adopted the fair value guidance for nonfinancial
assets and liabilities. The adoption of FASB ASC 820-10 did not have a material impact on the Company&#146;s Condensed Consolidated Financial Statements.</P>
<P align="justify">
Effective January 1, 2009, the Company adopted FASB ASC 810-10-65 (formerly SFAS 160, "Noncontrolling Interests in Consolidated Financial Statements &#151; an amendment of ARB No. 51"), which amends previously issued guidance to establish accounting
and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership
interest in the consolidated entity that should be reported as equity. Among other requirements, this Statement requires that the consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented
on the face of the consolidated income statement. The adoption of the provisions in this ASC did not have a material impact on the Company&#146;s Condensed Consolidated Financial Statements. </P>
<P align="justify">
Effective January 1, 2009, the Company adopted FASB ASC 805-10, (formerly SFAS 141R, "Business Combinations"), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any noncontrolling interest in an acquiree and the goodwill acquired. In addition, the provisions in this ASC require that any additional reversal of deferred tax asset valuation allowance established in
connection with fresh start reporting on January 7, 1998 be recorded as a component of income tax expense rather than as a reduction to the goodwill established in connection with the fresh start reporting. The Company will apply ASC 805-10 to any
business combinations subsequent to adoption. </P>
<P align="justify">
Effective January 1, 2009, the Company adopted FASB ASC 805-20 (formerly FSP FAS 141R-1, "Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies"), which amends ASC 805-10 to require that an
acquirer recognize at fair value, at the acquisition date, an asset acquired or a liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the
measurement period. If the acquisition-date fair value of such an asset acquired or liability assumed cannot be determined, the acquirer should apply the provisions of ASC Topic 450, <I>Contingences</I>, to determine whether the contingency should
be recognized at the acquisition date or after such date. The adoption of ASC 805-20 did not have a material impact on the Company&#146;s Condensed Consolidated Financial Statements.</P>
<P align="justify">
Effective July 1, 2009, the Company adopted FASB ASC 825-10-65 (formerly FASB Staff Position (&#147;FSP&#148;) No. FAS 107-1 and Accounting Principles Board 28-1, "Interim Disclosures about Fair Value of Financial Instruments"), which amends
previous guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The adoption of FASB ASC 825-10-65 did not have a material
impact on the Company&#146;s Condensed Consolidated Financial Statements. </P>
<P align="justify">
Effective July 1, 2009, the Company adopted FASB ASC 320-10-65 (formerly FSP FAS 115-2 and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments"). Under ASC 320-10-65, an other-than-temporary impairment must be recognized if
the Company has the intent to sell the debt security or the Company is more likely than not will be required to sell the debt security before its anticipated recovery. In addition, ASC 320-10-65 requires impairments related to credit loss, which is
the difference between the present value of the cash flows expected to be collected and the amortized cost basis for each security, to be recognized in earnings while impairments related to all other factors to be recognized in other
comprehensive income. The adoption of ASC 320-10-65 did not have a material impact on the Company&#146;s Condensed Consolidated Financial Statements. </P>
<P align="center">
<font FACE="Times New Roman" SIZE="2">
F-</font>9</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">




<A name="page_13"></A>

<P align="center">
<B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND SUBSIDIARIES <br>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align="justify">
Effective July 1, 2009, the Company adopted FASB ASC 820-10-65 (formerly FSP FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly"), which provides guidance on how to determine the fair value of assets and liabilities when the volume and level of activity for the asset or liability has significantly decreased when compared with normal market activity for the asset or
liability as well as guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of ASC 820-10-65 did not have a material impact on the Company&#146;s Condensed Consolidated Financial Statements.</P>
<P align="justify">
Effective July 1, 2009, the Company adopted FASB ASC 855-10 (formerly SFAS 165, &#147;Subsequent Events&#148;), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before
financial statements are issued or are available to be issued. Adoption of ASC 855-10 did not have a material impact on the Company&#146;s Condensed Consolidated Financial Statements.</P>
<P align="justify">
<B><I>New accounting pronouncement to be adopted </I></B></P>
<P align="justify">
In December 2008, the FASB issued ASC 715, <I>Compensation &#150; Retirement Benefits </I>(formerly FASB FSP FAS 132(R)-1, &#147;Employers&#146; Disclosures about Postretirement Benefit Plan Assets&#148;), which expands the disclosure requirements
about plan assets for defined benefit pension plans and postretirement plans. The Company is required to adopt these disclosure requirements in the fourth quarter of 2009. It is expected the adoption of these disclosure requirements will have no
material effect on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
In June 2009, the FASB issued SFAS No. 166, &#147;Accounting for Transfers of Financial Assets &#150; an amendment of FASB Statement No. 140,&#148; (not yet reflected in FASB ASC). SFAS No. 166 limits the circumstances in which a financial asset
should be derecognized when the transferor has not transferred the entire financial asset by taking into consideration the transferor&#146;s continuing involvement. The standard requires that a transferor recognize and initially measure at fair
value all assets obtained (including a transferor&#146;s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. The concept of a qualifying special-purpose entity is removed from SFAS No.
140, &#147;Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,&#148; along with the exception from applying FIN 46(R), &#147;Consolidation of Variable Interest Entities.&#148; The standard is effective for
the first annual reporting period that begins after November 15, 2009 (i.e. the Company&#146;s fiscal year beginning January 1, 2010), for interim periods within the first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. It is expected the adoption of this Statement will have no material effect on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
In June 2009, the FASB issued SFAS No. 167, &#147;Amendments to FASB Interpretation No. 46(R),&#148; (not yet reflected in FASB ASC). The standard amends FIN No. 46(R) to require a company to analyze whether its interest in a variable interest
entity (&#147;VIE&#148;) gives it a controlling financial interest. A company must assess whether it has an implicit financial responsibility to ensure that the VIE operates as designed when determining whether it has the power to direct the
activities of the VIE that significantly impact its economic performance. Ongoing reassessments of whether a company is the primary beneficiary are also required by the standard. SFAS No. 167 amends the criteria to qualify as a primary beneficiary
as well as how to determine the existence of a VIE. The standard also eliminates certain exceptions that were available under FIN No. 46(R). This Statement will be effective as of the beginning of each reporting entity&#146;s first annual reporting
period that begins after November 15, 2009 (i.e. the Company&#146;s fiscal year beginning January 1, 2010), for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application
is prohibited. Comparative disclosures will be required for periods after the effective date. As such, the Company will adopt this Statement for interim and annual periods ending after January 1, 2010. It is expected the adoption of this Statement
will have no material effect on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
In August, 2009, the FASB issued ASC Update No. 2009-05 (&#147;Update 2009-05&#148;) to provide guidance on measuring the fair value of liabilities under FASB ASC 820 (formerly SFAS 157, "Fair Value Measurements"). The Company is required to adopt Update 2009-05
in the fourth quarter of 2009. It is expected the adoption of this Update will
have no material effect on the Company&#146;s Consolidated Financial Statements.</P>
<P align="center">
<font FACE="Times New Roman" SIZE="2">
F-</font>10</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">

<A name=page_14></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align=justify>In October 2009, the FASB concurrently issued the following ASC
Updates:</P>
<ul>
  <li>
<P align=justify style="margin-top: 0; margin-bottom: 12">ASU No. 2009-14 - <I>Software (Topic 985): Certain Revenue
Arrangements That Include Software Elements </I>(formerly EITF Issue No. 09-3)
<I>. </I>This standard removes tangible products from the scope of software
revenue recognition guidance and also provides guidance on determining whether
software deliverables in an arrangement that includes a tangible product, such
as embedded software, are within the scope of the software revenue guidance.</P>
  </li>
  <li>
<P align=justify style="margin-top: 0; margin-bottom: 12">ASU No. 2009-13 - <I>Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangements </I>(formerly EITF Issue No. 08-1).
This standard modifies the revenue recognition guidance for arrangements that
involve the delivery of multiple elements, such as product, software, services
or support, to a customer at different times as part of a single revenue
generating transaction. This standard provides principles and application
guidance to determine whether multiple deliverables exist, how the individual
deliverables should be separated and how to allocate the revenue in the
arrangement among those separate deliverables. The standard also expands the
disclosure requirements for multiple deliverable revenue arrangements.</P>
  </li>
</ul>
<P align=justify>These Accounting Standards Updates should be applied on a
prospective basis for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010, with earlier application
permitted. Alternatively, an entity can elect to adopt these standards on a
retrospective basis, but both these standards must be adopted in the same period
using the same transition method. The Company expects to apply this standard on
a prospective basis for revenue arrangements entered into or materially modified
beginning January 1, 2011. The Company is currently evaluating the potential
impact these standards may have on its financial position and results of
operations.</P>
<P align=justify>Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company&#146;s
Condensed Consolidated Financial Statements upon adoption. </P>
<P align=justify><STRONG>NOTE 3</STRONG> </P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><STRONG>ACCOUNTS RECEIVABLE,
NET</STRONG> </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Accounts receivable consisted of the following: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%">September 30, </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="11%">December 31, </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2009
    </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2008
    </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%">Unaudited </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="11%">Audited </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD width="11%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD width="11%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Accounts receivable </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD align=right width="11%" bgcolor="#E6EFFF">&nbsp;362,880 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD align=right width="11%" bgcolor="#E6EFFF">&nbsp;283,822 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Less: Allowance for doubtful debts </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Accounts receivable, net </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%" bgcolor="#E6EFFF">&nbsp;362,880 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%" bgcolor="#E6EFFF">&nbsp;283,822 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  </TABLE>
<P align=left><B>NOTE 4</B> </P>
<P align=left style="margin-left: 60pt; margin-top: -25.5pt"> <STRONG>INVENTORIES</STRONG></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Inventories by major categories are summarized as follows:
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%">September 30, </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="11%">December 31, </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2009
    </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2008
    </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%">Unaudited </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="11%">Audited </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD width="11%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD width="11%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Raw materials </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD align=right width="11%" bgcolor="#E6EFFF">&nbsp;232,086 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD align=right width="11%" bgcolor="#E6EFFF">&nbsp;147,824 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Work in progress </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">224,550 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">832,680 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Finished goods </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%" bgcolor="#E6EFFF">174,674 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%" bgcolor="#E6EFFF">187,575 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;631,310 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;1,168,079 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>11</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_15></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align=justify><STRONG>NOTE 5</STRONG> </P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><STRONG>INTANGIBLE ASSETS, NET</STRONG>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Intangible assets, net consisted of the following: </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="11%">&nbsp; </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="11%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="11%">September 30, </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="11%">December 31, </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2009
    </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2008
    </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="11%">Unaudited </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="11%">Audited </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="11%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="11%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Computer software, cost </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF">$</TD>
    <TD align=right width="11%" bgcolor="#E6EFFF">&nbsp;1,454 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF">$</TD>
    <TD align=right width="11%" bgcolor="#E6EFFF">&nbsp;1,453 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exclusive right to use a secret process, cost </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="11%">4,394,794 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="11%">4,391,193 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Less: Accumulated amortization </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%" bgcolor="#E6EFFF">(1,539,287</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%" bgcolor="#E6EFFF">(1,208,651</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;2,856,961 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;3,183,995 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR></TABLE>
<P align=justify>In April 2006, the Company purchased from a third party a
ten-year exclusive right to use a secret process and method in the cultivation
and growing of Chinese Caterpillar Fungus, which is widely used for Chinese
medicine, for a cash consideration of RMB30,000,000, payable over five years.
The exclusive right is amortized over its term of ten years using the
straight-line method.</P>
<P align=justify>Amortization expenses for the nine months ended September 30,
2009 and 2008 were $329,495 and $322,388, respectively. Amortization expenses
for the three months ended September 30, 2009 and 2008 were $109,849 and
$109,879, respectively. </P>
<P align=justify><STRONG>NOTE 6</STRONG> </P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><STRONG>PROPERTY, PLANT AND EQUIPMENT,
NET</STRONG> </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Property, plant and equipment, net consisted of the
      following: </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="11%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="11%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="11%">September 30, </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="11%">December 31, </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2009
    </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2008
    </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="11%">Unaudited </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="11%">Audited </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="11%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="11%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#e6efff">Cost: </TD>
    <TD align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="11%" bgcolor="#e6efff">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="11%" bgcolor="#e6efff">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;Buildings </TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="11%">&nbsp;11,657,092 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">$</TD>
    <TD align=right width="11%">&nbsp;11,647,541 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#e6efff">&nbsp;Office equipment </TD>
    <TD align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=right width="11%" bgcolor="#e6efff">9,325 </TD>
    <TD align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD align=right width="11%" bgcolor="#e6efff">9,317 </TD>
    <TD align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;Machinery </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="11%">98,984 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="11%">98,903 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#e6efff">&nbsp;Motor vehicles </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%" bgcolor="#e6efff">54,835 </TD>
    <TD align=left width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%" bgcolor="#e6efff">54,790 </TD>
    <TD align=left width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total cost </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="11%">11,820,236 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="11%">11,810,551 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#e6efff">Less: Accumulated depreciation </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%" bgcolor="#e6efff">(1,335,414</TD>
    <TD align=left width="2%" bgcolor="#e6efff">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%" bgcolor="#e6efff">(907,575</TD>
    <TD align=left width="2%" bgcolor="#e6efff">) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Net book value </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;10,484,822 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;10,902,976 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR></TABLE>
<P align=justify>Depreciation expenses for the nine months ended September 30,
2009 and 2008 were $426,901 and $517,949, respectively. Depreciation expenses
for the three months ended September 30, 2009 and 2008 were $141,664 and
$173,914, respectively. </P>
<P align=justify><STRONG>NOTE 7</STRONG> </P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><STRONG>OTHER PAYABLES AND
ACCRUALS</STRONG> </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Other payables and accruals consisted of the following: </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="11%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="11%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="11%">September 30, </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="11%">December 31, </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2009
    </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="11%">2008
    </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="11%">Unaudited </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="11%">Audited </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="11%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD width="11%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Accrued staff costs </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF">$</TD>
    <TD align=right width="11%" bgcolor="#E6EFFF">&nbsp;337,407 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF">$</TD>
    <TD align=right width="11%" bgcolor="#E6EFFF">&nbsp;235,421 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Other taxes payable </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="11%">142,030 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="11%">232,481 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Other payables </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%" bgcolor="#E6EFFF">5,414
    </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%" bgcolor="#E6EFFF">5,057
    </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;484,851 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;472,959 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR></TABLE>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>12</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_16></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align=justify><B>NOTE 8</B></P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><B>PAYABLE FOR INTANGIBLES</B><BR></P>
<P align=justify>As described in Note 5, the Company purchased an exclusive
right from an independent party for a secret process and method for a stated
value of RMB 30,000,000 payable over 5 years from the date of purchase. The
agreement provides that all payments by the Company for the secret process and
method will be refundable if the secret process and method proves ineffective.
Under APB 21, &#147;Interest on Receivables and Payables&#148;, the payable for
intangibles are stated without imputed interest as the noninterest factor fairly
represents the warranty for performance. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>The following table presents the amounts payable for the
      next five years and thereafter: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left></TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>12-month period ending September 30, 2011
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="14%" bgColor=#e6efff>&nbsp;878,606 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>2012 and thereafter </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="14%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Total </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>878,606 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Less: Current portion </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="14%">(878,606</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Non-current portion </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="14%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify><STRONG>NOTE 9 </STRONG></P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><STRONG>ACQUISITION PAYABLE
</STRONG></P>
<P align=justify>The acquisition payable represents the transfer price of RMB
60,000,000 payable by New Resources for the acquisition of 100% equity interest
in Heilongjiang Shuaiyi. As discussed in Note 15, the acquisition payable is due
for payment in full on or before December 1, 2009 by New Resources to Shuaiyi
Founders who are also shareholders of the Company. During the period, the
Company paid $50,269 to the Shuaiyi Founders. </P>
<P align=justify><B>NOTE 10</B><BR></P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><B>SHAREHOLDERS&#146; EQUITY</B><BR></P>
<P align=justify><B><I>Reverse Split of Common Stock </I></B></P>
<P align=justify>On May 19, 2009, the Company effected a one for 114.59 reverse
split of its outstanding common stock (&#147;Reverse Split&#148;).</P>
<P align=justify><B><I>Series A Voting Convertible Preferred Stock </I></B></P>
<P align=justify>In accordance with the Company&#146;s Articles of Incorporation, the
Company&#146;s Board of Directors unanimously approved the filing of a Certificate of
Designation designating and authorizing the issuance of up to 800,000 shares of
Series A Voting Preferred Stock. The Certificate of Designation was filed on
December 22, 2008. The holders of the Company&#146;s Series A Preferred Stock were
entitled to vote on all matters together with all other classes of stock on an
as-converted to common stock basis. Holders of Series A Preferred Stock had
protective class voting veto rights on matters, such as business combination
transactions, payment of dividends, the issuance of other classes of stock with
senior rights, changes to oucharter documents and stock redemptions. Shares of
Series A Preferred Stock had a senior liquidation payment preference in the
event of a liquidation or sale of the Company.</P>
<P align=justify>Following effectiveness of the Reverse Split and in accordance
with the Certificate of Designation of the Series A Voting Convertible Preferred
Stock, all issued and outstanding shares of the Series A Preferred Stock were
automatically converted into 12,695,223 shares of common stock, on the basis of
17.45 shares of common stock for each one share of Series A Preferred Stock, on
or about May 29, 2009.</P>
<P align=justify>As of September 30, 2009 and December 31, 2008, the Company had
none and 727,520 shares of Series A Preferred Stock issued and outstanding,
respectively. </P>
<P align=justify><B>NOTE 11</B><BR></P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><B>EQUITY INCENTIVE PLAN</B><BR></P>
<P align=justify>On June 3, 2009, the Company established the &#147;Shuaiyi
International New Resources Development Inc. 2009 Equity Incentive Plan&#148;(the
&#147;Plan&#148;). The purposes of the Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to employees, directors and consultants, and to promote the long-term
growth and profitability of the Company. The Plan permits the granting of Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units and Performance Shares as the Company&#146;s board of director may
determine. The maximum number of shares that may be issued under the Plan was
1,000,000. </P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>13</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_17></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<P align=justify>On June 17, 2009, 500,000 restricted shares were issued under
the Plan and accordingly, remaining shares that can be issued under the Plan was
500,000 shares as of September 30, 2009. </P>
<P align=justify><B>NOTE 12</B><BR></P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><B>INCOME TAXES</B><BR></P>
<P align=justify>The PRC subsidiaries within the Group are subject to PRC income
taxes on an entity basis on income arising in or derived from the tax
jurisdiction in which they operate, i.e. the PRC. The statutory PRC Enterprise
Income Tax (&#147;EIT&#148;) rate for the Companies&#146; PRC subsidiaries was generally 33%
for periods before January 1, 2008. However, one of the Companies&#146; subsidiaries,
Daqing Shuaiyi, being engaged in growing and sales of agricultural products is
entitled to a preferential EIT treatment whereby Daqing Shuaiyi was granted an
EIT holiday for the two years ended December 31, 2007 and 2006 and a 50%
reduction on the EIT rate for the year ended December 31, 2008 and the two years
ending December 31, 2009 and 2010.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left><FONT size=2>The Company&#146;s income tax expense consisted of:
      </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><FONT size=2>For the Three Months
      </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><FONT size=2>For the Nine Months
      </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><FONT size=2>Ended September 30,
      </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><FONT size=2>Ended September 30,
      </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><FONT size=2>2009 </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><FONT size=2>2008 </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><FONT size=2>2009 </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><FONT size=2>2008 </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="10%"><FONT size=2>Unaudited </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="10%"><FONT size=2>Unaudited </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="10%"><FONT size=2>Unaudited </FONT></TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="10%"><FONT size=2>Unaudited </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#e6efff"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD width="10%" bgcolor="#e6efff"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD width="10%" bgcolor="#e6efff"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD width="10%" bgcolor="#e6efff"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgcolor="#e6efff">&nbsp;</TD>
    <TD width="1%" bgcolor="#e6efff">&nbsp;</TD>
    <TD width="10%" bgcolor="#e6efff"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgcolor="#e6efff">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Current &#150; PRC EIT </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>&nbsp;340,056
      </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>&nbsp;361,336
      </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>&nbsp;891,220 $
      </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff><FONT size=2>774,996
</FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>Deferred </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>- </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>- </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;- </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"><FONT
      size=2>- </FONT></TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff><FONT size=2>&nbsp;340,056 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff><FONT size=2>&nbsp;361,336 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff><FONT size=2>&nbsp;891,220 $ </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff><FONT size=2>774,996 </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>On March 16, 2007, the PRC government promulgated a new tax
law, China&#146;s Unified Enterprise Income Tax Law (&#147;New EIT Law&#148;), which took
effect from January 1, 2008. Under the New EIT Law, foreign-owned enterprises as
well as domestic companies are subject to a uniform tax rate of 25%. The New EIT
Law provides for a five-year transition period from its effective date for those
enterprises which were established before the promulgation date of the New EIT
Law and which were entitled to a preferential EIT treatment. Accordingly, Daqing
Shuaiyi has continued to be entitled to the 50% reduction on its EIT rate for
the year ended December 31, 2008 and the two years ending December 31, 2009 and
2010.<B> </B></P>
<P align=justify><STRONG>NOTE 13</STRONG> </P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><STRONG>RELATED PARTY
TRANSACTIONS</STRONG> </P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify>&nbsp;</P>
<p><B>(a) </B> </p>
<p style="margin-left: 3%; margin-top: -25.5pt"><B>Due to related
parties</B> </p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left><FONT size=2>Due to related parties consisted of the
      following: </FONT></TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><FONT size=2>September 30, </FONT></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><FONT size=2>December 31, </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><FONT size=2>2009 </FONT></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><FONT size=2>2008 </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><FONT size=2>Unaudited </FONT></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><FONT size=2>Audited </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Due to related company:
    </FONT></TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="11%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="11%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="11%" bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><FONT size=2>- Heilonjiang Shuaiyi Technology Development
      Co., Ltd. (&#147;Shuaiyi Technology&#148;) </FONT></TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><FONT size=2>(i) </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" ><FONT size=2>$</FONT></TD>
    <TD align=right width="11%"><FONT size=2>&nbsp;15,760 </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$&nbsp;&nbsp;</TD>
    <TD align=right width="11%"><FONT size=2>8,998 </FONT></TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>- Ms. Lianyun Han </FONT></TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="11%" bgColor=#e6efff><FONT size=2>(ii) </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%"
    bgColor=#e6efff><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;61,649 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%"
    bgColor=#e6efff><FONT size=2>- </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD><FONT size=2>&nbsp; </FONT></TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%"><FONT size=2>&nbsp; </FONT></TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#ffffff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="1%"  bgColor=#ffffff>&nbsp;</TD>
    <TD align=left width="11%" bgColor=#ffffff><FONT size=2>&nbsp; </FONT></TD>
    <TD align=left width="2%"  bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#ffffff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="11%"
    bgColor=#ffffff><FONT size=2>&nbsp;77,409&nbsp; </FONT></TD>
    <TD align=left width="2%"  bgColor=#ffffff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#ffffff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="11%"
    bgColor=#ffffff><FONT size=2>8,998 </FONT></TD>
    <TD align=left width="2%"
  bgColor=#ffffff>&nbsp;</TD></TR></TABLE>
<p><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(i) </TD>
    <TD>
      <P align=justify>Shuaiyi Technology and the Company are under common
      control and management.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD>
      <P align=justify>Ms. Lianyun Han is the CEO and Chairman of the
      Company.</P></TD></TR></TABLE>
<P align=justify>Due to Shuaiyi Technology relates to the land rental payable to
Shuaiyi Technology.</P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>14</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_18></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<P align=justify>The amounts due to related parties were non-interest bearing,
unsecured and had no fixed repayment date. </P>
<P align=justify><B>(b) </B></P>
<P align=justify style="margin-left: 3%; margin-top: -25.5pt"><B>Purchase of
goods </B></P>
<P align=justify>For the nine months ended September 30, 2009 and 2008, the
Company purchased rice amounting to $655,099 and $1,156,868, respectively, from
Shuaiyi Technology. </P>
<P align=justify><B>(c) </B></P>
<P align=justify style="margin-left: 3%; margin-top: -25.5pt"><B>Lease of land </B></P>
<P align=justify>For the nine months ended September 30, 2009 and 2008, the
Company paid rental expense of $6,751 and $ 6,597, respectively, for land under
an operating lease to Shuaiyi Technology.<B> </B></P>
<P align=justify><STRONG>NOTE 14</STRONG> </P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><STRONG>CONCENTRATION OF RISK</STRONG>
</P>
<P align=justify><STRONG>(a)</STRONG> </P>
<P align=justify style="margin-left: 3%; margin-top: -25.5pt"> <STRONG>Concentration of
credit risk</STRONG> </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  </TABLE>
<P align=justify>As of September 30, 2009 and December 31, 2008, 100% of the
Company&#146;s cash included cash on hand and deposits in accounts maintained within
the PRC where there is currently no rule or regulation in place for obligatory
insurance to cover bank deposits in the event of bank failure. However, the
Company has not experienced any losses in such accounts and believes it is not
exposed to any risks on its cash in bank accounts </P>
<P align=justify>For the nine months ended September 30, 2009 and 2008, all of
the Company&#146;s sales arose in the PRC. In addition, all accounts receivable as of
September 30, 2009 and December 31, 2008 also arose in the PRC. </P>
<P align=justify>There was one customer accounted for 10.20% of the Company&#146;s
revenue for the nine months ended September 30, 2009. There was no single
customer who accounted for more than 10% of the Company&#146;s revenue for the nine
months ended September 30, 2008. </P>
<P align=justify>As of September 30, 2009, five customers on an individual basis
accounted for 20%, 14%, 13%, 13% and 10% of accounts receivable of the Company.
As of December 31, 2008, three customers on an individual basis accounted for
32%, 23% and 15% of accounts receivable of the Company. Except as aforesaid,
there was no other single customer who accounted for more than 10% of the
Company&#146;s accounts receivable as of September 30, 2009 or December 31, 2008.
</P>
<P align=justify><B>(b) </B></P>
<P align=justify style="margin-left: 3%; margin-top: -25.5pt"><B>Concentration
of operating risk</B><BR></P>
<P align=justify>Substantially all of the Company&#146;s operations are conducted in
China. The Company&#146;s operations are subject to various political, economic, and
other risks and uncertainties inherent in China. Among other risks, the
Company&#146;s operations are subject to the risks of restrictions on transfer of
funds; export duties, quotas, and embargoes; domestic and international customs
and tariffs; changing taxation policies; foreign exchange restrictions; and
political conditions and governmental regulations. </P>
<P align=justify><STRONG>NOTE 15</STRONG> </P>
<P style="margin-left: 60pt; margin-top:-25.5pt" align=justify><B>COMMITMENTS AND CONTINGENCIES</B>
</P>
<P align=justify><B>(a)</B> </P>
<P align=justify style="margin-left: 3%; margin-top: -25.5pt"> <B>Operating leases</B></P>
<P align=justify>The Company has entered into tenancy agreements for the lease
of exhibition hall and land with a third party and a related company (see Note
13(a)), respectively, for the purposes of the operation of its subsidiaries. The
Company&#146;s commitments for minimum lease payments under this operating lease for
the next five years and thereafter as of September 30, 2009 are as follows: </P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>15</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_19></A>
<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES <BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">Unaudited </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Remainder of 2009 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="14%" bgColor=#e6efff>&nbsp;7,962 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>2010 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">31,849 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>2011 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>9,006 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>2012 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">9,006 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>2013 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>9,006 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Thereafter </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="14%">126,080 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="14%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Total </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="14%"
    bgColor=#e6efff>&nbsp;192,909 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify><STRONG>(b)</STRONG></P>
<P align=justify style="margin-left: 3%; margin-top: -25.5pt"> <STRONG>PRC employee costs</STRONG> </P>
<P align=justify>According to the prevailing laws and regulations of the PRC,
the Company&#146;s subsidiaries in the PRC are required to cover its employees with
medical, retirement and unemployment insurance programs. Management believes
that due to the transient nature of its employees, they do not need to provide
all employees with such social insurances, and have not paid the social
insurances for all employees. </P>
<P align=justify>In the event that any current or former employee files a
complaint with the PRC government, the Company's subsidiaries may be subject to
making up the social insurances as well as administrative fines. As the Company
believes that these fines would not be material, no provision has been made in
this regard. </P>
<P align=justify><B>(c) </B></P>
<P align=justify style="margin-left: 3%; margin-top: -25.5pt"><B>Transfer price for equity interest in Heilongjiang Shuaiyi </B></P>
<P align=justify>On July 28, 2008, the Company&#146;s subsidiary, New Resources
entered into an equity transfer agreement with the Shuaiyi Founders to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB 60,000,000
(approximately $8.8 million). A new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008. According to PRC merger and acquisition rules, the
equity interest transfer price should be paid in full within three months
commencing from the issuance of the new business license to Heilongjiang
Shuaiyi. If the transfer price is not paid by this date, the Company may apply
to the relevant PRC business bureau for an extension of up to one year from the
date of the issuance of the license; provided, however, that 60% of the transfer
price will be required to be paid within six months from such date. However, if
the Company is unable to make the payment for the transfer price by the March 1,
2009 or extended deadline and the relevant PRC business bureau does not grant
the Company additional time to make the payment, the Company may be subject to
fines or penalties imposed by the PRC business bureau. In addition, the Company
may not be permitted to exercise any decision-making rights as a shareholder in
Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi's financial results
into the Company&#146;s financial statements.</P>
<P align=justify>On March 10, 2009, New Resources obtained the approval from the
relevant PRC business bureau for the extension of time allowed for the payment
of the transfer price to one year until December 1, 2009. The Company has
engaged financial advisors with a view to raising additional capital for the
Company. The Company believes that it will be able to make the payment for the
transfer price within the time allowed by the relevant PRC business bureau and
therefore has not accrued any amount related to this contingency. However, there
can be no assurance that the Company will be successful in raising sufficient
capital for the purpose of the payment of the transfer price to the Shuaiyi
Founders.</P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>16</P>



<A name="page_20"></A>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>

<P align=center><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES </B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B></P>
<p><B>NOTE 16</B> </p>
<p style="margin-left: 60pt; margin-top: -25.5pt"><B>SEGMENT INFORMATION</B> </p>
<P align=justify>The Company operates in two business segments identified by
product, &#147;Chinese Caterpillar Fungus&#148; and &#147;other agricultural products&#148;. The
Chinese Caterpillar Fungus segment consists of the growing and sales of Chinese
Caterpillar Fungus, which business is conducted through the Company&#146;s
subsidiary, Daqing Shuaiyi. The other agricultural products segment consists of
the sales of rice, flour and silage corn etc, agricultural products which
business is mainly conducted through the Company&#146;s subsidiary, Harbin
Shuaiyi.</P>
<P align=justify dir="ltr">Throughout the nine months ended September 30, 2009 and 2008,
all of the Company&#146;s operations were carried out in one geographical segment -
China. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 dir="ltr">

  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Chinese</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Other</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Caterpillar</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Agricultural</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Corporate</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" noWrap align=left dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Nine months ended September 30,</B> <B>2009</B>
      </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Fungus</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Products</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>unallocated </B></FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><STRONG>Consolidated</STRONG> </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD align=left bgcolor="#E6EFFF" style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p style="margin-top: 10" dir="ltr"><FONT size=2>Segment revenue from external customers </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>&nbsp;8,696,141 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>2,853,103 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>- </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>&nbsp;11,549,244 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p style="margin-top: 10" dir="ltr"><FONT size=2>Segment profit (loss) </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;6,287,874</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>578,505 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>(231,992</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;&nbsp;6,634,387 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD align=left bgcolor="#E6EFFF" style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Income from operations before income taxes
      </FONT></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;6,634,387 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p style="margin-top: 10" dir="ltr"><FONT size=2>Segment assets </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;25,239,717&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>1,182,395&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>3,359,748 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;  &nbsp; 29,781,860 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left bgcolor="#E6EFFF" style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Total assets </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; 29,781,860 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p style="margin-top: 10" dir="ltr"><FONT size=2>Other segment information: </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left bgcolor="#E6EFFF" style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; &nbsp;Depreciation and
      amortization </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;748,444 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>5,889 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>2,063 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; 756,396 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; &nbsp;Expenditure for segment
      assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;878,207 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; 878,207 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Chinese</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Other</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Caterpillar</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Agricultural</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Corporate</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" noWrap align=left dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Nine months ended September 30,</B> <B>2008</B>
      </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Fungus</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Products</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>unallocated</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Consolidated</B> </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p style="margin-top: 10" dir="ltr"><FONT size=2>Segment revenue from external customers </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>&nbsp;6,985,060 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>3,182,225 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>$</FONT>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>- </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT
      size=2>&nbsp;10,167,285 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p style="margin-top: 10" dir="ltr"><FONT size=2>Segment profit (loss) </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;5,145,129 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>658,780 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>(157,814</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; 5,646,095 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Income from operations before income taxes
      </FONT></TD>
    <TD align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;5,646,095 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Segment assets </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;21,467,946 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>881,929 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>1,438,153 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; 23,788,028 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Total assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; 23,788,028 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p style="margin-top: 10" dir="ltr"><FONT size=2>Other segment information: </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; &nbsp;Depreciation and
      amortization </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;832,258 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>5,708 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>2,371</FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; 840,337 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; &nbsp;Expenditure for segment
      assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;884,338 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>4,598</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT>&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>2,130 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; 891,066 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD></TR></TABLE>
<P align=center dir="ltr">
<font FACE="Times New Roman" SIZE="2">
F-</font>17</P>
<HR style="PAGE-BREAK-AFTER: always" color=black
noShade SIZE=5 dir="ltr">
<!--$$/page=--><A name=page_2></A>
<P align=center dir="ltr"><B>SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 dir="ltr">

  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Chinese</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Other</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Caterpillar</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Agricultural</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Corporate</B>
</FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" noWrap align=left dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Three months ended September 30,</B> <B>2009</B>
      </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Fungus</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Products</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>unallocated</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="10%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><STRONG><FONT size=2>Consolidated</FONT></STRONG>&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr" style="margin-top: 10"><FONT size=2>Segment revenue from external customers </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;3,257,025 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>308,936 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>- </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;3,565,961 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr" style="margin-top: 10"><FONT size=2>Segment profit (loss) </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;2,415,268 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>19,468 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>(65,626</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;2,369,110 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Income from operations before income taxes
      </FONT></TD>
    <TD align=right width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;2,369,110 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr" style="margin-top: 10"><FONT size=2>Segment assets </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;25,239,716 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>1,182,396 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>3,359,748 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;29,781,860 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Total assets </FONT></TD>
    <TD noWrap align=right width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;29,781,860 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr" style="margin-top: 10"><FONT size=2>Other segment information: </FONT></TD>
    <TD noWrap align=right width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom" bgcolor="#E6EFFF">
    <p dir="ltr"><FONT size=2>&nbsp; &nbsp;Depreciation and
      amortization </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom" bgcolor="#E6EFFF">
    <p dir="ltr"><FONT size=2>&nbsp;248,862</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom" bgcolor="#E6EFFF">
    <p dir="ltr"><FONT size=2>1,962 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom" bgcolor="#E6EFFF">
    <p dir="ltr"><FONT size=2>688 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom" bgcolor="#E6EFFF">
    <p dir="ltr"><FONT size=2>&nbsp;251,512 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" bgcolor="#E6EFFF" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; &nbsp;Expenditure for segment
      assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;878,349 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>-&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;878,349 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Chinese</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Other</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Caterpillar</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Agricultural</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Corporate</B>
</FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=center width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" noWrap align=left dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Three months ended September 30,</B> <B>2008</B>
      </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Fungus</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Products</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>unallocated</B> </FONT></TD>
    <TD noWrap align=center width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2><B>Consolidated</B> </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr" style="margin-top: 10"><FONT size=2>Segment revenue from external customers </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;3,591,681 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>821,401 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>- </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;4,413,082 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr" style="margin-top: 10"><FONT size=2>Segment profit (loss) </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;2,708,344 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>73,652 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>(54,176</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;2,727,820 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Income from operations before income taxes
      </FONT></TD>
    <TD align=right width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr">&nbsp;</TD>
    <TD align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;2,727,820 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr" style="margin-top: 10"><FONT size=2>Segment assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;21,467,946 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>881,929</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>1,438,153</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;23,788,028 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>Total assets </FONT></TD>
    <TD noWrap align=right width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom"
    >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;23,788,028 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr" style="margin-top: 10"><FONT size=2>Other segment information: </FONT></TD>
    <TD noWrap align=right width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=right width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; &nbsp;Depreciation and
      amortization </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;278,338 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>4,597</FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>860 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;283,795 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR>
  <TR vAlign=top dir="ltr">
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp; &nbsp;Expenditure for segment
      assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;877,321 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>1,294</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>557</FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD>
    <TD noWrap align=left width="1%" dir="ltr" valign="bottom" >
    <p dir="ltr"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" dir="ltr" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;879,172 </FONT></TD>
    <TD noWrap align=left width="2%" dir="ltr" valign="bottom" >
    <p dir="ltr">&nbsp;</TD></TR></TABLE>
<P align=justify><B>NOTE 17 </B></P>
<P align=justify style="margin-left: 60pt; margin-top: -25.5pt"><B>SUBSEQUENT
EVENTS </B></P>
<P align=justify>The Company has evaluated events subsequent to the balance
sheet date through November 12, 2009, which represents the issue date of this
Form 10-Q. There were no events or transactions occurring during this subsequent
event report period which requires recognition or disclosure in the financial
statements. </P>
<P align=center>
<font FACE="Times New Roman" SIZE="2">
F-</font>18</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>

<P ALIGN="CENTER"><img alt="(LOGO)" src="img005.jpg" width="600" height="99"></P>



<P ALIGN=CENTER><FONT SIZE=3><B>REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</B></FONT></P>

<P ALIGN=JUSTIFY>To the Board
of Directors and Stockholders of <BR>
YzApp International, Inc. and subsidiaries </P>

<P ALIGN=JUSTIFY>We have
audited the accompanying balance sheet of YzApp International Inc. and
subsidiaries as of December 31, 2008 and the related statements of income and
comprehensive income, stockholders&#146; equity, and cash flows for the year then
ended. YzApp International Inc.&#146;s management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial
statements based on our audits. </P>

<P ALIGN=JUSTIFY>We conducted
our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about 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&#146;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, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. </P>

<P ALIGN=JUSTIFY>In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of YzApp International Inc. and
subsidiaries as of December 31, 2008 and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America. </P>

<P ALIGN=JUSTIFY>As discussed
in Notes 1 and 18 (c), the consolidated financial statements were prepared on
the assumption that New Zealand WAYNE&#146;S New Resources Development Co., Ltd.
will be able to pay up the investment money related to Heilongjiang Shuaiyi New
Energy Development Co., Ltd. on or before December 1, 2009. In case New
Zealand WAYNE&#146;S New Resources Development Co., Ltd. fails to pay the amount in
full on time, the basis of consolidation may not be appropriate. </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="36%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="63%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>/s/ AGCA,
  Inc.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>Arcadia,
  California <BR>
  March 24, 2009</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>F-19 </P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="100%"><img src="yzapp11.jpg" border="0" width="326" height="89"></td>
  </tr>
</table>
<b><font FACE="Times New Roman">
<p align="center"><u>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM </u>
</p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p>To the Stockholders and Board of Directors of <br>
Heilongjiang Shuaiyi New Energy Development Co., Ltd. and Subsidiaries: </p>
<p ALIGN="JUSTIFY">We have audited the accompanying consolidated balance sheet
of Heilongjiang Shuaiyi New Energy Development Co., (a wholly-owned subsidiary
of YzApp International Inc.) and its subsidiaries (the &quot;Company&quot;) as of
December 31, 2007 and the related consolidated statements of income and
comprehensive income, cash flows and stockholders&#146; equity for the year ended
December 31, 2007. These consolidated financial statements are the
responsibility of the Company&#146;s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. </p>
<p ALIGN="JUSTIFY">We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated 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&#146;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 consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. </p>
<p ALIGN="JUSTIFY">In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Heilongjiang Shuaiyi New Energy Development Co. Ltd. and its
subsidiaries as of December 31, 2007, and the consolidated result of their
operations and their cash flows for the year ended December 31, 2007 in
conformity with U.S. generally accepted accounting principles. </p>
<p>/s/ GC ALLIANCE LIMITED <i><br>
Certified Public Accountants</i> <br>
Hong Kong, May 15, 2008 </p>
<p align="center">F- 20</p>
</font>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
CONSOLIDATED BALANCE SHEETS<BR></B>(AMOUNTS EXPRESSED IN US DOLLAR)</FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" height="638">
<TR style="font-size:1px">
<TD WIDTH="70%" VALIGN=BOTTOM height="2">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM height="2">
<P ALIGN=JUSTIFY></P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM height="2">
<P ALIGN=JUSTIFY></P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM height="2">
<P ALIGN=RIGHT></P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM height="2">
<P ALIGN=JUSTIFY></P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM height="2">
<P ALIGN=JUSTIFY></P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM height="2">
<P ALIGN=RIGHT></P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM height="2">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM height="15">
<P ALIGN=CENTER><FONT SIZE=2><B>December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM height="15">
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM height="15">
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="3">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=CENTER></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=CENTER STYLE='MARGIN-LEFT:8.65PT;   TEXT-INDENT:-8.65PT'><FONT SIZE=2><B><U>ASSETS</U></B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>CURRENT ASSETS</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Cash and cash equivalents</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>9,198,243</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>2,148,348</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Accounts receivable, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>283,822</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>138,085</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Inventories</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>1,168,079</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>649,372</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Deposits, prepayments and other
receivables</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>14,105</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>147,850</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="3">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Total current assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>10,664,249</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>3,083,655</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>OTHER ASSETS</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Intangible assets, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>3,183,995</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>3,388,956</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Property, plant and equipment, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>10,902,976</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>10,720,477</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="3">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="12">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Total assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>24,751,220</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>17,193,088</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="5">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="5">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px" height="5">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px" height="5">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="5">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px" height="5">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px" height="5">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="5">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="12">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=CENTER STYLE='MARGIN-LEFT:8.65PT;   TEXT-INDENT:-8.65PT'><FONT SIZE="2"><B><U>LIABILITIES AND SHAREHOLDERS&#146;
EQUITY</U></B> </FONT> </P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>CURRENT LIABILITIES</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Accounts payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>3,206</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>29,777</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Other payables and accruals</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>472,959</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>476,629</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Payable for intangibles &#150; Current
portion</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>877,886</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>821,400</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Income tax payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>119,486</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>75,420</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Due to related parties</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>8,998</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>53</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Acquisition payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>8,778,861</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>6,396,187</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="3">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Total current liabilities</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>10,261,396</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>7,799,466</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>NON-CURRENT LIABILITIES</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Payable for intangibles, net of current
  portion</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>877,886</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>1,642,800</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="3">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Total liabilities</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>11,139,282</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>9,442,266</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="3">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="12">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>COMMITMENTS AND CONTINGENCIES (Note 18)</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="12">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>SHAREHOLDERS&#146; EQUITY</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Preferred Stock, $0.001 par value,
  1,000,000 shares authorized, 727,520 and 689,390 shares issued and outstanding</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>727</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>689</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Common stock, $0.001 par value, 50,000,000
  shares authorized, 11,746,041 shares and none issued and outstanding</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>11,746</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Additional paid-in capital</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>2,192,716</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>86,174</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Statutory reserves</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>1,326,239</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>693,028</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Retained earnings</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>9,131,744</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>6,045,906</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Accumulated other comprehensive income</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15" style="border-bottom: 1px solid #000000">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15" style="border-bottom: 1px solid #000000">
<P ALIGN=RIGHT><FONT SIZE=2>948,766</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15" style="border-bottom: 1px solid #000000">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15" style="border-bottom: 1px solid #000000">
<P ALIGN=RIGHT><FONT SIZE=2>925,025</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Total shareholders&#146; equity</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>13,611,938</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=RIGHT><FONT SIZE=2>7,750,822</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="3">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px" height="3">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="3">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM height="12">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM height="12">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Total liabilities and shareholders&#146;
equity</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>24,751,220</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=RIGHT><FONT SIZE=2>17,193,088</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" height="15">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM height="5">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'></P>
</TD>
<TD VALIGN=BOTTOM height="5">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px" height="5">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px" height="5">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="5">
<P ALIGN=JUSTIFY></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px" height="5">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px" height="5">&nbsp;

</TD>
<TD VALIGN=BOTTOM height="5">
<P ALIGN=JUSTIFY></P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>See accompanying notes to consolidated
financial statements</P>

<P ALIGN=CENTER>F-21</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES<BR>
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME<BR></B>(AMOUNTS EXPRESSED IN US DOLLAR)</FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="70%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Year Ended December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>NET REVENUE</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>12,989,760</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>9,194,589</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Cost of sales</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(4,604,948</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(3,511,570</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>GROSS PROFIT</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>8,384,812</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5,683,019</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Selling expenses</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(196,313</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(71,750</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>General and administrative expenses</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(1,416,111</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(435,651</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Loss on disposal of fixed assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(31,247</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Income from operations</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>6,741,141</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5,175,618</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Other income (expenses):</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Interest income</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>29,741</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>53,496</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Interest expense</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(22,938</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Exchange loss</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(20,376</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Merger costs</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(2,068,326</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Other</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>11,522</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>51,595</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Total other income (expenses), net</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(2,047,439</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>82,153</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Income before income taxes</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>4,693,702</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5,257,771</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Provision for income taxes</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(974,653</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(85,243</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>NET INCOME</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>3,719,049</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5,172,528</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>OTHER COMPREHENSIVE INCOME:</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Foreign currency translation adjustments</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>23,741</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>756,782</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>TOTAL COMPREHENSIVE INCOME</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>3,742,790</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>5,929,310</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Earnings per share</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Basic</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>0.003</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>0.004</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Diluted</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>0.003</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>0.004</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Weighted average number of shares
  outstanding</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Basic</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,397,873,464</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,378,780,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Diluted</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>1,397,873,464</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>1,378,780,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>See accompanying notes to consolidated
financial statements</P>

<P ALIGN=CENTER>F-22</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146; EQUITY<BR></B>(AMOUNTS EXPRESSED IN US DOLLAR)</FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="17%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="2%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="2%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="5%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Preferred Stock</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Common Stock</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" ROWSPAN="3" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Additional<BR>
  paid-in<BR>
  capital</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" ROWSPAN="3" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Accumulated<BR>
  other<BR>
  comprehensive<BR>
  income</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Number<BR>
  of shares</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Amount</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Number<BR>
  of shares</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Amount</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Statutory<BR>
  reserves</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Retained<BR>
  earnings</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1><B>Totals</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Balance at January 1, 2007</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>689,390</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>689</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>62,444
  </FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>154,355</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>1,390,631</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>168,243</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>1,776,362</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Premium on capital</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>23,730</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>21,420</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>45,150</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom-style: none; border-bottom-width: medium">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Net income</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>5,172,528</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" style="border-left: 1px solid #000000; border-top: 1px solid #000000">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" style="border-right: 1px solid #000000; border-top: 1px solid #000000">
<P ALIGN=RIGHT><FONT SIZE=1>5,172,528</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" style="border-top: medium none #000000">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Foreign currency translation adjustment</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>756,782</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM style="border-left: 1px solid #000000">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM style="border-right: 1px solid #000000">
<P ALIGN=RIGHT><FONT SIZE=1>756,782</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Comprehensive income</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>5,929,310</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Appropriation of statutory reserves</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>517,253</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>(517,253</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Balance at December 31, 2007</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>689,390</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>689</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>86,174</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>693,028</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>6,045,906</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>925,025</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>7,750,822</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Effect of reverse acquisition</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=right><FONT SIZE=1>&nbsp;&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=right><FONT SIZE=1>&nbsp;&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>11,746,041</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>11,746</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>(14,195</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>(2,449</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Issue of shares</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>38,130</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>38</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>427,411</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>427,449</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Share-based payment by shareholders</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>1,693,326</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>1,693,326</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Net income</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>3,719,049</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" style="border-left: 1px solid #000000; border-top: 1px solid #000000">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF" style="border-right: 1px solid #000000; border-top: 1px solid #000000">
<P ALIGN=RIGHT><FONT SIZE=1>3,719,049</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Foreign currency translation adjustment</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>23,741</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM style="border-left: 1px solid #000000">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM style="border-right: 1px solid #000000">
<P ALIGN=RIGHT><FONT SIZE=1>23,741</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Comprehensive income</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>3,742,790</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Appropriation of statutory reserves</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>633,211</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>(633,211</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
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<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
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<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
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<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=1>Balance at December 31, 2008</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>727,520</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>727</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>11,746,041</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>11,746</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>2,192,716
  </FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>1,326,239</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>9,131,744</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>948,766</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>13,611,938</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>See accompanying notes to consolidated
financial statements.</P>

<P ALIGN=CENTER>F-23</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
CONSOLIDATED STATEMENTS OF CASH FLOWS<BR></B>(AMOUNTS EXPRESSED IN US DOLLAR)</FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="70%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Years Ended December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>CASH FLOWS FROM OPERATING ACTIVITIES:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Net income</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>3,719,049</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>5,172,528</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Adjustments to reconcile net income to cash
  provided by operating activities:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Depreciation and amortization</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>1,123,447</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>548,289</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Loss from disposition of property, plant
  and equipment</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>31,247</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Merger costs</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>2,068,326</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>(Increase) decrease in assets:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Accounts receivable</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(134,017</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>103,286</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Deposits, prepayments and other
receivables</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>141,563</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(83,517</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Inventories</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(466,314</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(110,413</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Increase (decrease) in liabilities:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Accounts payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(28,151</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(45,290</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Other payables and accruals</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(35,852</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>392,052</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Income tax payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>38,245</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>29,404</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Trade payable due to related parties</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>8,795</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(1,502,898</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Net cash provided by operating activities</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>6,466,338</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>4,503,441</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>CASH FLOWS FROM INVESTING ACTIVITIES:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Payment of merger costs related to reverse
  acquisition</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(375,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Purchase of property, plant and equipment</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(32,501</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(9,327,194</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Proceeds from sale of property, plant and
  equipment</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>1,151,411</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Net cash provided by (used in) investing
  activities</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>743,910</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(9,327,194</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>CASH FLOWS FROM FINANCING ACTIVITIES:</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Proceeds from issue of preferred stock</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>427,449</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Repayment of payables for intangibles</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(865,292</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(822,759</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Repayments of short-term bank loans</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(192,093</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Net cash provided by (used in) financing
  activities</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(437,843</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(1,014,852</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Foreign currency translation adjustment</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>277,490</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>669,048</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>7,049,895</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(5,169,557</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>CASH AND CASH EQUIVALENTS, at the beginning
  of the year</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>2,148,348</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>7,317,905</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>CASH AND CASH EQUIVALENTS, at the end of
  the year</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>9,198,243</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>2,148,348</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>NON-CASH TRANSACTIONS</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Share-based payment awarded by shareholders
  to consultants for services related to the reverse acquisition</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>1,693,326</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>SUPPLEMENTAL DISCLOSURE INFORMATION</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Interest paid</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>22,938</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Income taxes paid</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>892,547</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>72,220</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>See accompanying notes to consolidated
financial statements</P>

<P ALIGN=CENTER>F-24</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES<BR>
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS <BR>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 1</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>DESCRIPTION OF BUSINESS AND ORGANIZATION </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>YzApp
International, Inc. (&#147;the Company&#148; or &#147;YzApp&#148;) was incorporated in the State of
Nevada on December 22, 2002. On December 23, 2008, the Company completed a
reverse acquisition of New Zealand WAYNE&#146;S New Resources Development Co., Ltd.
(&#147;New Resources&#148;). As a result of the reverse acquisition of New Resources, the
Company is no longer a shell company and active business operations have been
revived. </P>

<P ALIGN=JUSTIFY>As of December
31, 2008, details of the subsidiaries of the Company are as follows: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="21%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="13%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="14%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="9%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="18%" VALIGN=bottom>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE="2"><B>Subsidiaries&#146; names</B> </FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE="2"><B>Domicile and<BR>
date of<BR>
incorporation</B> </FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE="2"><B>Paid-up capital</B> </FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE="2"><B>Percentage<BR>
of effective<BR>
ownership</B> </FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE="2"><B>Principal activities</B> </FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>New Zealand WAYNE&#146;S</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>British Virgin</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$50,000</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=2>100%</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Holding company of</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>New Resources</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Islands</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>the other subsidiaries</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Development Co., Ltd</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>March 13, 2008</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>(&#147;New Resources&#148;)</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Heilongjiang Shuaiyi New</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>People&#146;s</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>RMB60,000,000</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=CENTER><FONT SIZE=2>100%</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Principally engaged in</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Energy Development Co.,</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Republic of</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>investment holding</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Ltd (&#147;Heilongjiang</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>China (&#147;PRC&#148;)</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Shuaiyi&#148;)</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>July 11, 2006</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Daqing Shuaiyi Biomass</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>PRC</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>RMB10,000,000</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=2>100%</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Growing and sales of </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Technology Co., Ltd.</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>August 8, 2005</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<FONT SIZE=2>Chinese Caterpillar</FONT></TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>(&#147;Daqing Shuaiyi&#148;)</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Fungus, which is</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>widely used for</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Chinese medicine</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom bgcolor="#E6EFFF">
&nbsp;</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Harbin Shuaiyi Green and</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>PRC</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>RMB1,500,000</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=CENTER><FONT SIZE=2>100%</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Sales of agricultural</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>Specialty Food Trading</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>May 18, 2001</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>products</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=2>LLP. (&#147;Harbin Shuaiyi&#148;)</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=bottom>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B>Reverse Acquisition </B></P>

<P ALIGN=JUSTIFY>On December
23, 2008, the Company entered into a share exchange agreement (&#147;<U>Share
Exchange Agreement</U>&#148;) under which the Company issued 689,390 shares of the
Company&#146;s series A preferred stock, par value $0.001, to the sole shareholder
of New Zealand WAYNE&#146;S New Resources Development Co., Ltd (&#147;<U>New Resources</U>&#148;)
in exchange for all the issued and outstanding shares of New Resources (the &#147;<U>Share
Exchange</U>&#148;). Immediately following the Share Exchange, the shareholder of
New Resources owned approximately 94% of the Company&#146;s total issued and
outstanding share capital on an as-if converted and fully-diluted basis. </P>

<P ALIGN=JUSTIFY>As a result,
the Share Exchange has been accounted for as a reverse acquisition using the
purchase method of accounting, whereby New Resources is deemed to be the
accounting acquirer and the YZAPP to be the accounting acquiree. The financial
statements before the date of Share Exchange are those of New Resources with
the results of YZAPP being consolidated from the date of Share Exchange. The
equity section and the earnings per share have been retroactively restated to
reflect the reverse acquisition and no
goodwill has been recorded. </P>

<P ALIGN=JUSTIFY>New Resources
was incorporated in the British Virgin Islands, which owns 100% of the
outstanding capital stock of Heilongjiang Shuaiyi. Heilongjiang Shuaiyi owns
100% equity interests in Daqing Shuaiyi and Harbin Shuaiyi. </P>

<P ALIGN=CENTER>F-25</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="10%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="90%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 1</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>DESCRIPTION OF BUSINESS AND ORGANIZATION (CONTINUED) </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B>Recapitalization of Daqing Shuaiyi and Harbin
Shuaiyi </B></P>

<P ALIGN=JUSTIFY>In September
2007, Heilongjiang Shuaiyi, Daqing Shuaiyi and Harbin Shuaiyi underwent a
restructuring exercise whereby Heilongjiang Shuaiyi acquired 100% equity
interests in Daqing Shuaiyi and Harbin Shuaiyi, and former ultimate controlling
shareholders of Daqing Shuaiyi and Harbin Shuaiyi have become the controlling
shareholders of Heilongjiang Shuaiyi. </P>

<P ALIGN=JUSTIFY>Before and
after the restructuring, all of the three entities, Heilongjiang Shuaiyi,
Daqing Shuaiyi and Harbin Shuaiyi are under the common control. </P>

<P ALIGN=JUSTIFY>This restructuring
exercise has been accounted for as combinations of entities under common
control using the &#147;as if&#148; pooling method of accounting, with no adjustment to
the historical basis of the assets and liabilities of Daqing Shuaiyi and Harbin
Shuaiyi and the operations were consolidated as though the restructuring
occurred as of the beginning of the first accounting period presented in these
financial statements. </P>

<P ALIGN=JUSTIFY>The
shareholding percentages before and after this restructuring exercise were as
follows: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="38%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="6%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="6%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="6%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="6%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="6%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="6%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Heilongjiang Shuaiyi</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Daqing Shuaiyi</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Harbin Shuaiyi</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Before</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>After</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Before</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>After</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Before</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>After</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2><B>Shareholder</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1><B>%</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1><B>%</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1><B>%</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1><B>%</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1><B>%</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1><B>%</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Heilongjiang Shuaiyi</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>100</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>100</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Daqing</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>47.1</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<p ALIGN="right"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Lianyun Han, CEO of the Company</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>80.4</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<p ALIGN="right"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>20</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Weihan Zhang*</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5.9</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>20</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>51</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Heilongjiang Shuaiyi Science <BR>
  Development Co. Ltd.**</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>52.9</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>60</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Lianju Han</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5.9</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>10</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Xinjun Li</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>5</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>29</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Nana Jiang</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Lianxue Han</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>5.9</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=right><FONT SIZE=1>&nbsp;</FONT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Fengxi Lang</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1.9</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=right><FONT SIZE=1>&nbsp;</FONT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>100</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>100</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>100</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>100</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>100</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>100</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</TABLE>

<p>

<BR>

</p>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="4%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="95%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>*</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>Mr. Weihan Zhang is the
  son of Ms. Lianyun Han. Mr. Weihan Zhang and Ms. Lianyun Han are acting in
  concert and considered parties to the same control group.</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>**</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>Equity interests in
  Heilongjiang Shuaiyi Science Development Co. Ltd. are held as follows:</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>(i)44.47% by Ms. Lianyun
  Han;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>(ii)40.86% by Mr. Weihan
  Zhang; and </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>(iii)14.67% by 9 other
  minority shareholders. </FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Before the
restructuring exercise, Ms. Lianyun Han together with her son, Mr. Weihan Zhang
had an effective interest of 78.7% in Heilongjiang Shuaiyi, 71.2% in Daqing
Shuaiyi, and 71% in Harbin Shuaiyi, respectively. Immediately after the
restructuring exercise, Ms. Lianyun Han together with her son, Mr. Weihan
Zhang, had an aggregate interest of 86.3% in Heilongjiang Shuaiyi, which holds
a 100% interest in each of Daqing Shuaiyi and Harbin Shuaiyi. In addition, Ms.
Lianyun Han has been the managing director of all the entities before and
after, and throughout, this restructuring exercise. As a result, there was no
change in control of the entities due to this restructuring exercise. </P>

<P ALIGN=CENTER>F-26</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 1</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>DESCRIPTION OF BUSINESS AND ORGANIZATION (CONTINUED) </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B>Recapitalization of Daqing Shuaiyi and Harbin
Shuaiyi (continued) </B></P>

<P ALIGN=JUSTIFY>The
considerations for the equity transfers in this restructuring exercise were
based on the face value of the paid-up capital of Daqing Shuaiyi and Harbin
Shuaiyi and satisfied in cash in compliance with the regulatory requirements in
the PRC. The acquisitions of Daqing Shuaiyi and Harbin Shuaiyi were funded by
the capital of Heilongjiang Shuaiyi, in which the former controlling
shareholders of Daqing Shuaiyi and Harbin Shuaiyi had already established a
majority ownership by way of cash contributions to Heilongjiang Shuaiyi&#146;s
paid-up capital. </P>

<P ALIGN=JUSTIFY><B>Restructuring of Heilongjiang Shuaiyi </B></P>

<P ALIGN=JUSTIFY>Pursuant to a
restructuring plan intended to ensure compliance with regulatory requirements
of the PRC, in July 2008, New Resources entered into an equity transfer
agreement (&#147;<U>Equity Transfer Agreement</U>&#148;) to acquire 100% equity interest
in Heilongjiang Shuaiyi from Ms. Lianyun Han, the then controlling shareholder
and chairperson of board of directors of Heilongjiang Shuaiyi, and Heilongjiang
Shuaiyi&#146;s other individual shareholders (collectively &#147;<U>Shuaiyi Founders</U>&#148;).
The Equity Transfer Agreement was approved by the relevant PRC government
authority on October 23, 2008. On November 24, 2008, Heilongjiang
Shuaiyi obtained the Certificate of Approval for Establishment of Enterprises
of Foreign Investment issued by Heilongjiang Provincial Government and a new
business license was issued to Heilongjiang Shuaiyi on December 1, 2008. </P>

<P ALIGN=JUSTIFY>As part of the
restructuring plan, each of Shuaiyi Founders respectively entered into an
earn-in agreement (&#147;<U>Earn-in Agreement</U>&#148;), dated September 12, 2008 (as
amended on February 12, 2009) with New Zealand WAYNE&#146;s Investment Holdings Co.,
Ltd., Heilongjiang Shuaiyi&#146;s sole shareholder (&#147;<U>Shareholder</U>&#148;). Pursuant
to the Earn-in Agreements, Shuaiyi Founders obtained the right and option to
acquire controlling shares (&#147;<U>Option Shares</U>&#148;) in Shareholder at the par
value of the Option Shares plus a nominal amount of $1,000, upon the satisfaction
of each of the following conditions: (1) six months have expired since the date
of the Share Exchange Agreement with YzApp, provided that on or before that
date, Ms. Lianyun Han and Heilongjiang Shuaiyi have entered into a binding
employment agreement and Ms. Lianyun Han is employed by Heilongjiang Shuaiyi
pursuant to that agreement on such date; (2) the U.S. Securities and Exchange
Commission has declared a registration statement filed by YzApp under the
Securities Act effective, or investors who purchased common stock from YzApp
pursuant to a securities purchase agreement being able to sell their common
stock under Rule 144; (3) Heilongjiang Shuaiyi and its subsidiaries have
achieved not less than $1,560,000 in after-tax net income, as determined under
US GAAP for the six months ended June 2009; and (4) Heilongjiang Shuaiyi and
its subsidiaries have achieved not less than $3,900,000 in pre-tax profits, as
determined under US GAAP for the fiscal year ending 2009. </P>

<P ALIGN=JUSTIFY>As of December
31, 2008 and up to the date of approval of these financial statements, none of
these four conditions have been met. However, Heilongjiang Shuaiyi has already
entered into a binding employment agreement dated December 7, 2008 with Ms.
Lianyun Han who is employed as the managing director of Heilongjiang Shuaiyi
for a 5-year period from December 7, 2008 to December 7, 2013. Therefore,
condition 1 will be met only subject to the passage of time when the six-month
period expires on June 23, 2009. It is fully expected by all parties to the
Earn-in Agreement that the other three conditions will also be met such that
Shuaiyi Founders will reacquire the ultimate legal ownership of Heilongjiang
Shuaiyi. </P>

<P ALIGN=CENTER>F-27</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES<BR>
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 1</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>DESCRIPTION OF BUSINESS AND ORGANIZATION (CONTINUED) </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B>Restructuring of Heilongjiang Shuaiyi
(continued) </B></P>

<P ALIGN=JUSTIFY>Pursuant to
the Earn-in Agreement, the Shareholder further agrees, among others, that
throughout the exercise period of the Earn-in Agreement, without the prior
written approval of Shuaiyi Founders:</P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="5%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="95%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>(i)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>it will not
  increase the number of authorized shares of the Shareholder&#146;s common stock,
  or any increased authorized shares will be deemed as part of the Option
  Shares; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>(ii)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>keeps
  available the services of current officers and employees of New Resources and
  Heilongjiang Shuaiyi;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>(iii)</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>New
  Resources and Heilongjiang Shuaiyi do not declare or pay any dividend or make
  any other distribution, nor do they repurchase, redeem or otherwise reacquire
  any equity of shares of capital stock or other securities. </FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Also as part
of the restructuring plan, Heilongjiang Shuaiyi entered into separate loan
agreements dated December 8, 2008, as amended on February 12, 2009, and
promissory notes with Shuaiyi Founders, pursuant to which, Shuaiyi Founders
have agreed to lend to Heilongjiang Shuaiyi a loan in the aggregate amount of
RMB60,000,000 (approximately $8.8 million, &#147;<U>Subordinated Loan</U>&#148;). The amount
of the Subordinated Loan exactly equals to the transfer price payable to the
Shuaiyi Founders by New Resources for the acquisition of Heilongjiang Shuaiyi
in compliance with regulatory requirements of the PRC. The Subordinated Loan
ranks behind all other debts of Heilongjiang Shuaiyi, bears no interest and is
only repayable after 10 years, in successive equal yearly payments beginning on
the tenth anniversary of the Notes, December 8, 2018, and within the first
month of each year thereafter. The final payment will be due on January 1,
2028. </P>

<P ALIGN=JUSTIFY>According to
the PRC rules and regulations, New Resources is required to settle the transfer
price for acquisition of Heilongjiang Shuaiyi by way of remittance of the
RMB60,000,000 to Shuaiyi Founders within three months from the issue of the new
business license. However, New Resources has obtained the approval of the
relevant business bureau for the extension of the time to one year until
December 1, 2009. As of December 31, 2008, New Resources had not paid the transfer
price and, accordingly, the Subordinated Loan has not been drawn yet. </P>

<P ALIGN=JUSTIFY>During and
after this restructuring plan, there has been no change to the composition of
the board of directors of Heilongjiang Shuaiyi. The board of directors of
Heilongjiang Shuaiyi, chaired by Ms. Lianyun Han, has continued to comprise
representatives of Shuaiyi Founders. Therefore, Heilongjiang Shuaiyi is still
under the same operating and management control of Shuaiyi Founders. In
addition, due to the Subordinated Loan, Shuaiyi Founders will not receive any
cash amount, nor will there be any cash flow out of the combined entity during
the whole period from the date of the Equity Transfer Agreement though the
expiry of the Earn-in Agreement, at which time it is expected Shuaiyi Founders
will have reacquired the ultimate legal controlling ownership of Heilongjiang
Shuaiyi. Furthermore, by providing the Subordinated Loan to Heilongjiang
Shuaiyi and obtaining the agreement of the Shareholder on not declaring any
dividend throughout the exercise period of the Earn-in Agreement without the
prior written approval of Shuaiyi Founders, Shuaiyi Founders continue to bear
the residual risks and rewards relating to Heilongjiang Shuaiyi. As a result,
this restructuring has been accounted for as a recapitalization of Heilongjiang
Shuaiyi with no adjustment to the historical basis of the assets and
liabilities of Heilongjiang Shuaiyi. Results of Heilongjiang Shuaiyi have been
consolidated as though the restructuring occurred as of the beginning of the
first accounting period presented in these financial statements. </P>

<P ALIGN=CENTER>F-28</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 2</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Principle of
consolidation <BR></I></B>These consolidated financial statements include
the financial statements of YzApp and its subsidiaries. All significant
inter-company balances or transactions have been eliminated on consolidation. </P>

<P ALIGN=JUSTIFY><B><I>Basis of preparation
<BR></I></B>These consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America. These consolidated financial statements, in the
opinion of management, include all adjustments necessary for a fair statement
of consolidated results of operations, financial position and cash flows for
each period presented. </P>

<P ALIGN=JUSTIFY><B><I>Use of estimates <BR></I></B>The preparation of these consolidated financial
statements in conformity with generally accepted accounting principles requires
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the related disclosure of contingent assets and
liabilities at the date of these consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. The Company bases
its estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances. Accordingly, actual
results may differ from these estimates under different assumptions or
conditions. </P>

<P ALIGN=JUSTIFY><B><I>Cash and cash
equivalents<BR></I></B>Cash and cash equivalents consist of all cash
balances and highly liquid investments with an original maturity of three
months or less. Because of the short maturity of these investments, the
carrying amounts approximate their fair value. Restricted cash is excluded from
cash and cash equivalents. </P>

<P ALIGN=JUSTIFY><B><I>Accounts receivable <BR></I></B>Accounts receivable is stated at cost, net of
allowance for doubtful accounts. The
Company maintains allowances for doubtful accounts for estimated losses
resulting from the failure of customers to make required payments. The Company
reviews the accounts receivable on a periodic basis and makes allowances where
there is doubt as to the collectibility of individual balances. In evaluating
the collectibility of individual receivable balances, the Company considers
many factors, including the age of the balance, the customer&#146;s payment history,
its current credit-worthiness and current economic trends. </P>

<P ALIGN=JUSTIFY><B><I>Inventories <BR></I></B>Inventories are stated at the lower of cost,
determined on a weighted average basis, or market. Costs of inventories include
purchase and related costs incurred in bringing the products to their present
location and condition. Market value is determined by reference to selling
prices after the balance sheet date or to management&#146;s estimates based on
prevailing market conditions. The management will write down the inventories to
market value if it is below cost. The management also regularly evaluates the
composition of its inventories to identify slow-moving and obsolete inventories
to determine if valuation allowance is required. </P>

<P ALIGN=CENTER>F-29</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES<BR>
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 2</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Financial
instruments <BR></I></B>SFAS 107, &#147;Disclosures about Fair Value of
Financial Instruments&#148; requires disclosure of the fair value of financial
instruments held by the Company. The carrying amounts reported in the
consolidated balance sheet for cash, accounts and other receivables, accounts
and other payables and accrued expenses approximate their fair values based on
the short-term maturity of these instruments. The carrying amount of the
Company&#146;s payable for intangibles approximate fair value, as it is considered
the noninterest factor fairly represents the warranty for performance. </P>

<P ALIGN=JUSTIFY>Effective
January 1, 2008, the Company adopted SFAS No. 157, &#147;Fair Value Measurements&#148;.
The standard provides enhanced guidance for using fair value to measure assets
and liabilities. The standard also responds to investors&#146; requests for expanded
information about the extent to which companies measure assets and liabilities
at fair value, the information used to measure fair value, and the effect of
fair value measurements on earnings. The standard applies whenever other
standards require (or permit) assets or liabilities to be measured at fair
value. The standard does not expand the use of fair value in any new
circumstances. The adoption of SFAS No. 157 with respect to provisions
applicable to the Company did not have a material effect on the accompanying
consolidated financial statements. </P>

<P ALIGN=JUSTIFY><B><I>Property, plant and
equipment </I><BR>
</B>Property, plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses, if any. Gains or losses on
disposals are reflected as gain or loss in the year of disposal. The cost of
improvements that extend the life of property, plant and equipment are
capitalized. These capitalized costs may include structural improvements,
equipment and fixtures. All ordinary repair and maintenance costs are expensed
as incurred.</P>

<P ALIGN=JUSTIFY>Depreciation
for financial reporting purposes is provided using the straight-line method
over the estimated useful lives of the assets as follows: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="84%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Useful Life<BR>
  (In years)</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Buildings</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=2>20-40</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Machinery
  and motor vehicles</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>5-10</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Office
  equipment</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=2>5</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>The carrying
value of property, plant and equipment is assessed annually and when factors
indicating impairment is present, the carrying value of the property, plant and
equipment is reduced by the amount of the impairment. The Company determines
the existence of such impairment by measuring the expected future cash flows
(undiscounted and without interest charges) and comparing such amount to the
net asset carrying value. An impairment loss, if exists, is measured as the
amount by which the carrying amount of the asset exceeds the fair value of the
asset.</P>

<P ALIGN=CENTER>F-30</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES<BR>
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 2</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Intangible assets <BR></I></B>The Company&#146;s intangible assets include a ten-year
exclusive right to use a secret process and computer software. The Company&#146;s
amortization policy on intangible assets is as follows: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="84%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Useful Life<BR>
  (In years)</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Exclusive
  right</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=CENTER><FONT SIZE=2>10</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Computer
  software</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>4</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>The Company
accounts for its intangible assets pursuant to SFAS No. 142, &#147;Goodwill and
Other Intangible Assets&#148;. Under SFAS 142, intangibles with definite lives
continue to be amortized on a straight-line basis over the lesser of their
estimated useful lives or contractual terms. Intangibles with indefinite lives
are evaluated at least annually for impairment by comparing the asset&#146;s
estimated fair value with its carrying value, based on cash flow methodology. </P>

<P ALIGN=JUSTIFY>Impairment of
goodwill is tested at least annually at the reporting unit. The test consists
of two steps. Firstly, the Company identifies potential impairment by comparing
the fair value of the reporting unit to its carrying amount, including
goodwill. If the fair value of the reporting unit is greater than its carrying
amount, goodwill is not considered impaired. Secondly, if there is impairment
identified in the first step, an impairment loss is recognized for any excess
of the carrying amount of the reporting unit&#146;s goodwill over the implied fair
value of goodwill. The implied fair value of goodwill is determined by
allocating the fair value of the reporting unit in a manner similar to a
purchase price allocation, in accordance with SFAS No 141, &#147;Business
Combinations&#148;. If the carrying value of a reporting unit exceeds its estimated
fair value, the Company compares the implied fair value of the reporting unit&#146;s
goodwill to its carrying amount, and any excess of the carrying value over the
fair value is charged to earnings. The Company&#146;s fair value estimates are based
on numerous assumptions and it is possible that actual fair value will be
significantly different than the estimates. </P>

<P ALIGN=JUSTIFY><B><I>Impairment of
long-lived assets <BR></I></B>The Company reviews and evaluates its long-lived
assets for impairment when events or changes in circumstances indicate that the
related carrying amounts may not be recoverable. An impairment is considered to
exist if the total estimated future cash flows on an undiscounted basis are
less than the carrying amount of the assets, including goodwill, if any. An
impairment loss is measured and recorded based on discounted estimated future
cash flows. In estimating future cash flows, assets are grouped at the lowest
level for which there is identifiable cash flows that are largely independent
of future cash flows from other asset groups. </P>

<P ALIGN=JUSTIFY><B><I>Revenue recognition <BR></I></B>Revenue is recognized when the following four
revenue criteria are met: persuasive evidence of an arrangement exists,
delivery has occurred, the selling price is fixed or determinable, and
collectibility is reasonably assured. </P>

<P ALIGN=JUSTIFY>Sales revenue
is recognized net of sales discounts and returns at the time when the
merchandise is sold to the customer. Based on historical experience, management
estimates that sales returns are immaterial and has not made allowance for
estimated sales returns. Sales revenue is presented net of value added and
sales related taxes in accordance with the guidance in EITF 06-3. </P>

<P ALIGN=CENTER>F-31</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES<BR>
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 2</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Research and
development costs <BR></I></B>Research and development costs are expensed as incurred. Research and development costs  were $32,815 and $18,930 for the years ended December 31, 2008 and 2007,
respectively. </P>

<P ALIGN=JUSTIFY><B><I>Advertising costs </I><BR>
</B>The Company expenses all advertising costs as incurred. Advertising costs
charged to selling expenses were $3,258 and $158 for the years ended December
31, 2008 and 2007, respectively. </P>

<P ALIGN=JUSTIFY><B><I>Shipping and
handling costs <BR></I></B>Substantially all costs of shipping and handling
of products to customers are included in selling expense. Shipping and handling
costs for the years ended December 31, 2008 and 2007 were $298 and $294,
respectively. </P>

<P ALIGN=JUSTIFY><B><I>Income taxes <BR></I></B>The Company accounts for income taxes in
accordance with SFAS No. 109, &#147;Accounting for Income Taxes&#148;. SFAS No. 109
requires an asset and liability approach for financial accounting and reporting
for income taxes and allows recognition and measurement of deferred tax assets
based upon the likelihood of realization of tax benefits in future years. Under
the asset and liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes. A valuation allowance is provided for deferred tax assets if it
is more likely than not these items will either expire before the Company is
able to realize their benefits, or that future deductibility is uncertain. </P>

<P ALIGN=JUSTIFY>On January 1,
2007, the Company adopted the provisions of FASB Interpretation No. 48, <I>Accounting for Uncertainty in Income Taxes</I>
(&#147;FIN 48&#148;). FIN 48 prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken (or expected to
be taken) in a tax return. This Interpretation also provides guidance on
derecognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, accounting for income taxes in interim
periods and income tax disclosures. The adoption of FIN 48 has not resulted in
any material impact on the Company&#146;s financial position or results. </P>

<font FACE="Times New Roman"><b>
<p align="justify"><i>Share-based payments </i></b>
<br>
The Company accounts for share-based compensation awards to employees in
accordance with SFAS No. 123R, &quot;Share-based Payment&quot; which requires that
share-based payment transactions with employees be measured based on the
grant-date fair value of the equity instrument issued and recognized as
compensation expense over the requisite service period. </p>
<p ALIGN="JUSTIFY">The Company accounts for share-based
compensation awards to non-employees in accordance with SFAS 123R and EITF Issue
No. 96-18, &quot;Accounting for Equity Instruments That Are Issued To Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services&quot;, or
EITF 96-18. Under SFAS 123R and EITF 96-18, stock compensation granted to
non-employees has been determined as the fair value of the consideration
received or the fair value of equity instrument issued, whichever is more
reliably measured and is recognized as expenses as the goods or services are
received. </p>
</font>

<P ALIGN=CENTER>F-32</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 2</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Comprehensive income
<BR></I></B>SFAS No.130, &#147;Reporting Comprehensive Income,&#148;
establishes standards for reporting and displaying comprehensive income and its
components in the consolidated financial statements. Accumulated other
comprehensive income includes foreign currency translation adjustments.</P>

<P ALIGN=JUSTIFY><B><I>Earnings per share </I><BR>
</B>The Company reports earnings per share in accordance with the provisions of
SFAS 128, &#147;Earnings per Share.&#148; SFAS 128 requires presentation of basic and
diluted earnings per share in conjunction with the disclosure of the
methodology used in computing such earnings per share. Basic earnings per share
excludes dilution and is computed by dividing income available to common
stockholders by the weighted average common shares outstanding during the
period. Diluted earnings per share takes into account the potential dilution
(using the treasury stock method) that could occur if securities or other
contracts to issue common stock were exercised and converted into common stock. </P>

<P ALIGN=JUSTIFY>All per share
data including earnings per share has been retroactively restated to reflect
the reverse acquisition on December 23, 2008 whereby the 689,390 shares of
preferred stock issued by YzApp (the nominal acquirer) to the shareholder of
New Resources (the nominal acquiree) are deemed to be the number of shares
outstanding for the period prior to the reverse acquisition. For the period
after the reverse acquisition, the number of shares considered to be
outstanding is the actual number of shares outstanding during that period. As
holders of Series A Preferred Stock vote with the holders of common stock on
all matters on an as-converted to common stock basis, basic and diluted
earnings per share have been calculated and presented on the basis that all
shares of the Company&#146;s common stock and Series A Preferred Stock are
considered a single class and on an as-converted to common stock basis. </P>

<P ALIGN=JUSTIFY><B><I>Foreign currency <BR></I></B>The Company uses the United States dollars (&#147;US
Dollar&#148; or &#147;US$&#148; or &#147;$&#148;) for financial reporting purposes. The Company
maintains the books and records in its functional currency, Chinese Renminbi
(&#147;RMB&#148;), being the primary currency of the economic environment in which its
operations are conducted. In general, the Company translates its assets and
liabilities into U.S. dollars using the applicable exchange rates prevailing at
the balance sheet date, and the statement of income is translated at average
exchange rates during the reporting period. Equity accounts are translated at
historical rates. Adjustments resulting from the translation of the Company&#146;s
financial statements are recorded as accumulated other comprehensive income. </P>

<P ALIGN=JUSTIFY>The exchange
rates used to translate amounts in RMB into U.S. Dollars for the purposes of
preparing the consolidated financial statements were as follows:- </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="60%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="2%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="15%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="2%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="15%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P ALIGN=CENTER><FONT SIZE=2><B>December 31, 2008</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P ALIGN=CENTER><FONT SIZE=2><B>December 31, 2007</B></FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=TOP>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Balance sheet items, except for capital
  accounts  and retained earnings, as of
  year end</FONT></P>
</TD>
<TD VALIGN=TOP BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>US$1=RMB6.8346</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>US$1=RMB7.3046</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Amounts included in the statements of
  income and statements of cash flows for
  the year</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>US$1=RMB6.9480</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>US$1=RMB7.6071</FONT></P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>F-33</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES<BR>
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 2</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Business
segmentation <BR></I></B>The Company follows SFAS No. 131, &#147;Disclosures
about Segments of an Enterprise and Related Information&#148;, which requires that
companies disclose segment data based on how management makes decision about
allocating resources to segments and evaluating their performance.</P>

<P ALIGN=JUSTIFY>The Company
believes that during the years ended December 31, 2008 and 2007, it operated in
two business segments &#150;Growing and sales of Chinese Caterpillar Fungus, which is
widely used for Chinese medicine, and sales of agricultural products,
respectively. Throughout the years ended December 31, 2008 and 2007, all of the
Company&#146;s operations were carried out in one geographical segment - China.</P>

<P ALIGN=JUSTIFY><B><I>Commitments and
contingencies <BR></I></B>The Company follows SFAS No. 5, &#147;Accounting for
Contingencies,&#148; in determining its accruals and disclosures with respect to
loss contingencies. Accordingly, estimated losses from loss contingencies are
accrued by a charge to income when information available prior to issuance of
the financial statements indicates that it is probable that a liability could
be been incurred and the amount of the loss can be reasonably estimated. Legal
expenses associated with the contingency are expensed as incurred. If a loss
contingency is not probable or reasonably estimable, disclosure of the loss
contingency is made in the financial statements when it is at least reasonably
possible that a material loss could be incurred. </P>

<P ALIGN=JUSTIFY><B><I>Recent accounting
pronouncements </I><BR>
</B>In December, 2007, the FASB issued SFAS No. 141(R), &#147;Business
Combinations&#148;, and SFAS No. 160, &#147;Accounting and Reporting of Noncontrolling
interest in Consolidated Financial Statements, an amendment of ARB No. 51&#148;
(SFAS No. 160). These new standards will significantly change the financial
accounting and reporting of business combination transactions and
noncontrolling (or minority) interests in consolidated financial statements.
SFAS No. 141(R) and SFAS No. 160 are effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008
(that is, fiscal 2009 for the Company). Management does not expect that the
adoption of SFAS 141(R) and 160 will have a material effect on the Company&#146;s
consolidated financial statements. </P>

<P ALIGN=JUSTIFY>In December
2007, the FASB issued SFAS No. 160, &#147;Noncontrolling Interests in Consolidated
Financial Statements - An Amendment of ARB No. 51&#148; (&#147;SFAS No. 160&#148;), which
establishes new accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary.
Specifically, this statement requires the recognition of a noncontrolling
interest (minority interest) as equity in the consolidated financial statements
and separate from the parent&#146;s equity. SFAS No. 160 is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008 (that is, fiscal 2009 for the Company). Management does not
expect that this Statement will have an effect on the Company&#146;s consolidated financial
statements. </P>

<P ALIGN=JUSTIFY>In March 2008,
the FASB issued SFAS No. 161, &#147;Disclosures about Derivative Instruments and
Hedging Activities &#150; An Amendment of FASB Statement No. 133&#148; (&#147;SFAS No. 161&#148;),
which changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity&#146;s financial position, financial performance, and
cash flows. This statement will be effective for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008 (that
is, fiscal 2009 for the Company). Management does not expect that this
Statement will have an effect on the Company&#146;s consolidated financial
statements. </P>

<P ALIGN=CENTER>F-34</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 2</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Recent accounting
pronouncements (continued)</I> <BR>
</B>In May 2008, the FASB issued SFAS No. 162, &#147;The Hierarchy of Generally
Accepted Accounting Principles&#148;. This Statement identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). This Statement is effective 60 days
following the SEC&#146;s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles. Management does not expect that this
Statement will have an effect on the Company&#146;s consolidated financial
statements. </P>

<P ALIGN=JUSTIFY>In May 2008,
the FASB issued SFAS No. 163, &#147;Accounting for Financial Guarantee Insurance
Contracts&#151;an interpretation of FASB Statement No. 60&#148;. This Statement
interprets Statement 60, &#147;Accounting and Reporting by Insurance Enterprises&#148;
and amends existing accounting pronouncements to clarify their application to
the financial guarantee insurance contracts included within the scope of this
Statement. This Statement requires that an insurance enterprise recognize a
claim liability prior to an event of default (insured event) when there is
evidence that credit deterioration has occurred in an insured financial
obligation. This Statement also clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement to be
used to account for premium revenue and claim liabilities. This Statement is
effective for financial statements issued for fiscal years beginning after
December 15, 2008 (that is, fiscal 2009 for the Company), and all interim
periods within those fiscal years. Management does not expect that this
Statement will have an effect on the Company&#146;s consolidated financial
statements. </P>

<P ALIGN=JUSTIFY>In June 2008,
the FASB issued EITF 08-4, &#147;Transition Guidance for Conforming Changes to Issue
No. 98-5.&#148; The objective of EITF 08-4 is to provide transition guidance for
conforming changes made to EITF 98-5, &#147;Accounting for Convertible Securities
with Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios&#148;, that result from EITF 00-27 &#147;Application of Issue No. 98-5 to Certain
Convertible Instruments&#148;, and SFAS 150, &#147;Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity&#148;. This Issue is
effective for financial statements issued for fiscal years ending after
December 15, 2008 and has no effect on the Company&#146;s financial statements. </P>

<P ALIGN=JUSTIFY>In October
2008, the FASB issued FSP FAS 157-3, &#147;Determining the Fair Value of a Financial
Asset in a Market That Is Not Active&#148; (FSP 157-3), which clarifies the
application of SFAS 157 when the market for a financial asset is inactive.
Specifically, FSP 157-3 clarifies how (1) management&#146;s internal assumptions
should be considered in measuring fair value when observable data are not
present, (2) observable market information from an inactive market should be
taken into account, and (3) the use of broker quotes or pricing services should
be considered in assessing the relevance of observable and unobservable data to
measure fair value. The Company adopted the provisions of FSP 157-3, which did
not impact the Company&#146;s financial position or results of operations. </P>

<P ALIGN=JUSTIFY>In December
2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, &#147;Disclosures by Public
Entities (Enterprises) about Transfers of Financial Assets and Interests in
Variable Interest Entities&#148; (&#147;FSP FAS 140-4 and FIN 46(R)-8&#148;). FSP FAS 140-4
and FIN 46(R)-8 amends FAS 140 and FIN 46(R) to require additional disclosures
regarding transfers of financial assets and interest in variable interest
entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for interim or annual
reporting periods ending after December 15, 2008. FSP FAS 140-4 and FIN 46(R)-8
did not have any impact on the Company&#146;s financial statements. </P>

<P ALIGN=CENTER>F-35</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 2</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Recent accounting
pronouncements (continued)</I> <BR>
</B>In January 2009, the FASB issued FSP EITF 99-20-1, &#147;Amendments to the
Impairment Guidance of EITF Issue No. 99-20, and EITF Issue No. 99-20,
Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets&#148;. FSP EITF 99-20-1 changes
the impairment model included within EITF 99-20 to be more consistent with the
impairment model of SFAS 115. FSP EITF 99-20-1 achieves this by amending the
impairment model in EITF 99-20 to remove its exclusive reliance on &#147;market
participant&#148; estimates of future cash flows used in determining fair value.
Changing the cash flows used to analyze other-than-temporary impairment from
the &#147;market participant&#148; view to a holder&#146;s estimate of whether there has been
a &#147;probable&#148; adverse change in estimated cash flows allows companies to apply
reasonable judgment in assessing whether an other-than-temporary impairment has
occurred. The adoption of FSP EITF 99-20-1, which is effective for annual
reporting periods ending after December 15, 2008, will not have a material
impact on the Company&#146;s consolidated financial statements. </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 3</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>ACCOUNTS RECEIVABLE, NET </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Accounts
receivable consisted of the following: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="70%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>As of December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Accounts
  receivable</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>283,822</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>138,085</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Less:
  Allowance for doubtful debts</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Accounts
  receivable, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>283,822</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>138,085</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</TABLE>

<p>

<BR>

</p>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 4</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>INVENTORIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Inventories by
major categories are summarized as follows: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="70%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>As of December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Raw
  materials</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>147,824</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>108,701</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Work in
  progress</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>832,680</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>517,494</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Finished
  goods</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>187,575</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>23,177</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>1,168,079</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>649,372</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>F-36</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 5</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES</B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Deposits,
prepayments and other receivables consist of the following: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="70%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>As of December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Trade
  deposits</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>125,289</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Other
  receivables</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>14,105</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>22,561</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>14,105</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>147,850</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</TABLE>

<p>

<BR>

</p>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 6</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>INTANGIBLE ASSETS, NET</B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Intangible
assets, net consisted of the following: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="66%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="12%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="12%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>As of December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Computer software, cost</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,453</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,360</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Exclusive right to use a secret process,
  cost</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>4,391,193</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>4,107,001</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Less: Accumulated amortization</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(1,208,651</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(719,405</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>3,183,995</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>3,388,956</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>In April 2006,
the Company purchased from a third party a ten-year exclusive right to use a
secret process and method in the cultivation and growing of Chinese Caterpillar
Fungus, which is widely used for Chinese medicine, for a cash consideration of
RMB30,000,000, payable over five years. The exclusive right is amortized over
its term of ten years using the straight-line method. </P>

<P ALIGN=JUSTIFY>Amortization
expenses for the years ended December 31, 2008 and 2007 were $432,597 and
$395,021, respectively. </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 7</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>PROPERTY, PLANT AND EQUIPMENT, NET </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Property,
plant and equipment, net consisted of the following: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="66%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="12%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="12%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>As of December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Cost:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Buildings</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>11,647,541</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>10,898,103</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Office equipment</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>9,317</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>6,019</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Machinery</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>98,903</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>64,525</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Motor vehicles</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>54,790</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>51,265</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Total cost</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>11,810,551</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>11,019,912</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Less: Accumulated depreciation</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(907,575</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(299,435</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Net book value</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>10,902,976</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>10,720,477</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Depreciation
expenses for the years ended December 31, 2008 and 2007 were $690,850 and
$153,268, respectively. </P>

<P ALIGN=CENTER>F-37</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 8</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>OTHER PAYABLES AND ACCRUALS </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Other payables
and accruals consisted of the following: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="66%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="12%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="12%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>As of December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Accrued
  staff costs</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>235,421</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>181,503</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Advance from
  customers</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>276,538</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Other taxes
  payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>232,481</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,886</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Other
  payables</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>5,057</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>16,702</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>472,959</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>476,629</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</TABLE>

<p>

<BR>

</p>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 9</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>PAYABLE FOR INTANGIBLES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>As described
in Note 6, the Company purchased an exclusive right from an independent party
for a secret process and method for a stated value of RMB30,000,000 payable
over 5 years from the date of purchase. The agreement provides that all payments
by the Company for the secret process and method will be refundable if the
secret process and method proves ineffective. Under APB21, &#147;Interest on
Receivables and Payables&#148;, the payable for intangibles are stated without
imputed interest as the noninterest factor fairly represents the warranty for
performance. </P>

<P ALIGN=JUSTIFY>The following
table presents the amounts payable for the next five years and thereafter: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="82%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="12%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Year ending
  December 31,</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>2009</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>877,886</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>2010</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>877,886</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>2011 and
  thereafter</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Total</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>1,755,772</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Less:
  Current portion</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(877,886</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Non-current
  portion</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>877,886</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</TABLE>

<p>

<BR>

</p>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 10</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>ACQUISITION PAYABLE </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>The
acquisition payable represents the transfer price of RMB60,000,000 payable by
New Resources for the acquisition of 100% equity interest in Heilongjiang
Shuaiyi, as further discussed in paragraphs under the heading &#147;Restructuring of
Heilongjiang Shuaiyi&#148; in Note 1. As further discussed in Note 18, the
acquisition payable is due for payment in full on or before December 1, 2009 by
New Resources to Shuaiyi Founders who are also shareholders of the Company. </P>

<P ALIGN=CENTER>F-38</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>



</page>



<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 11</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SHAREHOLDERS&#146; EQUITY </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B><I>Series A Voting
Convertible Preferred Stock </I></B><BR>In accordance
with the Company&#146;s Articles of Incorporation, the Company&#146;s Board of Directors
unanimously approved the filing of a Certificate of Designation
designating and authorizing the issuance of up to 800,000 shares of our Series
A Voting Preferred Stock. The Certificate of Designation was filed on December
22, 2008. The holders of the Company&#146;s Series A Preferred Stock are entitled to
vote on all matters together with all other classes of stock on an as-converted
to common stock basis. Holders of Series A Preferred Stock have protective class
voting veto rights on matters, such as business combination transactions,
payment of dividends, the issuance of other classes of stock with senior
rights, changes to our charter documents and stock redemptions. Shares of
Series A Preferred Stock have a senior liquidation payment preference in the
event of a liquidation or sale of the Company. </P>

<P ALIGN=JUSTIFY>Shares of
Series A Preferred Stock will be, upon the occurrence of certain events,
convertible into shares of common stock on the basis of one share of Series A
Preferred Stock for 2,000 shares of common stock, which will be adjusted to a
conversion ratio of one share of Series A Preferred Stock for 17.45 shares of
common stock upon the effectiveness of a planned 1-for-114.59 reverse split of
the Company&#146;s outstanding common stock, as discussed in Note 20. All shares of
Series A Preferred Stock will be automatically converted into common stock upon
the effectiveness of such reverse stock split. Holders of Series A Preferred
Stock vote with the holders of common stock on all matters on an as-converted
to common stock basis. </P>

<P ALIGN=JUSTIFY>As of December
31, 2008, the Company had 727,520 shares of Series A Preferred Stock issued and
outstanding. </P>

<P ALIGN=JUSTIFY>On December
23, 2008, which was the date of the Share Exchange as set out in Note 1, the Company
entered into an amendment, (the &#147;<U>Amendment</U>&#148;), of a stock purchase agreement,
(the &#147;SPA)&#148;, dated August 6, 2008, by and among ACI (formerly BMC Acquisitions
Corp., LLC), Belmont Partners LLC, or Belmont, and the Company. ACI was the
Company&#146;s majority shareholder prior to the Company&#146;s reverse acquisition of
New Resources. Pursuant to the SPA, the Company was required to issue to
Belmont a number of shares of its common stock sufficient for Belmont to retain
1.1% ownership interest in the Company. Pursuant to the Amendment, ACI assumed
the foregoing obligation of the Company and agreed to transfer its shares of
the Company&#146;s common stock in order to satisfy such obligation. On the same
day, the Company entered into a subscription agreement with ACI, pursuant to
which the Company issued and sold to ACI 17,962 shares of Series A Preferred
Stock for $52,530.50, or $2.92 per share. </P>

<P ALIGN=JUSTIFY>On December
23, 2008, the Company also entered into a subscription agreement with Tan Zhen
Investment Limited, (the &#147;<U>Investor</U>&#148;), pursuant to which the Company issued and
sold to the Investor 20,168 shares of the Company&#146;s Series A Preferred Stock
for $375,000, or $18.59 per share. </P>

<P ALIGN=CENTER>F-39</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 12</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>STATUTORY RESERVES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>In accordance
with the PRC Companies Law, the Company&#146;s PRC subsidiaries were required to
transfer 10% of their profits after tax, as determined in accordance with
accounting standards and regulations of the PRC, to the statutory surplus
reserve and a percentage of not less than 5%, as determined by management, of
the profits after tax to the public welfare fund. With the amendment of the PRC
Companies Law which was effective from January 1, 2006, enterprises in the PRC
were no longer required to transfer any profit to the public welfare fund. Any
balance of public welfare fund brought forward from December 31, 2005 should be
transferred to the statutory surplus reserve. The statutory surplus reserve is
non-distributable. </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 13</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SHARE-BASED PAYMENT </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Immediately
following closing of the Share Exchange as set out in Note 1, the Shareholder
transferred 91,088 shares out of the 689,390 shares of Series A Preferred Stock
issued to it under the Share Exchange Agreement to ten individuals and entities
for consulting services provided by them to New Resources and its subsidiaries
in assisting them to consummate the share exchange transaction contemplated by
the Share Exchange Agreement prior to December 23, 2008. </P>

<P ALIGN=JUSTIFY>In accordance
with the requirements of and guidance in Staff Accounting Bulletin No. 107 and
SFAS 123(R), the Company charged $1,693,326 to merger costs based on the
grant-date fair value of the 91,088 shares of Series A Preferred Stock
transferred by the Shareholder to the Company&#146;s consultants. As the Company&#146;s
shares were scarcely traded, the Company has determined that the price of
$18.59 at which 20,168 shares of the Company&#146;s Series A Preferred Stock were
issued to the Investor, as discussed in Note 11, appropriately represented a
fair value of the Company&#146;s Series A Preferred Stock, because the Investor was
an independent third party before the transaction and the terms for the
issuance of those shares to the Investor were based on arm&#146;s length
negotiation. Accordingly, this being a current cash transaction between
unrelated willing parties provides the best evidence for the fair value of the
Company&#146;s shares in accordance with AICPA Practice Aid, &#147;Valuation of
Privately-Held-Company Equity Securities Issued as Compensation&#148;. </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 14</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>OTHER INCOME (EXPENSES), NET </B></FONT></P>
</TD>
</TR>
</TABLE>

<p>

<BR>

</p>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="74%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="8%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="8%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Year ended
  December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Service
  income</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>11,623</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>51,608</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Other
  expenses</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(101</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(13</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>11,522</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>51,595</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>F-40</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 15</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>INCOME TAXES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>The PRC
subsidiaries within the Group are subject to PRC income taxes on an entity
basis on income arising in or derived from the tax jurisdiction in which they
operate, i.e. the PRC. The statutory PRC Enterprise Income Tax rate (&#147;EIT&#148;) for
the years ended December 31, 2008 and 2007 is generally 33%. However, one of
the Companies&#146; subsidiaries, Daqing Shuaiyi, being engaged in growing and sales
of agricultural products is entitled to a preferential EIT treatment whereby
Daqing Shuaiyi is granted an EIT holiday for the two years ended December 31,
2007 and 2006 and a 50% reduction on the EIT rate for the three years ended
December 31, 2008, 2009 and 2010. </P>

<P ALIGN=JUSTIFY>The Company&#146;s
income tax expense consisted of:</P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="74%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="8%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="8%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Year ended
  December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Current &#150;
  PRC</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(974,653</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(85,243</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Deferred</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(974,653</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(85,243</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>A
reconciliation of the provision for income taxes determined at the local income
tax to the Company&#146;s effective income tax rate is as follows: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="71%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="9%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="9%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Year ended
  December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Pre-tax
  income</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>4,693,702</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5,257,771</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>U.S.
  statutory corporate income tax rate</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>34</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>%</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>34</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>%</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Income tax
  computed at U.S. statutory corporate income tax rate</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(1,595,859</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(1,787,642</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Reconciling
  items:</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Impact of tax holiday of Daqing Shuaiyi</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>868,500</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,665,410</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Loss not recognised as deferred tax
assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(713,687</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Rate differential for PRC earnings</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>610,355</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>52,577</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Non-deductible expenses</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(143,962</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(15,588</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Effective
  tax expense</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(974,653</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>(85,243</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>On March 16,
2007, the PRC government promulgated a new tax law, China&#146;s Unified Enterprise
Income Tax Law (&#147;New EIT Law&#148;), which took effect from January 1, 2008. Under
the New EIT Law, foreign-owned enterprises as well as domestic companies are
subject to a uniform tax rate of 25%. The New EIT Law provides a five-year
transition period from its effective date for those enterprises which were
established before the promulgation date of the New EIT Law and which were
entitled to a preferential EIT treatment. Accordingly, Daqing Shuaiyi will
continue to be entitled to the 50% reduction on its EIT rate for the three
years ended December 31, 2008, 2009 and 2010 </P>

<P ALIGN=CENTER>F-41</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 16</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>RELATED PARTY TRANSACTIONS </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B>(a) Due to related parties </B></P>

<P ALIGN=JUSTIFY>Due to related
parties consisted of the following:</P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="71%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="9%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="9%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="5" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>As of
  December 31,</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Due to
  related company:</FONT></P>
</TD>
<TD VALIGN=BOTTOM bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM bgcolor="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM bgcolor="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM bgcolor="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>-
  Heilonjiang Shuaiyi Technology Development Co., Ltd. (&#147;Shuaiyi
  Technology&#148;)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>8,998</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>53</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>

</table>

<P ALIGN=JUSTIFY>Shuaiyi
Technology and the Company are under common control and management. </P>

<P ALIGN=JUSTIFY>Due to Shuaiyi
Technology relates to the land rent payable to Shuaiyi Technology. </P>

<P ALIGN=JUSTIFY>The amounts
due to related parties were non-interest bearing, unsecured and had no fixed
repayment date. </P>

<P ALIGN=JUSTIFY><B>(b) Purchase of goods </B></P>

<P ALIGN=JUSTIFY>For the years
ended December 31, 2008 and 2007, the Company purchased rice amounting to
$1,579,315 and $961,312, respectively, from Shuaiyi Technology. </P>

<P ALIGN=JUSTIFY><B>(c) Purchase of buildings, machinery and
equipment </B></P>

<P ALIGN=JUSTIFY>During the
year ended December 31, 2007, the Company acquired buildings of $9,332,932 from
Shuaiyi Technology.</P>

<P ALIGN=JUSTIFY><B>(d) Lease of land </B></P>

<P ALIGN=JUSTIFY>For the year
ended December 31, 2008, the Company paid rental expense of $8,851 for land to
Shuaiyi Technology. </P>

<P ALIGN=CENTER>F-42</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 17</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>CONCENTRATION OF RISK</B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B>(a) Concentration of credit risk </B></P>

<P ALIGN=JUSTIFY>As of December
31, 2008 and 2007, 100% of the Company&#146;s cash included cash on hand and
deposits in accounts maintained within the PRC where there is currently no rule
or regulation in place for obligatory insurance to cover bank deposits in the
event of bank failure. However, the Company has not experienced any losses in
such accounts and believes it is not exposed to any risks on its cash in bank
accounts </P>

<P ALIGN=JUSTIFY>For the years
ended December 31, 2008 and 2007, all of the Company&#146;s sales arose in the PRC.
In addition, all accounts receivable as of December 31, 2008 and 2007 also
arose in the PRC. </P>

<P ALIGN=JUSTIFY>Except for one
customer who accounted for 11% of the Company&#146;s revenue for the year ended
December 31, 2007, there was no other single customer who accounted for more
than 10% of the Company&#146;s revenue for either the year ended December 31, 2008
or 2007. </P>

<P ALIGN=JUSTIFY>As of December
31, 2008, the largest three customers accounted for 32%, 23% and 15% of
accounts receivable of the Company. As of December 31, 2007, the largest three
customers accounted for 40%, 25% and 20% of accounts receivable of the Company. </P>

<P ALIGN=JUSTIFY><B>(b) Concentration of operating risk </B></P>

<P ALIGN=JUSTIFY>Substantially
all of the Company&#146;s operations are conducted in China. The Company&#146;s
operations are subject to various political, economic, and other risks and
uncertainties inherent in China. Among other risks, the Company&#146;s operations
are subject to the risks of restrictions on transfer of funds; export duties,
quotas, and embargoes; domestic and international customs and tariffs; changing
taxation policies; foreign exchange restrictions; and political conditions and
governmental regulations. </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 18</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>COMMITMENTS AND CONTINGENCIES </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B>(a) Operating leases </B></P>

<P ALIGN=JUSTIFY>The Company
has entered into tenancy agreements for the lease of exhibition hall and land
with a third party and a related company (see Note 16(a)), respectively, for
the purposes of the operation of its subsidiaries. The Company&#146;s commitments
for minimum lease payments under this operating lease for the next five years
and thereafter as of December 31, 2008 are as follows: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>

<TR style="font-size:1px">
<TD WIDTH="86%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="8%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>

<TR>
<TD  VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><font size="2">Year ending
  December 31,</font></P>
</TD>
<TD  VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD  VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD  VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD  VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>2009</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>31,823</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>2010</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>31,823</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>2011</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>8,998</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>2012</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>8,998</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>2013</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>8,998</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Thereafter</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>125,977</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Total</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>216,617</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>F-43</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN="CENTER"><FONT SIZE=3><B>YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES <BR>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 18</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>COMMITMENTS AND CONTINGENCIES (CONTINUED) </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY><B>(b) PRC employee costs </B></P>

<P ALIGN=JUSTIFY>According to
the prevailing laws and regulations of the PRC, the Company&#146;s subsidiaries in
the PRC are required to cover its employees with medical, retirement and
unemployment insurance programs. Management believes that due to the transient
nature of its employees, they do not need to provide all employees with such
social insurances, and have not paid the social insurances for all employees. </P>

<P ALIGN=JUSTIFY>In the event
that any current or former employee files a complaint with the PRC government,
the Company&#146;s subsidiaries may be subject to making up the social insurances as
well as administrative fines. As the Company believes that these fines would
not be material, no provision has been made in this regard. </P>

<P ALIGN=JUSTIFY><B>(c) Transfer price for equity interest in
Heilongjiang Shuaiyi </B></P>

<P ALIGN=JUSTIFY>On July 28,
2008, as set out in Note 1, the Company&#146;s subsidiary, New Resources entered
into an equity transfer agreement with the Shuaiyi Founders to acquire all of
their equity interests in Heilongjiang Shuaiyi for RMB60,000,000 (approximately
$8.8 million). A new business license was issued to Heilongjiang Shuaiyi on
December 1, 2008. According to PRC merger and acquisition rules, the equity
interest transfer price should be paid in full within three months commencing
from the issuance of the new business license to Heilongjiang Shuaiyi. If the
transfer price is not paid by this date, the Company may apply to the relevant
PRC business bureau for an extension of up to one year from the date of the
issuance of the license; provided, however, that 60% of the transfer price will
be required to be paid within six months from such date. However, if the
Company is unable to make the payment for the transfer price by the March 1,
2009 or extended deadline and the relevant PRC business bureau does not grant
the Company additional time to make the payment, the Company may be subject to
fines or penalties imposed by the PRC business bureau. In addition, the Company
may not be permitted to exercise any decision-making rights as a shareholder in
Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi&#146;s financial results
into the Company&#146;s financial statements. </P>

<P ALIGN=JUSTIFY>On March 10,
2009, New Resources obtained the approval from the relevant PRC business bureau
for the extension of time allowed for the payment of the transfer price to one
year until December 1, 2009. The Company has engaged financial advisors with a
view to raising additional capital for the Company. The Company believes that
it will be able to make the payment for the transfer price within the time
allowed by the relevant PRC business bureau and therefore has not accrued any
amount related to this contingency. However, there can be no
assurance that the Company will be successful in raising sufficient capital for
the purpose of the payment of the transfer price to the Shuaiyi Founders. </P>

<P ALIGN=CENTER>F-44</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES <BR>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 19</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SEGMENT INFORMATION </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>The Company
believes that during the years ended December 31, 2008 and 2007, the Group
operated in two business segments identified by product, &#147;Chinese Caterpillar
Fungus&#148; and &#147;other agricultural products&#148;. The Chinese Caterpillar Fungus
segment consists of the growing and sales of Chinese Caterpillar Fungus, which
was conducted through the Company&#146;s subsidiary, Daqing. The other agricultural
products segment consists of the sales of rice, flour and silage corn etc,
which were mainly conducted through the Company&#146;s subsidiary, Green &amp;
Specialty. </P>

<P ALIGN=JUSTIFY>Throughout the
years ended December 31, 2008 and 2007, all of the Company&#146;s operations were
carried out in one geographical segment - China. </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="38%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="11%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="11%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="11%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="11%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>Year ended
  December 31, 2008</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Chinese<BR>
  Caterpillar<BR>
  Fungus</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Other<BR>
  Agricultural<BR>
  Products</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Corporate<BR>
  unallocated</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Consolidated</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Segment revenue from
  external customers</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>8,892,894</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>4,096,866</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>12,989,760</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Segment profit</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>6,547,634</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>759,133</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(2,613,065</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>4,693,702</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Income from operations
  before income taxes</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>4,693,702</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Segment assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>21,282,501</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>956,782</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>2,511,937</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>24,751,220</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Total assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>24,751,220</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Other segment information:</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Depreciation and amortization</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,114,118</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>6,089</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>3,240</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,123,447</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT   SIZE=2>Expenditure for segment assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>27,005</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>3,353</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>2,143</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>32,501</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
</TABLE>

<p>

<BR>

</p>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="38%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="11%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="11%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="11%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="11%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>Year Ended
  December 31, 2007</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Chinese<BR>
  Caterpillar<BR>
  Fungus</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Other<BR>
  Agricultural<BR>
  Products</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Corporate<BR>
  unallocated</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2><B>Consolidated</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
<TD COLSPAN="2" VALIGN=BOTTOM style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Segment revenue from
  external customers</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5,974,944</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>3,219,645</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>9,194,589</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Segment profit</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>4,734,749</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>523,792</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(770</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>5,257,771</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Income from operations
  before income taxes</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>5,257,771</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Segment assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>15,873,699</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>708,820</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>610,569</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>17,193,088</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=TOP style="border-bottom:solid black 1px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Total assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>17,193,088</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR style="font-size:1 px">
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM style="border-bottom:double black 3px">&nbsp;

</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Other segment information:</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>Depreciation and
  amortization</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>544,703</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>1,087</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>2,499</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=RIGHT><FONT SIZE=2>548,289</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#E6EFFF">
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>Expenditure for segment assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>9,325,083</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>2,111</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>9,327,194</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
</table>

<P ALIGN=CENTER>F-45</P>

<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black noShade SIZE=5>
<p></p>
<PAGE>

</page>

<P ALIGN=CENTER><FONT SIZE=3><B>YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES <BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <br>
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="12%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="88%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>NOTE 20</B></FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2><B>SUBSEQUENT EVENTS </B></FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>On December
31, 2008, the Company filed with the Securities and Exchange Commission (SEC) a
preliminary information statement on Schedule 14C, which was amended and filed
on February 23, 2009, pursuant to Section 14(c) of the Securities Exchange Act
of 1934 relating to a written consent of the majority stockholders of the
Company authorizing an amendment and restatement of the Company&#146;s Articles of
Incorporation to, among other things: </P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
<TR style="font-size:1px">
<TD WIDTH="5%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
<TD WIDTH="95%" VALIGN=TOP>
<P ALIGN=JUSTIFY>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>1.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>change the
  Company&#146;s name to &#147;Shuaiyi International New Resources Development Inc.&#148;; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>2.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>increase the
  Company&#146;s total authorized stock from 50,000,000 to 190,000,000 shares of
  Common Stock; </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>3.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>effect and implement a 1-for-114.59 reverse split
of the outstanding shares of the Company&#146;s Common Stock; and </FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>4.</FONT></P>
</TD>
<TD VALIGN=TOP>
<P ALIGN=JUSTIFY><FONT SIZE=2>include certain
  provisions regarding the Company&#146;s election not to be governed by certain
  provisions of the Nevada Revised Statutes restricting certain business
  combinations with interested stockholders and control share acquisitions. </FONT></P>
</TD>
</TR>
</table>

<P ALIGN=JUSTIFY>Pending SEC&#146;s
review of the Company&#146;s preliminary information statement, the Company will
mail the definitive information statement on Schedule 14C to stockholders. The
Company will, when permissible following the expiration of the 20-day period
mandated by Rule 14c of the Exchange Act and the provisions of the Nevada
Revised Statutes, file the Restated Articles with the Nevada Secretary of
State&#146;s Office. The Restated Articles will become effective upon such filing
and the Company anticipates that such filing will occur approximately 20 days
after the definitive information statement on Schedule 14C is first mailed to
stockholders. </P>

<P ALIGN=CENTER>F-46</P>

</font></font>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_63></A>
<P align=center><B>1,500,000 Shares</B> </P>
<P align=center><IMG src="forms1x63x1.jpg" border=0 width="269" height="242">&nbsp;</P>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. </B></P>
<P align=center><B>Common Stock, $0.001 Par Value Per Share</B> </P>
<P
align=center><B>______________<BR><BR>PROSPECTUS<BR>______________<BR></B></P>
<P align=center><B>, 2010</B><B> </B></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_64></A>
<P align=center><B>PART II </B></P>
<P align=center><B>INFORMATION NOT REQUIRED IN THE PROSPECTUS </B></P>
<P align=justify><B><I>Item 13. Other Expenses of Issuance and
Distributions</I></B></P>
<P align=justify>The following table sets forth the costs and expenses, other
than underwriting discounts and commissions, payable by us in connection with
the sale of common stock being registered. All amounts, other than the SEC
registration fee, are estimates. We will pay all these expenses. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="16%"><B>Amount to be Paid</B> </TD>
    <TD align=left width="3%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >SEC Registration Fee </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="16%" bgColor=#e6efff>&nbsp;406.41 </TD>
    <TD align=left width="3%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >Printing Fees and Expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="16%">2,500 </TD>
    <TD align=left width="3%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Legal Fees and Expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="16%" bgColor=#e6efff>25,000 </TD>
    <TD align=left width="3%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >Accounting Fees and Expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="16%">10,000 </TD>
    <TD align=left width="3%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Blue Sky Fees and Expenses
</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="16%" bgColor=#e6efff>2,000 </TD>
    <TD align=left width="3%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >Transfer Agent and Registrar Fees </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="16%">1,500 </TD>
    <TD align=left width="3%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Miscellaneous </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="16%" bgColor=#e6efff>3,000 </TD>
    <TD align=left width="3%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >Total </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="16%">&nbsp;44,406.41 </TD>
    <TD align=left width="3%" >&nbsp;</TD></TR></TABLE>
<P align=justify><B><I>Item 14. Indemnification of Directors and Officers
</I></B></P>
<P align=justify>Section 78.138 of the Nevada Revised Statutes, or NRS, provides
that a director or officer will not be individually liable unless it is proven
that (i) the director&#146;s or officer&#146;s acts or omissions constituted a breach of
his or her fiduciary duties, and (ii) such breach involved intentional
misconduct, fraud or a knowing violation of the law. </P>
<P align=justify>Section 78.7502 of NRS permits a company to indemnify its
directors and officers against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending or completed action, suit or proceeding if the officer or director (i)
is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner
the officer or director reasonably believed to be in or not opposed to the best
interests of the corporation and, if a criminal action or proceeding, had no
reasonable cause to believe the conduct of the officer or director was unlawful.
</P>
<P align=justify>Section 78.751 of NRS permits a Nevada company to indemnify its
officers and directors against expenses incurred by them in defending a civil or
criminal action, suit or proceeding as they are incurred and in advance of final
disposition thereof, upon receipt of an undertaking by or on behalf of the
officer or director to repay the amount if it is ultimately determined by a
court of competent jurisdiction that such officer or director is not entitled to
be indemnified by the company. Section 78.751 of NRS further permits the company
to grant its directors and officers additional rights of indemnification under
its articles of incorporation or bylaws or otherwise. </P>
<P align=justify>Section 78.752 of NRS provides that a Nevada company may
purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the
company, or is or was serving at the request of the company as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or
agent, or arising out of his status as such, whether or not the company has the
authority to indemnify him against such liability and expenses. </P>
<P align=justify>Our Amended and Restated Bylaws implement the indemnification
and insurance provisions permitted by Chapter 78 of the Nevada Revised Statutes
by providing that: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>The Company shall indemnify its legal representative, officers and
  directors to the fullest extent permitted by the Nevada Revised Statutes
  against liability, reasonable expense or other matter whatsoever; and <BR>
  <LI>The Company may at the discretion of the Board of Directors purchase and
  maintain insurance on behalf of any person who holds or who has held any
  position identified in the paragraph above against any and all liability
  incurred by such person in any such position or arising out of his status as
  such. </LI></UL>
<P align=center>II-1 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_65></A>
<P align=justify>Insofar as indemnification by us for liabilities arising under
the Securities Act may be permitted to our directors, officers or persons
controlling the company pursuant to provisions of our articles of incorporation
and bylaws, or otherwise, we have been advised that in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable. In the event that a claim for indemnification by
such director, officer or controlling person of us in the successful defense of
any action, suit or proceeding is asserted by such director, officer or
controlling person in connection with the securities being offered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
</P>
<P align=justify>At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding, which may result in a claim for such
indemnification. </P>
<P align=justify><B><I>Item 15. Recent Sales of Unregistered Securities
</I></B></P>
<P align=justify>On December 17, 2009, we completed a private placement
transaction under which we sold 1,000,000 shares of our common stock to certain
investors at $2.5 per share for a total of $2.5 million. In addition, we granted
to each of the investors two warrants to purchase in aggregate 500,000 shares of
our common stock, including a Series A warrant having a term of three years with
an exercise price of $3.25 per share and a Series B warrant having a term of
three years with an exercise price of $4.00 per share. The issuance of these
shares of common stock and the warrants was made in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D promulgated
thereunder. </P>
<P align=justify>On December 23, 2008, we issued 689,390 shares of our Series A
Preferred Stock to the Shareholder of New Resources. The total consideration for
the 689,390 shares of our Series A Preferred Stock is 50,000 shares of New
Resources, which is all the issued and outstanding capital stock of New
Resources. Such amount of shares of Series A Preferred Stock were subsequently
converted into 8,949,424 shares of our common stock on May 29, 2009. We did not
receive any cash consideration in connection with the share exchange. The number
of our shares issued to the Shareholder of New Resource was determined based on
an arms-length negotiation. The issuance of our shares to the Shareholder of New
Resource was made in reliance on the exemption provided by Section 4(2) of the
Securities Act for the offer and sale of securities not involving a public
offering and Regulation D promulgated thereunder. </P>
<P align=justify>On December 23, 2008, we issued and sold to ACI 17,962 shares
of our Series A Preferred Stock for $52,530.50, or $2.92 per share. Such amount
of shares of Series A Preferred Stock were subsequently converted into 313,437
shares of our common stock on May 29, 2009. The issuance of our shares to ACI
was made in reliance on the exemption provided by Section 4(2) of the Securities
Act for the offer and sale of securities not involving a public offering and
Regulation D promulgated thereunder. </P>
<P align=justify>On December 23, 2008, we issued and sold to Tan Zhen Investment
Limited 20,168 shares of our Series A Preferred Stock for $375,000, or $18.59
per share. Such amount of shares of Series A Preferred Stock were subsequently
converted into 351,932 shares of our common stock on May 29, 2009. The issuance
of our shares to the Investor was made in reliance on the exemption provided by
Section 4(2) of the Securities Act for the offer and sale of securities not
involving a public offering and Regulation D promulgated thereunder. </P>
<P align=justify>In instances described above where we indicate that we relied
upon Section 4(2) of the Securities Act in issuing securities, our reliance was
based upon the following factors: (a) the issuance of the securities was an
isolated private transaction by us which did not involve a public offering; (b)
there were only a limited number of offerees; (c) there were no subsequent or
contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the negotiations for
the sale of the stock took place directly between the offeree and us. </P>
<P align=justify>In instances described above where we issued securities in
reliance upon Regulation D, we relied upon Rule 506 of Regulation D of the
Securities Act. These stockholders who received the securities in such instances
made representations that (a) the stockholder is acquiring the securities for
his, her or its own account for investment and not for the account of any other
person and not with a view to or for distribution, assignment or resale in
connection with any distribution within the meaning of the Securities Act, (b)
the stockholder agrees not to sell or otherwise transfer the purchased shares
unless they are registered under the Securities Act and any applicable state
securities laws, or an exemption or exemptions from such registration are
available, (c) the stockholder has knowledge and experience in financial and
business matters such that he, she or it is capable of evaluating the merits and
risks of an investment in us, (d) the stockholder had access to all of our documents,
records, and books pertaining to the investment and was provided the opportunity
ask questions and receive answers regarding the terms and conditions of the
offering and to obtain any additional information which we possessed or were
able to acquire without unreasonable effort and expense, and (e) the stockholder
has no need for the liquidity in its investment in us and could afford the
complete loss of such investment. Management made the determination that the
investors in instances where we relied on Regulation D are accredited investors
(as defined in Regulation D) based upon management's inquiry into their
sophistication and net worth. In addition, there was no general solicitation or
advertising for securities issued in reliance upon Regulation D. </P>
<P align=center>II-2 </P>
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<P align=justify><B><I>Item 16. Exhibits and Financial Statement Schedules
</I></B></P>
<P align=justify>The following exhibits are included as part of this Form
S-1.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left ><B><U>Exhibit No.</U></B> </TD>
    <TD align=left width="85%"><B>Description</B> </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="85%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >2.1 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Share Exchange Agreement, dated
      December 23, 2008, among the Company, New Zealand WAYNE&#146;s New Resources
      Development Co., Ltd., Heilongjiang Shuaiyi New Energy Development Co.,
      Ltd., Daqing Shuaiyi Biotech Co., Ltd., Harbin Shuaiyi Green &amp;
      Specialty Food Trading LLC and New Zealand WAYNE&#146;s Investments Holdings
      Co., Ltd. [Incorporated by reference to Exhibit 2.1 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >3.1 <BR></TD>
    <TD align=left width="85%">Amended and Restated Articles of Incorporation
      filed with the Nevada Secretary of State on May 19, 2009 [Incorporated by
      reference to Exhibit 3.1 to the Company&#146;s Current Report on Form 8-K filed
      on May 26, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >3.2 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Certificate of Amendment filed
      with the Nevada Secretary of State on January 11, 2010 [Incorporated by
      reference to Exhibit 3.1 to the Company&#146;s Current Report on Form 8-K filed
      on January 14, 2010]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >4.1 <BR></TD>
    <TD align=left width="85%">Form of Series A Warrant [Incorporated by
      reference to Exhibit 4.1 to the Company&#146;s Current Report on Form 8-K filed
      on December 21, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >4.2 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Form of Series B Warrant
      [Incorporated by reference to Exhibit 4.2 to the Company&#146;s Current Report
      on Form 8-K filed on December 21, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left ><a style="text-decoration: none" href="exhibit5-1.htm">5 </a> <BR></TD>
    <TD align=left width="85%">
    <a style="text-decoration: none" href="exhibit5-1.htm">Opinion of Holland &amp; Hart
    LLP as to the legality of the shares.*</a><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.1 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Form of Securities Purchase
      Agreement, dated December 17, 2009 [Incorporated by reference to Exhibit
      10.1 to the Company&#146;s Current Report on Form 8-K filed on December 21,
      2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.2 <BR></TD>
    <TD align=left width="85%">Subscription Agreement, dated December 23,
      2008, between the Company and Allied China Investments, LLC. [Incorporated
      by reference to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.3 </TD>
    <TD align=left width="85%" bgColor=#e6efff>Amendment No. 1 to Stock
      Purchase Agreement, dated December 23, 3008, by and <BR>among the Company,
      Allied China Investments, LLC and Belmont Partners LLC. <BR>[Incorporated
      by reference to Exhibit 10.2 to the Company&#146;s Current Report on Form
      <BR>8-K filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.4 <BR></TD>
    <TD align=left width="85%">Subscription Agreement, dated December 23,
      2008, between the Company and Tan Zhen Investment Limited. [incorporated
      by reference to Exhibit 10.3 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.5 </TD>
    <TD align=left width="85%" bgColor=#e6efff>Escrow Agreement, dated
      December 23, by and among the Company, Tan Zhen Investment Limited and
      Sichenzia Ross Friedman Ference LLP, as escrow agent. [incorporated by reference to Exhibit 10.4 to
      the Company&#146;s Current Report on Form 8-K filed on December 31, 2008]. </TD></TR></TABLE>
<P align=center>II-3 </P>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.6 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Real Property Purchase
      Agreement, dated October 22, 2007, between Daqing Shuaiyi Biotech Co.,
      Ltd. and Heilongjiang Shuaiyi Technology Development Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.5 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.7 <BR></TD>
    <TD align=left width="85%">Land Lease Agreement, dated January 10, 2008,
      between Heilongjiang Shuaiyi Technology Development Co., Ltd. and Daqing
      Shuaiyi Biotech Co., Ltd. (English Translation) [incorporated by reference
      to Exhibit 10.6 to the Company&#146;s Current Report on Form 8-K filed on
      December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.8 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Lease Agreement, dated December
      28, 2005, between Liye Qian and Harbin Shuaiyi Green &amp; Specialty Food
      Trading LLC. (English Translation) [incorporated by reference to Exhibit
      10.7 to the Company&#146;s Current Report on Form 8-K filed on December 31,
      2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.9 <BR></TD>
    <TD align=left width="85%">Lease Agreement, dated April 23, 2008, between
      Harbin Jinhua Keji Qiye Fuhuaqi Co., Ltd. and Harbin Shuaiyi Green &amp;
      Specialty Food Trading LLC. (English Translation) [incorporated by
      reference to Exhibit 10.8 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.10 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Exclusive Licensing Agreement,
      dated April 10, 2006, between Runjiao Wang and Daqing Shuaiyi Biotech Co.,
      Ltd. (English Translation) [incorporated by reference to Exhibit 10.9 to
      the Company&#146;s Current Report on Form 8-K filed on December 31, 2008].
    <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.11 <BR></TD>
    <TD align=left width="85%">Equity Transfer Agreement, dated July 28, 2008,
      by and among Heilongjiang Shuaiyi New Energy Development Co., Ltd.,
      Lianyun Han, Lianxue Han, Lianju Han, Weihan Zhang, Yuehong Luan, Chunming
      Zhang, Xunjun Li, Nana Jiang, Fengxi Lang and New Zealand WAYNE&#146;S New
      Resources Development Co., Ltd. (English Translation) [incorporated by
      reference to Exhibit 10.10 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.12 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Form of Earn-In Agreement,
      dated September 12, 2008. [incorporated by reference to Exhibit 10.11 to
      the Company&#146;s Current Report on Form 8-K filed on December 31, 2008].
    <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.13 <BR></TD>
    <TD align=left width="85%">Form of First Amendment to Earn-In Agreement,
      dated February 12, 2009. [incorporated by reference to Exhibit 10.16 to
      the Company&#146;s Current Report on Form 8-K/A filed on February 23, 2009].
      <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.14 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Loan Agreement, dated October
      15, 2007, between Heilongjiang Shuaiyi New Energy Development Co., Ltd.
      and Daqing Shuaiyi Biotech Co., Ltd. (English Translation) [incorporated
      by reference to Exhibit 10.12 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.15 <BR></TD>
    <TD align=left width="85%">Form of Loan Agreement and Promissory Note,
      dated December 8, 2008. [incorporated by reference to Exhibit 10.13 to the
      Company&#146;s Current Report on Form 8-K filed on December 31, 2008].
  <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.16 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Form of First Amendment to Loan
      Agreement and Promissory Note, dated February 12, 2009. [incorporated by
      reference to Exhibit 10.15 to the Company&#146;s Current Report on Form 8-K/A
      filed on February 23, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.17 </TD>
    <TD align=left width="85%">Form of Heilongjiang Shuaiyi New Energy
      Development Co., Ltd. Employment Agreement. (English Translation)
      [incorporated by reference to Exhibit 10.14 to the Company&#146;s Current Report on Form 8-K filed on
      December 31, 2008]. </TD></TR></TABLE>
<P align=center>II-4 </P>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.18 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>English Translation of
      Employment Agreement, dated August 18, 2009, between Heilongjiang Shuaiyi
      New Energy Development Co., Ltd. and Hongbing Hua [Incorporated by
      reference to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K
      filed on August 21, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.19 <BR></TD>
    <TD align=left width="85%">2009 Equity Incentive Plan [Incorporated by
      reference to Appendix A to the Company&#146;s Information Statement on Schedule
      14C filed on July 2, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.20 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Stock Option Agreement, dated
      January 1, 2010, by and between the Company and Daniel K. Lee
      [Incorporated by reference to Exhibit 10.1 to the Company&#146;s Current Report
      on Form 8-K filed on January 7, 2010]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>10.21 <BR></TD>
    <TD align=left width="85%">Restricted Shares Grant Agreement, dated
      January 1, 2010, by and between the Company and Daniel K. Lee
      [Incorporated by reference to Exhibit 10.2 to the Company&#146;s Current Report
      on Form 8-K filed on January 7, 2010]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.22 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Employment Agreement, dated
      November 16, 2009, by and among the Company, Heilongjiang Shuaiyi New
      Energy Development Co., Ltd. and Daniel K. Lee [Incorporated by reference
      to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed on
      November 18, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left ><a style="text-decoration: none" href="exhibit21.htm">21 </a> <BR></TD>
    <TD align=left width="85%">
    <a style="text-decoration: none" href="exhibit21.htm">Subsidiaries of the registrant*
    </a> <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <a style="text-decoration: none" href="exhibit23-1.htm">23.1 </a> <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>
    <a style="text-decoration: none" href="exhibit23-1.htm">Consent of AGCA, Inc.*
    </a>
  <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left ><a style="text-decoration: none" href="exhibit23-2.htm">23.2</a></TD>
    <TD align=left width="85%">
    <a style="text-decoration: none" href="exhibit23-2.htm">Consent of AGCA
    CPA Limited*</a></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >23.3<BR></TD>
    <TD align=left width="85%" bgcolor="#E6EFFF">Consent of Holland &amp; Hart, LLP (included in
      Exhibit 5)* <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF >24 </TD>
    <TD align=left width="85%" bgColor=#FFFFFF>Power of Attorney (included on
      the signature page of this registration statement) </TD></TR></TABLE>
<P align=justify>_______________ <BR>* Filed herewith.</P>
<P align=justify><B><I>Item 17. Undertakings </I></B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(A) </TD>
    <TD>
      <P align=justify>The undersigned Registrant hereby
  undertakes:</P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>(1) </P>
<P style="MARGIN-LEFT: 5%; text-indent:5%; margin-top:-25.5pt" align=justify>To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: </P>
<P style="MARGIN-LEFT: 10%" align=justify>(a) </P>
<P style="MARGIN-LEFT: 10%; text-indent:5%; margin-top:-25.5pt" align=justify>To
include any prospectus required by Section 10(a)(3) of the Securities Act; </P>
<P style="MARGIN-LEFT: 10%" align=justify>(b) </P>
<P style="MARGIN-LEFT: 10%; text-indent:5%; margin-top:-25.5pt" align=justify>To
reflect in the prospectus any facts or events arising after the effective date
of this Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering price
set forth in the &#147;Calculation of Registration Fee&#148; table in the effective
Registration Statement; and </P>
<P style="MARGIN-LEFT: 10%" align=justify>(c) </P>
<P style="MARGIN-LEFT: 10%; text-indent:5%; margin-top:-25.5pt" align=justify>To
include any additional or changed material information with respect to the plan
of distribution not previously disclosed in this Registration Statement; </P>
<P style="MARGIN-LEFT: 5%" align=justify>(2) </P>
<P style="MARGIN-LEFT: 5%; text-indent:5%; margin-top:-25.5pt" align=justify>
That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to
be the initial <I>bona fide</I> offering thereof. </P>
<P align=center>II-5 </P>
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<P style="MARGIN-LEFT: 5%" align=justify>(3) </P>
<P style="MARGIN-LEFT: 5%; text-indent:5%; margin-top:-25.5pt" align=justify>To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering. </P>
<P style="MARGIN-LEFT: 5%" align=justify>(4) </P>
<P style="MARGIN-LEFT: 5%; text-indent:5%; margin-top:-25.5pt" align=justify>If the registrant is subject to
Rule 430C (&#167;230.430C of this chapter), each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A (&#167;230.430A of this chapter), shall be deemed to be part of
and included in the registration statement as of the date it is first used after
effectiveness. <I>Provided, however, </I>that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use. </P>
<P align=justify>(B) </P>
<P align=justify style="text-indent: 5%; margin-top: -25.5pt">Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue. </P>
<P align=center>II-6 </P>
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<P align=center><B>SIGNATURES </B></P>
<P align=justify>Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Harbin, China, on the 28<SUP>th</SUP> day of January,
2010. </P>
<DIV align=right>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="50%" border=0>

  <TR vAlign=top>
    <TD align=left colSpan=2><B>Nutrastar International Inc.</B> </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="92%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >By </TD>
    <TD align=left width="92%"><U>/s/ Lianyun
      Han&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      </U>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="92%">Lianyun Han, CEO and President
</TD></TR></TABLE></DIV>
<P align=center><B>POWER OF ATTORNEY </B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature to this Registration Statement on
Form S-1 appears below hereby constitutes and appoints Lianyun Han and Daniel K.
Lee, and each or any of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective on filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, and all post-effective amendments
thereto, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or his substitute or their substitutes, may lawfully do or cause to be
done by virtue hereof. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of
the Securities Act of 1933, this Registration Statement has been signed by the
following persons in the capacities indicated on January 28, 2010. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>SIGNATURE </TD>
    <TD align=left width="50%">TITLE </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Lianyun Han</U> </TD>
    <TD align=left width="50%">Chief Executive Officer, President and Chairman
    </TD></TR>
  <TR vAlign=top>
    <TD align=left>Lianyun Han </TD>
    <TD align=left width="50%">(Principal Executive Officer) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Daniel K. Lee</U> </TD>
    <TD align=left width="50%">Chief Financial Officer and Treasurer </TD></TR>
  <TR vAlign=top>
    <TD align=left>Daniel K. Lee </TD>
    <TD align=left width="50%">(Principal Financial Officer and Principal
      Accounting </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="50%">Officer) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Hongbing Hua</U> </TD>
    <TD align=left width="50%">Chief Marketing Officer </TD></TR>
  <TR vAlign=top>
    <TD align=left>Hongbing Hua </TD>
    <TD align=left width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Nana Jiang</U> </TD>
    <TD align=left width="50%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left>Nana Jiang </TD>
    <TD align=left width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Chunming Zhang</U> </TD>
    <TD align=left width="50%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left>Chunming Zhang </TD>
    <TD align=left width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ John Jing Zhang</U> </TD>
    <TD align=left width="50%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left>John Jing Zhang </TD>
    <TD align=left width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Xi Zhu</U> </TD>
    <TD align=left width="50%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left>Xi Zhu </TD>
    <TD align=left width="50%">&nbsp; </TD></TR></TABLE><BR>
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<P align=center><B>EXHIBIT INDEX </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left ><B><U>Exhibit No.</U></B> </TD>
    <TD align=left width="85%"><B>Description</B> </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="85%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >2.1 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Share Exchange Agreement, dated
      December 23, 2008, among the Company, New Zealand WAYNE&#146;s New Resources
      Development Co., Ltd., Heilongjiang Shuaiyi New Energy Development Co.,
      Ltd., Daqing Shuaiyi Biotech Co., Ltd., Harbin Shuaiyi Green &amp;
      Specialty Food Trading LLC and New Zealand WAYNE&#146;s Investments Holdings
      Co., Ltd. [Incorporated by reference to Exhibit 2.1 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >3.1 <BR></TD>
    <TD align=left width="85%">Amended and Restated Articles of Incorporation
      filed with the Nevada Secretary of State on May 19, 2009 [Incorporated by
      reference to Exhibit 3.1 to the Company&#146;s Current Report on Form 8-K filed
      on May 26, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >3.2 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Certificate of Amendment filed
      with the Nevada Secretary of State on January 11, 2010 [Incorporated by
      reference to Exhibit 3.1 to the Company&#146;s Current Report on Form 8-K filed
      on January 14, 2010]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >4.1 <BR></TD>
    <TD align=left width="85%">Form of Series A Warrant [Incorporated by
      reference to Exhibit 4.1 to the Company&#146;s Current Report on Form 8-K filed
      on December 21, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >4.2 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Form of Series B Warrant
      [Incorporated by reference to Exhibit 4.2 to the Company&#146;s Current Report
      on Form 8-K filed on December 21, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left ><a style="text-decoration: none" href="exhibit5-1.htm">5 </a> <BR></TD>
    <TD align=left width="85%">
    <a style="text-decoration: none" href="exhibit5-1.htm">Opinion of Holland &amp; Hart
    LLP as to the legality of the shares.*</a><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.1 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Form of Securities Purchase
      Agreement, dated December 17, 2009 [Incorporated by reference to Exhibit
      10.1 to the Company&#146;s Current Report on Form 8-K filed on December 21,
      2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.2 <BR></TD>
    <TD align=left width="85%">Subscription Agreement, dated December 23,
      2008, between the Company and Allied China Investments, LLC. [Incorporated
      by reference to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.3 </TD>
    <TD align=left width="85%" bgColor=#e6efff>Amendment No. 1 to Stock
      Purchase Agreement, dated December 23, 3008, by and <BR>among the Company,
      Allied China Investments, LLC and Belmont Partners LLC. <BR>[Incorporated
      by reference to Exhibit 10.2 to the Company&#146;s Current Report on Form
      <BR>8-K filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.4 <BR></TD>
    <TD align=left width="85%">Subscription Agreement, dated December 23,
      2008, between the Company and Tan Zhen Investment Limited. [incorporated
      by reference to Exhibit 10.3 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.5 </TD>
    <TD align=left width="85%" bgColor=#e6efff>Escrow Agreement, dated
      December 23, by and among the Company, Tan Zhen Investment Limited and
      Sichenzia Ross Friedman Ference LLP, as escrow agent. [incorporated by reference to Exhibit 10.4 to
      the Company&#146;s Current Report on Form 8-K filed on December 31, 2008]. </TD></TR></TABLE>
<BR>
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  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="85%">&nbsp;</TD></TR>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.6 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Real Property Purchase
      Agreement, dated October 22, 2007, between Daqing Shuaiyi Biotech Co.,
      Ltd. and Heilongjiang Shuaiyi Technology Development Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.5 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.7 <BR></TD>
    <TD align=left width="85%">Land Lease Agreement, dated January 10, 2008,
      between Heilongjiang Shuaiyi Technology Development Co., Ltd. and Daqing
      Shuaiyi Biotech Co., Ltd. (English Translation) [incorporated by reference
      to Exhibit 10.6 to the Company&#146;s Current Report on Form 8-K filed on
      December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.8 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Lease Agreement, dated December
      28, 2005, between Liye Qian and Harbin Shuaiyi Green &amp; Specialty Food
      Trading LLC. (English Translation) [incorporated by reference to Exhibit
      10.7 to the Company&#146;s Current Report on Form 8-K filed on December 31,
      2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.9 <BR></TD>
    <TD align=left width="85%">Lease Agreement, dated April 23, 2008, between
      Harbin Jinhua Keji Qiye Fuhuaqi Co., Ltd. and Harbin Shuaiyi Green &amp;
      Specialty Food Trading LLC. (English Translation) [incorporated by
      reference to Exhibit 10.8 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.10 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Exclusive Licensing Agreement,
      dated April 10, 2006, between Runjiao Wang and Daqing Shuaiyi Biotech Co.,
      Ltd. (English Translation) [incorporated by reference to Exhibit 10.9 to
      the Company&#146;s Current Report on Form 8-K filed on December 31, 2008].
    <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.11 <BR></TD>
    <TD align=left width="85%">Equity Transfer Agreement, dated July 28, 2008,
      by and among Heilongjiang Shuaiyi New Energy Development Co., Ltd.,
      Lianyun Han, Lianxue Han, Lianju Han, Weihan Zhang, Yuehong Luan, Chunming
      Zhang, Xunjun Li, Nana Jiang, Fengxi Lang and New Zealand WAYNE&#146;S New
      Resources Development Co., Ltd. (English Translation) [incorporated by
      reference to Exhibit 10.10 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.12 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Form of Earn-In Agreement,
      dated September 12, 2008. [incorporated by reference to Exhibit 10.11 to
      the Company&#146;s Current Report on Form 8-K filed on December 31, 2008].
    <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.13 <BR></TD>
    <TD align=left width="85%">Form of First Amendment to Earn-In Agreement,
      dated February 12, 2009. [incorporated by reference to Exhibit 10.16 to
      the Company&#146;s Current Report on Form 8-K/A filed on February 23, 2009].
      <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.14 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Loan Agreement, dated October
      15, 2007, between Heilongjiang Shuaiyi New Energy Development Co., Ltd.
      and Daqing Shuaiyi Biotech Co., Ltd. (English Translation) [incorporated
      by reference to Exhibit 10.12 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.15 <BR></TD>
    <TD align=left width="85%">Form of Loan Agreement and Promissory Note,
      dated December 8, 2008. [incorporated by reference to Exhibit 10.13 to the
      Company&#146;s Current Report on Form 8-K filed on December 31, 2008].
  <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.16 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Form of First Amendment to Loan
      Agreement and Promissory Note, dated February 12, 2009. [incorporated by
      reference to Exhibit 10.15 to the Company&#146;s Current Report on Form 8-K/A
      filed on February 23, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.17 </TD>
    <TD align=left width="85%">Form of Heilongjiang Shuaiyi New Energy
      Development Co., Ltd. Employment Agreement. (English Translation)
      [incorporated by reference to Exhibit 10.14 to the Company&#146;s Current Report on Form 8-K filed on
      December 31, 2008]. </TD></TR></TABLE>
<BR>

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  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.18 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>English Translation of
      Employment Agreement, dated August 18, 2009, between Heilongjiang Shuaiyi
      New Energy Development Co., Ltd. and Hongbing Hua [Incorporated by
      reference to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K
      filed on August 21, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >10.19 <BR></TD>
    <TD align=left width="85%">2009 Equity Incentive Plan [Incorporated by
      reference to Appendix A to the Company&#146;s Information Statement on Schedule
      14C filed on July 2, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.20 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Stock Option Agreement, dated
      January 1, 2010, by and between the Company and Daniel K. Lee
      [Incorporated by reference to Exhibit 10.1 to the Company&#146;s Current Report
      on Form 8-K filed on January 7, 2010]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>10.21 <BR></TD>
    <TD align=left width="85%">Restricted Shares Grant Agreement, dated
      January 1, 2010, by and between the Company and Daniel K. Lee
      [Incorporated by reference to Exhibit 10.2 to the Company&#146;s Current Report
      on Form 8-K filed on January 7, 2010]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >10.22 <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>Employment Agreement, dated
      November 16, 2009, by and among the Company, Heilongjiang Shuaiyi New
      Energy Development Co., Ltd. and Daniel K. Lee [Incorporated by reference
      to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed on
      November 18, 2009]. <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left ><a style="text-decoration: none" href="exhibit21.htm">21 </a> <BR></TD>
    <TD align=left width="85%">
    <a href="exhibit21.htm" style="text-decoration: none">Subsidiaries of the registrant*
    </a> <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >
    <a style="text-decoration: none" href="exhibit23-1.htm">23.1 </a> <BR></TD>
    <TD align=left width="85%" bgColor=#e6efff>
    <a style="text-decoration: none" href="exhibit23-1.htm">Consent of AGCA, Inc.*
    </a>
  <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left ><a style="text-decoration: none" href="exhibit23-2.htm">23.2</a></TD>
    <TD align=left width="85%">
    <a style="text-decoration: none" href="exhibit23-2.htm">Consent of AGCA
    CPA Limited*</a></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >23.3<BR></TD>
    <TD align=left width="85%" bgcolor="#E6EFFF">Consent of Holland &amp; Hart, LLP (included in
      Exhibit 5)* <BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF >24 </TD>
    <TD align=left width="85%" bgColor=#FFFFFF>Power of Attorney (included on
      the signature page of this registration statement) </TD></TR></TABLE>
<P align="justify">
* Filed herewith</P>

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[{"type": "S-1", "sequence": "1", "filename": "forms1.htm", "description": "FORM S-1", "secsgml_size_bytes": 1150390}]
{"company-data": {"conformed-name": "Nutrastar International Inc.", "cik": "0001273385", "assigned-sic": "2000", "irs-number": "800264950", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-164564", "film-number": "10554431"}, "business-address": {"street1": "7/F JINHUA MANSION, 41 HANGUANG STREET", "street2": "NANGANG DISTRICT,", "city": "HARBIN", "state": "F4", "zip": "150080", "phone": "(86) 451-82287746"}, "mail-address": {"street1": "7/F JINHUA MANSION, 41 HANGUANG STREET", "street2": "NANGANG DISTRICT,", "city": "HARBIN", "state": "F4", "zip": "150080"}, "former-company": [{"former-conformed-name": "SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC.", "date-changed": "20090527"}, {"former-conformed-name": "YZAPP INTERNATIONAL INC", "date-changed": "20031215"}]}
Nutrastar International Inc.: Form S-1 - Prepared by TNT Filings Inc.
As filed with the Securities and Exchange Commission on January
28, 2010
Registration No. 333 -
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
NUTRASTAR INTERNATIONAL INC.
(Exact name of
registrant as specified in its charter)
Nevada
2000
80-0264950
(State or other jurisdiction of
(Primary Standard Industrial
(I.R.S. Employer
incorporation or organization)
Classification Code Number)
Identification No.)
7/F Jinhua Mansion
41 Hanguang Street
Nangang District,
Harbin, 150080
People's Republic of China
(86) 451-82287746
(Address and telephone number of principal executive offices)
____________________________
Copies to:
Scott C. Kline, Esq.
Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, CA 94105-2228
(415) 983-1000
(Names, addresses and telephone numbers of agents for
service)
____________________________
Approximate date of commencement of proposed sale to
public
: From time to time after the effective date of this Registration
Statement, as determined by market conditions and other factors.
If any of the securities being
registered on this form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, check the following box.
x
If this form is filed
to register additional securities for an offering pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
If this form is
a post-effective amendment filed pursuant to Rule 462(d) under the Securities
Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement the same offering.
o
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definitions of "large accelerated
filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of
the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Title of securities
Proposed maximum offering
Proposed maximum aggregate
Amount of
to be registered
Amount to be registered
(1)
price per share
(2)
offering price
(2)
registration fee
Common stock, $0.001
par value per
      share
1,000,000
(5)
$3.76
$3,760,000
$268.09
Common stock
underlying Series A
Warrants
      exercisable at
$3.25 per share
250,000
(6)
3.76
(3)
940,000
67.02
Common stock
underlying Series B
Warrants exercisable at
$4.00 per share
250,000
(6)
4.00
(4)
1,000,000
71.30
Total
1,500,000
$5,700,000
$406.41
(1) In accordance with Rule 416(a), the Registrant is also
registering hereunder an indeterminate number of shares that may be issued and
resold resulting from stock splits, stock dividends or similar transactions.
(2) Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely
for the purpose of computing the amount of the registration fee based on the
average of the bid and asked prices reported on the Over-the-Counter Bulletin
Board on January 25, 2010.
(3) Calculated in accordance with Rule 457(g)
based upon the offering price of the securities of the same class included in
the registration statement.
(4) Calculated in accordance with Rule 457(g)
based upon the exercise price of the Series B Warrants held by selling stockholders named
in this registration statement.
(5) Represents shares of the Registrant's
common stock being registered for resale that have been issued to the selling
stockholders named in this registration statement.
(6) Represents shares of
common stock issuable upon exercise of three-year warrants to purchase shares of
common stock held by selling stockholders named in this registration statement.
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall hereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
Subject to completion, dated January 28, 2010
1,500,000 Shares
NUTRASTAR INTERNATIONAL INC.
Common Stock, par value $0.001 per share
____________________________
This prospectus relates to
1,500,000 shares of common stock of Nutrastar International Inc. that may be
sold from time to time by the selling stockholders named in this prospectus,
which includes:
1,000,000 shares of common stock;
250,000 shares of common stock issuable to the selling stockholders upon
  the exercise of Series A warrants; and
250,000 shares of common stock issuable to the selling stockholders upon
  the exercise of Series B warrants.
We will not receive any proceeds
from the sales of outstanding shares of common stock by the selling
stockholders, but we will receive funds from the exercise of warrants held by
the selling stockholders, if exercised for cash.
Our common stock is quoted on the
OTC Bulletin Board under the symbol "NUIN.OB." The closing price for our common
stock on January 25, 2010 was $3.76 per share, as reported on the OTC Bulletin
Board. You are urged to obtain current market quotations of our common stock
before purchasing any of the shares being offered for sale pursuant to this
prospectus.
The shares of our common stock
offered under this prospectus are being registered to permit the selling
stockholders to sell the shares from time to time in the public market. The
selling stockholders may sell the shares through ordinary brokerage transactions
or through any other means described in the section titled "Plan of
Distribution." We do not know when or in what amount the selling stockholders
may offer the shares for sale. The selling stockholders may sell any, all or
none of the shares offered by this prospectus.
Investing in the shares being
offered pursuant to this prospectus involves a high degree of risk. You should
carefully read and consider the information set forth in the section of this
prospectus titled "Risk Factors," beginning on page 7, when determining whether
to purchase any of these shares.
Neither the Securities and
Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The date of this prospectus
is                      
, 2010.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY
1
RISK FACTORS
7
SPECIAL NOTE REGARDING FORWARD-LOOKING
      STATEMENTS
17
USE OF PROCEEDS
17
BUSINESS
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF
OPERATIONS
25
HISTORY AND CORPORATE STRUCTURE
36
MANAGEMENT
40
EXECUTIVE COMPENSATION
42
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
      CONTROL PERSONS;
CORPORATE GOVERNANCE
44
SELLING STOCKHOLDERS
46
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT
48
DESCRIPTION OF SECURITIES
49
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER
      MATTERS
52
SHARES ELIGIBLE FOR FUTURE SALE
53
PLAN OF DISTRIBUTION
54
LEGAL MATTERS
56
EXPERTS
56
WHERE YOU CAN FIND MORE INFORMATION
56
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
You should rely only on the information provided in this
prospectus. Neither we nor the selling stockholders have authorized anyone to
provide you with additional or different information. The selling stockholders
are not making an offer of these securities in any jurisdiction where the offer
is not permitted. You should assume that the information in this prospectus is
accurate only as of the date on the front of the document.
i
PROSPECTUS SUMMARY
The items in the following summary are described in more
detail later in this prospectus. You should read the following summary together
with the more detailed information regarding our company and the common stock
being sold in this offering, including "Risk Factors" and our consolidated
financial statements and related notes, included elsewhere in, or incorporated
by reference into, this prospectus.
In this prospectus, unless indicated otherwise:
"we," "us," "our company," "our" and "Nutrastar" refer to the combined
  business of Nutrastar International Inc. and/or its consolidated subsidiaries,
  as the case may be;
"New Resources" refers to New Zealand WAYNE's New Resources Development
  Co., Ltd., our direct, wholly-owned subsidiary, a BVI corporation;
"Heilongjiang Shuaiyi" refers to Heilongjiang Shuaiyi New Energy
  Development Co., Ltd. our indirect, wholly-owned subsidiary, a Chinese
  corporation;
"Daqing Shuaiyi" refers to Daqing Shuaiyi Biotech Co., Ltd., our indirect,
  wholly-owned subsidiary, a Chinese corporation;
"Harbin Shuaiyi" refers to Harbin Shuaiyi Green & Specialty Food
  Trading LLC, our indirect, wholly-owned subsidiary, a Chinese corporation;
"BVI" refers to the British Virgin Islands;
"China," "Chinese" and "PRC,"
  refer to the People's Republic of China and for the purpose of this
  prospectus, do not include Taiwan and the special administrative regions of
  Hong Kong and Macau;
"Renminbi" and "RMB" refer to the legal currency of China;
"U.S. dollars," "dollars" and "$" refer to the legal currency of the
  United States;
"SEC" refers to the United States Securities and Exchange Commission;
"Securities Act" refers to the Securities Act of 1933, as amended; and
"Exchange Act" refers to the Securities Exchange Act of 1934, as amended.
Effective May 19, 2009, we implemented a 1-for-114.59 reverse
stock split of issued and outstanding shares of our common stock. Except where
specifically indicated, all common share information (including information
related to warrants to purchase common stock) has been restated to reflect the
1-for-114.59 reverse split.
The Company
Overview of Our Business
We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading grower and producer of
Cordyceps Militaris, or "Chinese Golden Grass" in China. We specialize in
developing, processing, marketing and distributing a variety of agricultural and
nutraceutical products consisting of Chinese Golden Grass, organic and specialty
food products. In addition, we plan to produce and market other products
developed from Cordyceps Militaris within the coming months and years, including
specialty beverage products as indicated in more detail below.
Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in north-eastern mountainous China. It is a precious
ingredient in traditional Chinese medicine, as Cordyceps Militaris is widely
believed in China to offer high medical and health benefits by nourishing the
yin,
boosting the
yang,
and invigorating the meridians of the
lungs and kidneys.
1
We generated 75.32%
and 68.46% of our revenues from Chinese Golden Grass for the nine months ended September 30, 2009 and the fiscal year
of 2008, respectively. We believe that we own 19% of the world wide market share
in the cultivated Chinese Golden Grass industry. We plan to continue to focus on
Chinese Golden Grass, which is our fastest growing product line with the
greatest market demand and a significantly high profit margin. We also sell
organic and specialty food products through our subsidiary, Harbin Shuaiyi,
which was formed in 2001. After years of development, we believe that we have
become the largest wholesale distributor of organic and specialty food in
Heilongjiang Province, China.
Our Competitive Strengths
We believe that our success to date and potential for future
growth can be attributed to a combination of our strengths, including the
following:
High-end niche products.
We sell organic and specialty food
  products and Chinese Golden Grass products that the followers of traditional
  Chinese medicine believe have high nutrient concentration, potential health
  benefits and high value. Our products are positioned in the high-end market as
  premium healthy food and are distinguished from the common nutraceutical
  products in the market.
Leading market position and significantly high margin.
We
  believe we have established ourselves as a dominant player in China's Chinese
  Golden Grass industry. We believe that we currently own approximately 19% of
  world market of Chinese Golden Grass. By successfully commercializing our
  Cordyceps Militaris planting technology, we believe that we have achieved
  economies of scale and accordingly significantly high margin that no other
  major competitor can match in the near future.
Leading-edge R&D team.
Our research and development team
  has a strong and extensive technology background and has been an early
  participant in the Chinese Golden Grass market. Currently we have 21
  technicians in our R&D department. The head of our research and
  development team, Mr. Lichen Wang, is a lead expert in the field of edible
  fungus in China. Mr. Wang graduated with a Bachelor's degree in edible fungus
  and has served as the deputy director of several research institutes of edible
  fungus in Northeast China.
Experienced management team with a strong track record.
Our
  management team has extensive operating experience and industry knowledge.
  Lianyun Han, our founder and chief executive officer, has more than 10 years
  experience in operational management and business development. Daniel K. Lee,
  our chief financial officer, has extensive financial and investment experience
  with U.S. financial institutions including Morgan Stanley & Co., Roth
  Capital Partners, Punk, Ziegel, & Knoell. We believe that our management
  team's experience and capabilities have contributed greatly to our significant
  growth in the past three years.
Our Growth Strategy
As a leading nutraceutical producer in China, we believe we are
well positioned to capitalize on future industry growth in China. We are
dedicated to providing healthy and high nutritional products to our consumers.
We will implement the following strategic plans to take advantage of industry
opportunities and our competitive strengths:
Focus on brand development
.
With intense price
  competition among many similar or identical products in the industry, we
  believe that building brand awareness is the primary means to generate and
  sustain profitable growth in the future. We believe that developing close
  cooperative relationships with research centers of well-known universities in
  China and globally is key to building brand equity. We also market our
  products through an integrated marketing program that includes advertising in
  relevant media outlets, attending trade shows such as Harbin International
  Fair for Trade and Economic Corporation and Beijing Agriculture Exposition and
  offering seminars and lectures to local communities regarding the products and
  their heath benefits.
Introducing new products
.
We constantly evaluate our
  products and seek to adapt to changing market conditions by updating our
  products to reflect new trends in consumer preferences. We endeavor to expand our market presence by introducing additional
  competitive nutraceutical products to our product offerings. Our new products
  under development include specialty beverage products.
2
Increase production capacity.
Our existing production lines
  of Chinese Golden Grass have been running at close to full capacity while the
  market demand for our existing products continues to increase. We plan to
  develop an additional 4.1 million square meters to grow Cordyceps Militaris
  with a designed annual production capacity of 65 tons by the end of 2010. We
  also own 75 buildings in our company compound and only 10 of them are
  currently used to plant Cordyceps Militaris. We plan to convert more buildings
  into biotechnologically controlled cultivation plants to grow and process
  Cordyceps Militaris.
Further expand our distribution network to increase the prevalence
  of our products nationwide.
Our current sales depend heavily on the
  sales of our large-pack products to pharmaceutical companies. To support our
  rapid growth in sales, we plan to expand our distribution network by
  selling our small-pack products through drug stores, supermarkets and
  franchise stores. We have one-year contracts with our major distributors which
  normally extend for one more year by the end of the contracts. We maintain
  constant communications with these distributors to keep us informed regarding
  consumer preferences and market trends in order to develop new products. We
  also organize monthly product promotion meetings with the distributors to
  increase the sales of small package products.
Technology innovation.
We believe that the development of
  new technology is critical to our success. We will continuously improve the
  quality of our existing and future products through new technologies. We
  intend to maintain our long-term partnership with Chinese universities and
  research institutes in order to develop new technologies.
Our Background and History
We were originally incorporated in the State of Nevada on
December 22, 2002. Following incorporation, we engaged in the business of
developing software which allowed us to act as an application service provider
acting as a conduit between retailers and financial institutions. Because this
business was not successful, we were focused on the identification of suitable
businesses with which to enter into a business opportunity or business
combination until December 23, 2008, when we completed our reverse acquisition
of New Resources. As a result of our reverse acquisition of New Resources, we
are no longer a shell company and active business operations were revived.
On May 19, 2009, we filed amended and restated articles of
incorporation with the Nevada Secretary of State to amend our articles of
incorporation to, among other things, (1) change our name from "YzApp
International Inc." to "Shuaiyi International New Resources Development Inc.,"
(2) increase the total number of shares of common stock that we have the
authority to issue from 50,000,000 to 190,000,000 shares and (3) effect a
1-for-114.59 reverse split of our outstanding common stock.
On January 11, 2010, we changed our name to Nutrastar
International Inc. to more accurately reflect our marketing and branding
strategy and our products. Our common stock has been quoted on
the OTC Bulletin Board under the new symbol NUIN.OB since January 20, 2010.
Corporate Information
The following chart reflects our organizational structure as of
the date of this prospectus.
3
Our corporate headquarters are located at 7/F Jinhua Mansion,
41 Hanguang Street, Nangang District, Harbin 150080, China. Our telephone number
is (86) 451-82287746. We maintain a website at http://www.syxny.net that
contains information about us, but that information is not a part of this
prospectus.
4
The Offering
Common stock offered by selling
      stockholders
1,500,000 shares, consisting of
      1,000,000 outstanding shares of common stock owned by selling stockholders
      and 500,000 shares issuable upon the exercise of warrants held by the
      selling stockholders. This number represents 10.13% of our current
      outstanding common stock, on a fully diluted basis
(1)
.
Common stock outstanding before the offering
14,312,731 shares
Common stock outstanding after the
      offering, assuming all warrants are exercised for cash.
14,812,731 shares
Proceeds to us
We
      will not receive any proceeds from the sale of common stock covered by
      this prospectus. We will, however, receive approximately $1.81 million
      from the exercise of the warrant held by the selling stockholder, if
      exercised for cash.
Trading Symbol
NUIN.OB
(1) Based on 14,312,731 shares of our common stock issued and
outstanding as of January 25, 2010.
Risk Factors
In operating our business, we have faced and will continue to
face significant challenges. Our ability to successfully operate our business is
subject to numerous risks as discussed more fully in the section titled "Risk
Factors." For example:
Our current business is significantly based on a single product, Chinese
  Golden Grass;
Our inability to grow and harvest sufficient Cordyceps Militaris to
  satisfy our production requirements could reduce our sales and negatively
  affect our results of operations;
Evaluating our business and prospects based only on our past results may
  be difficult; and
We are subject to risks of conducting business in China.
Any of the above risks could materially and adversely affect
our business, financial position and results of operations. An investment in our
common stock involves risks. You should carefully read and consider the
information set forth in "Risk Factors" and all other information set forth in
this prospectus before investing in our common stock.
5
Summary Consolidated Financial Information
The following summary consolidated statement of income data for
the years ended December 31, 2008 and 2007 and the consolidated balance sheet
data as of December 31, 2008 and 2007 are derived from our audited consolidated
financial statements included in this prospectus. The summary consolidated
statement of income data for the periods ended September 30, 2009 and 2008 and
the consolidated balance sheet data as of September 30, 2009 are derived from
our unaudited consolidated financial statements included in this prospectus.
Such unaudited financial information includes all adjustments, consisting of
only normal recurring accruals, which our management considers necessary for the
fair presentation of our financial position and results of operations for such
interim periods. The data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and related notes
appearing elsewhere in this prospectus. Our historical results are not
necessarily indicative of our results for any future periods.
STATEMENT OF
INCOME
Nine Months Ended
September 30,
Years Ended
December
      31,
2009
(Unaudited)
2008
(Unaudited)
2008
2007
Revenues
$11,549,244
$10,167,285
12,989,760
9,194,589
Operating expenses
1,224,928
964,658
1,643,671
507,401
Operating income
6,591,290
5,623,489
6,741,141
5,175,618
Income taxes
891,220
774,996
974,653
85,243
Net income
5,743,167
4,871,099
3,719,049
5,172,528
Basic and Diluted Earnings
Per Share
$0.44
$0.41
$0.003
$0.004
BALANCE SHEET DATA
As of September 30,
As of December 31,
2009
(Unaudited)
2008
2007
Working capital
$6,059,262
$402,853
$-4,715,811
Current assets
16,440,077
10,664,249
3,083,655
Total assets
29,781,860
24,751,220
17,193,088
Current liabilities
10,380,815
10,261,396
7,799,466
Total liabilities
10,380,815
11,139,282
9,442,266
Stockholders' equity
$19,401,045
$13,611,938
$7,750,822
6
RISK FACTORS
The shares of our common stock being offered for resale by
the selling stockholders are highly speculative in nature, involve a high degree
of risk and should be purchased only by persons who can afford to lose the
entire amount invested in the common stock. Before purchasing any of the shares
of common stock, you should carefully consider the following factors relating to
our business and prospects. You should pay particular attention to the fact that
we conduct all of our operations in China and are governed by a legal and
regulatory environment that in some respects differs significantly from the
environment that may prevail in the U.S. and other countries. If any of the
following risks actually occurs, our business, financial condition or operating
results will suffer, the trading price of our common stock could decline, and
you may lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
The recent financial crisis could negatively affect our
business, results of operations, and financial condition.
The recent credit crisis and turmoil in the global financial
system may have an impact on our business and our financial condition, and we
may face challenges if conditions in the financial markets do not improve. Our
ability to access the capital markets may be restricted at a time when we would
like, or need, to raise capital, which could have an impact on our flexibility
to react to changing economic and business conditions. In addition, these
economic conditions also impact levels of consumer spending, which have recently
deteriorated significantly and may remain depressed for the foreseeable future.
Consumer purchases of discretionary items, including our Chinese Golden Grass,
generally decline during recessionary periods and other periods where disposable
income is adversely affected. If demand for our products fluctuates as a result
of economic conditions or otherwise, our revenue and gross margin could be
harmed.
Our current business is significantly based on a single
product, Chinese Golden Grass, which currently accounts for over 75 percent of
our revenues, and we may not be able to general significant revenue if this
product fails.
Approximately 75.32% of our sales for the nine months ended
September 30, 2009 comes from a single product, Chinese Golden Grass, and our
business may suffer a material adverse impact if this product fails. If we
experience difficulties or obstacles in the manufacture and sale of Chinese
Golden Grass, we may not be able to generate significant revenues, our business
may fail and you would lose all or part of your investment in our company.
We may not be able to grow and harvest sufficient
Cordyceps Militaris to satisfy our production requirements and any decline in
the amount or quality of Cordyceps Militaris could reduce our sales and
negatively affect our results of operations, financial condition and business
prospects.
Our Chinese Golden Grass business and financial results
significantly depend on maintaining a consistent and cost-effective supply of
Cordyceps Militaris. The availability, size and quality of Cordyceps Militaris
for the production of our products are subject to risks inherent to growing,
such as size, quality, and yield fluctuation caused by technical problems of
growing, pest and disease problems, and other factors beyond our control.
Because all Cordyceps Militaris used to produce our Chinese Golden Grass
products are grown by us, we may not be able to locate in a timely manner any
third party suppliers who could provide us with sufficient materials to meet our
production needs when our self-supply faces significant fluctuations in the
availability of Cordyceps Militaris. Therefore, any interruptions to or decline
in the amount or quality of our Cordyceps Militaris supply could materially
disrupt our production and adversely affect our business and financial condition
and financial prospects.
Our sales and reputation may be affected by product
liability claims, litigation, product recalls, or adverse publicity in relation
to our products.
The sale of products for human consumption involves an inherent
risk of injury to consumers. We face risks associated with product liability
claims, litigation, or product recalls, if our products cause injury, or become
adulterated or misbranded. Our products are subject to product tampering, and to
contamination risks, such as mold, bacteria, insects, and other pests, and
off-flavor contamination during the various stages of the procurement,
production, transportation and storage processes. If any of our products were to
be tampered with, or become tainted in any of these respects and we were unable
to detect this, our products could be subject to product liability claims or
product recalls. We cannot predict what impact such product liability claims or
resulting negative publicity would have on our business or on our brand image.
The successful assertion of product liability claims against us could result in potentially significant monetary damages, diversion
of management resources and require us to make significant payments and incur
substantial legal expenses. We do not have product liability insurance and have
not made provisions for potential product liability claims. Therefore, we may
not have adequate resources to satisfy a judgment if a successful claim is
brought against us. Even if a product liability claim is not successfully
pursued to judgment by a claimant, we may still incur substantial legal expenses
defending against such a claim. Finally, serious product quality concerns could
result in governmental action against us, which, among other things, could
result in the suspension of production or distribution of our products, loss of
certain licenses, or other governmental penalties. A widespread product recall
could result in significant loss due to the cost of conducting a product recall
including destruction of inventory and the loss of sales resulting from the
unavailability of the product for a period of time. In addition. product
liability claims and product recalls could have a material adverse effect on the
demand for our products and on our business goodwill and reputation. Adverse
publicity could result in a loss of consumer confidence in our products.
7
We compete in an industry that is brand-conscious, and
unless we are able to establish and maintain brand name recognition our sales
may be negatively impacted.
Our business is substantially dependent upon awareness and
market acceptance of our products and brand by our targeted consumers. In
addition, our business depends on acceptance by our suppliers and consumers of
our brand. Although we believe that we have made progress towards establishing
market recognition for our brand "
帅亿东方神
" in the Chinese Golden Grass products
industry, it is too early in the product life cycle of the brand to determine
whether our products and brand will achieve and maintain satisfactory levels of
acceptance by our customers.
We compete in an industry characterized by rapid changes
in consumer preferences, so our inability to continue developing new products to
satisfy our consumers' changing preferences would have a material adverse effect
on our sales volumes.
Our success depends on our ability to anticipate, gauge and
react in a timely and effective manner to changes in consumer spending patterns
and product preferences. We must continually work to develop, produce and market
new products, maintain and enhance the recognition of our brands, achieve a
favorable mix of products, and refine our approach as to how and where we market
and sell our products. While we plan to devote considerable effort and resources
to shape, analyze and respond to consumer preferences, consumer spending
patterns and preferences cannot be predicted with certainty and can change
rapidly. Our failure to adapt our product offering to respond to such changes
may result in reduced demand and lower prices for our products, resulting in a
material adverse effect on our sales volumes, sales and profits.
Our current market distribution and penetration is limited as
compared with the potential market and so our initial views as to customer
acceptance of a particular product can be erroneous, and there can be no
assurance that true market acceptance will ultimately be achieved. In addition,
customer preferences are also affected by factors other than taste. If we do not
adjust to respond to these and other changes in customer preferences, our sales
may be adversely affected.
Expansion of our business may put added pressure on our
management and operational infrastructure impeding our ability to meet any
potential increased demand for the products that we sell and possibly hurting
our future operating results.
Our business plan is to significantly grow our operations to
meet anticipated growth in demand for the products that we sell, and by the
introduction of new product offerings. Growth in our business may place a
significant strain on our personnel, management, financial systems and other
resources. The evolution of our business also presents numerous risks and
challenges, including:
our ability to successfully and rapidly expand sales to potential new
  distributors in response to potentially increasing demand;
the costs associated with such growth, which are difficult to quantify,
  but could be significant; and
rapid technological change.
8
To accommodate any such growth and compete effectively, we may
need to obtain additional funding to improve information systems, procedures and
controls and expand, train, motivate and manage our employees, and such funding
may not be available in sufficient quantities, if at all. If we are not able to
manage these activities and implement these strategies successfully to expand to
meet any increased demand, our operating results could suffer.
Due to our rapid growth in recent years, our past results
may not be indicative of our future performance and evaluating our business and
prospects may be difficult.
Our business has grown and evolved rapidly in recent years. We
may not be able to achieve similar growth in future periods, and our historical
operating results may not provide a meaningful basis for evaluating our
business, financial performance and prospects. Moreover, our ability to achieve
satisfactory production results at higher volumes is unproven. Therefore, you
should not rely on our past results or our historical rate of growth as an
indication of our future performance.
We depend heavily on key personnel, and turnover of key
employees and senior management could harm our business.
Our future business and results of operations depend in
significant part upon the continued contributions of our key technical and
senior management personnel, including Lianyun Han, our chief executive officer
and chairperson, and Daniel K. Lee, our chief financial officer. The expertise
of management and technical innovation of the company give it a strong
competitive advantage. We do not maintain key person insurance on these
individuals. The loss of any of these key employees' services or any of our
other management poses a risk to our business. We may not be able to attract or
retain qualified management on acceptable terms in the future due to the intense
competition for qualified personnel in our industry and as a result, our
business could be adversely affected.
Our inability to protect our trademarks, patent and trade
secrets may prevent us from successfully marketing our products and competing
effectively.
Failure to protect our intellectual property could harm our
brands and our reputation, and adversely affect our ability to compete
effectively. Further, enforcing or defending our intellectual property rights,
including our trademarks, patents, copyrights, know how and trade secrets, could
result in the expenditure of significant financial and managerial resources. We
produce, market and sell our products using the brand "
帅亿东方神
" We regard our
intellectual property, particularly our trademark, know how and trade secrets to
be of considerable value and importance to our business and our success. We rely
on a combination of patent, trademark, trade secrecy laws, and contractual
provisions to protect our intellectual property rights. There can be no
assurance that the steps taken by us to protect these proprietary rights will be
adequate or that third parties will not infringe or misappropriate our patent,
trademark, trade secrets or similar proprietary rights. In addition, there can
be no assurance that other parties will not assert infringement claims against
us, and we may have to pursue litigation against other parties to assert our
rights. Any such claim or litigation could be costly and we may lack the
resources required to defend against such claims. In addition, any event that
would jeopardize our proprietary rights or any claims of infringement by third
parties could have a material adverse affect on our ability to market or sell
our brands, and profitably exploit our products.
We may be exposed to potential risks relating to our
internal controls over financial reporting and our ability to have those
controls attested to by our independent auditors.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002,
or SOX 404, the SEC adopted rules requiring public companies to include a report
of management on the company's internal controls over financial reporting in
their annual reports, including Form 10-K. In addition, the independent
registered public accounting firm auditing a company's financial statements must
also attest to the operating effectiveness of the company's internal controls.
Since we just completed the acquisition of New Resources on December 23, 2008,
we did not evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2008 in order to allow our management to report on
our internal controls on a consolidated basis as required by these requirements
of SOX 404. Under current law, we are subject to these requirements beginning
with our annual report for the fiscal year ended December 31, 2007, although the
auditor attestation is not required until our annual report for the fiscal year
ending December 31, 2010, assuming our filing status remains as a smaller
reporting company. We can provide no assurance that we will comply with all of
the requirements imposed thereby. There can be no assurance that we will receive
a positive attestation from our independent auditors. In the event we identify
significant deficiencies or material weaknesses in our internal controls that we
cannot remediate in a timely manner or we are unable to receive a positive attestation from our independent auditors with respect to our
internal controls, investors and others may lose confidence in the reliability
of our financial statements.
9
We do not carry any business interruption insurance,
third-party liability insurance for our production facilities or insurance that
covers the risk of loss of our products in shipment.
Operation of our facilities involves many risks, including
equipment failures, natural disasters, industrial accidents, power outages,
labor disturbances and other business interruptions. Furthermore, if any of our
products are faulty, then we may become subject to product liability claims or
we may have to engage in a product recall. We do not carry any business
interruption insurance, product recall or third-party liability insurance for
our production facilities or with respect to our products to cover claims
pertaining to personal injury or property or environmental damage arising from
defects in our products, product recalls, accidents on our property or damage
relating to our operations. As a result, we may be required to pay for financial
and other losses, damages and liabilities, including those caused by natural
disasters and other events beyond our control, out of our own funds, which could
have a material adverse effect on our business, financial condition and results
of operations.
We may be exposed to liabilities under the Foreign
Corrupt Practices Act, and any determination that we violated the Foreign
Corrupt Practices Act could have a material adverse effect on our
business.
We are subject to the Foreign Corrupt Practice Act, or the
FCPA, and other laws that prohibit improper payments or offers of payments to
foreign governments and their officials and political parties by U.S. persons
and issuers as defined by the statute for the purpose of obtaining or retaining
business. We have operations, agreements with third parties and make sales in
China, which may experience corruption. Our activities in China create the risk
of unauthorized payments or offers of payments by one of the employees,
consultants, sales agents or distributors of our company, because these parties
are not always subject to our control. It is our policy to implement safeguards
to discourage these practices by our employees. Also, our existing safeguards
and any future improvements may prove to be less than effective, and the
employees, consultants, sales agents or distributors of our Company may engage
in conduct for which we might be held responsible. Violations of the FCPA may
result in severe criminal or civil sanctions, and we may be subject to other
liabilities, which could negatively affect our business, operating results and
financial condition. In addition, the government may seek to hold our Company
liable for successor liability FCPA violations committed by companies in which
we invest or that we acquire.
RISKS RELATED TO DOING BUSINESS IN CHINA
Adverse changes in political and economic policies of the
PRC government could impede the overall economic growth of China, which could
reduce the demand for our products and damage our business.
We conduct substantially all of our operations and generate all
of our revenue in China. Accordingly, our business, financial condition, results
of operations and prospects are affected significantly by economic, political
and legal developments in China. The PRC economy differs from the economies of
most developed countries in many respects, including:
a higher level of government involvement;
a early stage of development of the market-oriented sector of the economy;
a rapid growth rate;
a higher level of control over foreign exchange; and
the allocation of resources.
As the PRC economy has been transitioning from a planned
economy to a more market-oriented economy, the PRC government has implemented
various measures to encourage economic growth and guide the allocation of
resources. While these measures may benefit the overall PRC economy, they may
also have a negative effect on us.
Although the PRC government has in recent years implemented
measures emphasizing the utilization of market forces for economic reform, the
PRC government continues to exercise significant control over economic growth in
China through the allocation of resources, controlling the payment of
foreign currency-denominated obligations, setting monetary policy and imposing
policies that impact particular industries or companies in different ways.
10
Any adverse change in economic conditions or government
policies in China could have a material adverse effect on the overall economic
growth in China, which in turn could lead to a reduction in demand for our
services and consequently have a material adverse effect on our business and
prospects.
Uncertainties with respect to the PRC legal system could
limit the legal protections available to you and us.
We conduct substantially all of our business through our
operating subsidiaries in the PRC. Our operating subsidiaries are generally
subject to laws and regulations applicable to foreign investments in China and,
in particular, laws applicable to foreign-invested enterprises. The PRC legal
system is based on written statutes, and prior court decisions may be cited for
reference but have limited precedential value. Since 1979, a series of new PRC
laws and regulations have significantly enhanced the protections afforded to
various forms of foreign investments in China. However, since the PRC legal
system continues to rapidly evolve, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws,
regulations and rules involve uncertainties, which may limit legal protections
available to you and us. In addition, any litigation in China may be protracted
and result in substantial costs and diversion of resources and management
attention. In addition, all of our executive officers and all of our directors
are residents of China and not of the United States, and substantially all the
assets of these persons are located outside the United States. As a result, it
could be difficult for investors to affect service of process in the United
States or to enforce a judgment obtained in the United States against our
Chinese operations and subsidiaries.
If we are found to have failed to comply with applicable
laws, we may incur additional expenditures or be subject to significant fines
and penalties.
Our operations are subject to PRC laws and regulations
applicable to us. However, many PRC laws and regulations are uncertain in their
scope, and the implementation of such laws and regulations in different
localities could have significant differences. In certain instances, local
implementation rules and/or the actual implementation are not necessarily
consistent with the regulations at the national level. Although we strive to
comply with all the applicable PRC laws and regulations, we cannot assure you
that the relevant PRC government authorities will not later determine that we
have not been in compliance with certain laws or regulations. Our failure to
comply with applicable PRC laws and regulations could subject us to
administrative penalties and injunctive relief, as well as civil remedies,
including fines, injunctions and recalls of our products. It is possible that
changes to such laws or more rigorous enforcement of such laws or with respect
to our current or past practices could have a material adverse effect on our
business, operating results and financial condition.
The PRC government exerts substantial influence over the
manner in which we must conduct our business activities.
The PRC government has exercised and continues to exercise
substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by
changes in its laws and regulations, including those relating to taxation,
import and export tariffs, environmental regulations, land use rights, property
and other matters. We believe that our operations in China are in material
compliance with all applicable legal and regulatory requirements. However, the
central or local governments of the jurisdictions in which we operate 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 or joint ventures.
Restrictions on currency exchange may limit our ability
to receive and use our sales revenue effectively.
All our sales revenue and expenses are denominated in RMB.
Under PRC law, the RMB is currently convertible under the "current account,"
which includes dividends and trade and service-related foreign exchange
transactions, but not under the "capital account," which includes foreign direct
investment and loans. Currently, our PRC operating subsidiaries may purchase foreign currencies for settlement of
current account transactions, including payments of dividends to us, without the
approval of the State Administration of Foreign Exchange, or SAFE, by complying
with certain procedural requirements. However, the relevant PRC government
authorities may limit or eliminate our ability to purchase foreign currencies in
the future. Since a significant amount of our future revenue will be denominated
in RMB, any existing and future restrictions on currency exchange may limit our
ability to utilize revenue generated in RMB to fund our business activities
outside China that are denominated in foreign currencies.
11
Foreign exchange transactions by our PRC operating subsidiaries
under the capital account continue to be subject to significant foreign exchange
controls and require the approval of or need to register with PRC government
authorities, including SAFE. In particular, if our PRC operating subsidiaries
borrow foreign currency through loans from us or other foreign lenders, these
loans must be registered with SAFE, and if we finance the subsidiaries by means
of additional capital contributions, these capital contributions must be
approved by certain government authorities, including the Ministry of Commerce,
or MOFCOM, or their respective local counterparts. These limitations could
affect their ability to obtain foreign exchange through debt or equity
financing.
Fluctuations in exchange rates could adversely affect our
business and the value of our securities.
The value of our common stock will be indirectly affected by
the foreign exchange rate between U.S. dollars and RMB and between those
currencies and other currencies in which our sales may be denominated.
Appreciation or depreciation in the value of the RMB relative to the U.S. dollar
would affect our financial results reported in U.S. dollar terms without giving
effect to any underlying change in our business or results of operations.
Fluctuations in the exchange rate will also affect the relative value of any
dividend we issue in the future as well as earnings from, and the value of, any
U.S. dollar-denominated investments we make in the future.
Since July 2005, the RMB has no longer been pegged to the U.S.
dollar. Although the People's Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange
rate, the RMB may appreciate or depreciate significantly in value against the
U.S. dollar in the medium to long term. Moreover, it is possible that in the
future PRC authorities may lift restrictions on fluctuations in the RMB exchange
rate and lessen intervention in the foreign exchange market.
Very limited hedging transactions are available in China to
reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. While we may enter into hedging transactions in
the future, the availability and effectiveness of these transactions may be
limited, and we may not be able to successfully hedge our exposure at all. In
addition, our foreign currency exchange losses may be magnified by PRC exchange
control regulations that restrict our ability to convert RMB into foreign
currencies.
Restrictions under PRC law on our PRC subsidiaries'
ability to make dividends and other distributions could materially and adversely
affect our ability to grow, make investments or acquisitions that could benefit
our business, pay dividends to you, and otherwise fund and conduct our
businesses.
Substantially all of our revenues are earned by our PRC
subsidiaries. However, PRC regulations restrict the ability of our PRC
subsidiaries to make dividends and other payments to its offshore parent
company. PRC legal restrictions permit payments of dividend by our PRC
subsidiaries only out of their accumulated after-tax profits, if any, determined
in accordance with PRC accounting standards and regulations. Our PRC
subsidiaries are also required under PRC laws and regulations to allocate at
least 10% of our annual after-tax profits determined in accordance with PRC GAAP
to a statutory general reserve fund until the amounts in said fund reaches 50%
of our registered capital. Allocations to these statutory reserve funds can only
be used for specific purposes and are not transferable to us in the form of
loans, advances or cash dividends. Any limitations on the ability of our PRC
subsidiaries to transfer funds to us could materially and adversely limit our
ability to grow, make investments or acquisitions that could be beneficial to
our business, pay dividends and otherwise fund and conduct our business.
Under the New EIT Law, we may be classified as a
"resident enterprise" of China. Such classification will likely result in
unfavorable tax consequences to us and our non-PRC stockholders.
China passed a new Enterprise Income Tax Law, or the New EIT
Law, and its implementation regulations, both of which became effective on
January 1, 2008. Under the New EIT Law, an enterprise established outside of
China with "de facto management bodies" within China is considered a "resident
enterprise," meaning that it can be treated in a manner similar to a Chinese
domestic enterprise for enterprise income tax purposes. The implementing rules
of the New EIT Law define de facto management as "substantial and
overall management and control over the production and operations, personnel,
accounting, and properties" of the enterprise. On April 22, 2009, the State
Administration of Taxation issued the Notice Concerning Relevant Issues
Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated
Offshore as Resident Enterprises pursuant to Criteria of de facto Management
Bodies, or the Notice, further interpreting the application of the New EIT Law
and its implementation with respect to non-Chinese enterprises or group
controlled offshore entities. Pursuant to the Notice, an enterprise incorporated
in an offshore jurisdiction and controlled by a Chinese enterprise or group will
be classified as a "non-domestically incorporated resident enterprise" if (i)
its senior management in charge of daily operations reside or perform their
duties mainly in China; (ii) its financial or personnel decisions are made or
approved by bodies or persons in China; (iii) substantial assets and properties,
accounting books, corporate chops, board and shareholder minutes are kept in
China; and (iv) at least half of its directors with voting rights or senior
management often resident in China. A resident enterprise would be generally
subject to the uniform 25% enterprise income tax rate as to its worldwide
income. Substantially all of our management is currently based in China.
Therefore, we may be treated as a Chinese resident enterprise for enterprise
income tax purposes. The tax consequences of such treatment are currently
unclear, as they will depend on how local tax authorities apply or enforce the
New EIT Law or the implementation regulations.
12
In addition, under the New EIT Law and implementation
regulations, PRC income tax at the rate of 10% is applicable to dividends
payable to investors that are "non-resident enterprises" (and that do not have
an establishment or place of business in the PRC, or that have such
establishment or place of business but the relevant income is not effectively
connected with the establishment or place of business) to the extent that such
dividends have their source within the PRC unless there is an applicable tax
treaty between the PRC and the jurisdiction in which an overseas holder resides
which reduces or exempts the relevant tax. Similarly, any gain realized on the
transfer of shares by such investors is also subject to the 10% PRC income tax
if such gain is regarded as income derived from sources within the PRC. If we
are considered a PRC "resident enterprise", it is unclear whether the dividends
we pay with respect to our shares, or the gain you may realize from the transfer
of our shares, would be treated as income derived from sources within the PRC
and be subject to PRC tax. If we are required under the New EIT Law to withhold
PRC income tax on our dividends payable to our foreign shareholders, or if you
are required to pay PRC income tax on the transfer of your shares, the value of
your investment in our shares may be materially and adversely affected.
If the China Securities Regulatory Commission, or CSRC,
or another PRC regulatory agency determines that CSRC approval is required in
connection with the reverse acquisition of New Resources, the reverse
acquisition may be unwound, or we may become subject to penalties.
On August 8, 2006, six PRC regulatory agencies, including the
CSRC, promulgated the Provisions Regarding Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, or the M&A Rule, which became effective on
September 8, 2006. The M&A Rule, among other things, requires that an
offshore company controlled by PRC companies or individuals that have acquired a
PRC domestic company for the purpose of listing the PRC domestic company's
equity interest on an overseas stock exchange must obtain the approval of the
CSRC prior to the listing and trading of such offshore company's securities on
an overseas stock exchange. On September 21, 2006, the CSRC, pursuant to the
M&A Rule, published on its official web site procedures specifying documents
and materials required to be submitted to it by offshore companies seeking CSRC
approval of their overseas listings.
We do not believe that the M&A Rule concerning the CSRC
approval for acquisition of a PRC domestic company by an offshore company
controlled by PRC companies or individuals applies to our reverse acquisition of
New Resources because neither Nutrastar International Inc. nor New Resources are
a "Special Purpose Vehicle" or an "offshore company controlled by PRC companies
or individuals" as defined in the M&A Rule. If the CSRC or another PRC
governmental agency subsequently determines that we must obtain CSRC approval
prior to the completion of the reverse acquisition, the reverse acquisition may
be unwound and we may face regulatory actions or other sanctions from the CSRC
or other PRC regulatory agencies. These regulatory agencies may impose fines and
penalties on our operations in China and limit our operating privileges in
China, or take other actions that could have a material adverse effect on our
business, financial condition, results of operations, reputation and prospects,
as well as the trading price of our shares.
If we do not fulfill our obligation to pay the transfer
price for the equity interest of Heilongjiang Shuaiyi, then we may be subject to
fines and prohibitions imposed by relevant PRC authorities that could have a
material adverse effect on our business.
13
On July 28, 2008, our subsidiary, New Resources entered into an
equity transfer agreement with the founders of Heilongjiang Shuaiyi to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB 60 million
(approximately $8.8 million). On November 24, 2008, Heilongjiang Shuaiyi
obtained the Certificate of Approval for Establishment of Enterprises of Foreign
Investment issued by Heilongjiang Provincial Government and a new business
license was issued to Heilongjiang Shuaiyi on December 1, 2008. According to the
M&A Rule, the equity interest transfer price should be paid in full within
three months commencing from the issuance of the new business license to
Heilongjiang Shuaiyi. If the transfer price is not paid by this date, we may
apply to the relevant PRC regulatory agency for an extension of up to one year
from the date of the issuance of the license; provided, however, that 60% of the
transfer price will be required to be paid within six months from such date. On
March 10, 2009, we obtained the approval from the relevant PRC regulatory agency
allowing us to make the payment by December 1, 2009. On January 4, 2010, the
relevant PRC regulatory agency further extended the payment due date to June 30,
2010. However, if we are unable to make the transfer payment in full by the June
30, 2010 deadline we may subject to fines or penalties imposed by the PRC
regulatory agency. In addition, we may not be permitted to exercise any
decision-making rights as a shareholder in Heilongjiang Shuaiyi or to
consolidate Heilongjiang Shuaiyi's financial results into our financial
statements, both of which result would have a material adverse effect on our
business.
The M&A Rule establishes more complex procedures for
some acquisitions of Chinese companies by foreign investors, which could make it
more difficult for us to pursue growth through acquisitions in China.
The M&A Rule establishes additional procedures and
requirements that could make some acquisitions of Chinese companies by foreign
investors more time-consuming and complex, including requirements in some
instances that the PRC Ministry of Commerce be notified in advance of any
change-of-control transaction and in some situations, require approval of the
PRC Ministry of Commerce when a foreign investor takes control of a Chinese
domestic enterprise. In the future, we may grow our business in part by
acquiring complementary businesses, although we do not have any plans to do so
at this time. The M&A Rule also requires PRC Ministry of Commerce anti-trust
review of any change-of-control transactions involving certain types of foreign
acquirers. Complying with the requirements of the M&A Rule to complete such
transactions could be time-consuming, and any required approval processes,
including obtaining approval from the PRC Ministry of Commerce, may delay or
inhibit our ability to complete such transactions, which could affect our
ability to expand our business or maintain our market share.
The implementation of the new PRC employment contract law
and increases in the labor costs in China may hurt our business and
profitability.
A new employment contract law became effective on January 1,
2008 in China. It imposes more stringent requirements on employers in relation
to entry into fixed-term employment contracts, recruitment of temporary
employees and dismissal of employees. In addition, under the newly promulgated
Regulations on Paid Annual Leave for Employees, which also became effective on
January 1, 2008, employees who have worked continuously for more than one year
are entitled to paid vacation ranging from 5 to 15 days, depending on the length
of the employee's service. Employees who waive such vacation entitlements at the
request of the employer will be compensated for three times their normal daily
salaries for each vacation day so waived. As a result of the new law and
regulations, our labor costs may increase. There is no assurance that disputes,
work stoppages or strikes will not arise in the future. Increases in the labor
costs or future disputes with our employees could damage our business, financial
condition or operating results.
Any outbreak of the Swine Flu (H1N1), severe acute
respiratory syndrome, or SARS, the Avian Flu, or another widespread public
health problem in the PRC could adversely affect our operations.
There have been recent outbreaks of the highly pathogenic Swine
Flu, caused by the H1N1 virus, in certain regions of the world, including parts
of China, where all of our manufacturing facilities are located and where all of
our sales occur. Our business is dependent upon our ability to continue to
manufacture and distribute our products, and an outbreak of the Swine Flu, or a
renewed outbreak of SARS, the Avian Flu, or another widespread public health
problem in China, could have a negative effect on our operations. Any such
outbreak could have an impact on our operations as a result of:
quarantines or closures of our manufacturing or distribution facilities or
  the retail outlets, which would severely disrupt our operations,
the sickness or death of our key officers and employees, and
a general slowdown in the Chinese economy.
14
Any of the foregoing events or other unforeseen consequences of
public health problems could adversely affect our operations.
You may have difficulty enforcing judgments against us.
We are a Nevada holding company and most of our assets are
located outside of the United States. Most of our current operations are
conducted in the PRC. In addition, most of our directors and officers are
nationals and residents of countries other than the United States. A substantial
portion of the assets of these persons is located outside the United States. As
a result, it may be difficult for you to effect service of process within the
United States upon these persons. It may also be difficult for you to enforce in
U.S. courts judgments on the civil liability provisions of the U.S. federal
securities laws against us and our officers and directors, most of whom are not
residents in the United States and the substantial majority of whose assets are
located outside of the United States. In addition, there is uncertainty as to
whether the courts of the PRC would recognize or enforce judgments of U.S.
courts. Courts in China may recognize and enforce foreign judgments in
accordance with the requirements of the PRC Civil Procedures Law based on
treaties between China and the country where the judgment is made or on
reciprocity between jurisdictions. China does not have any treaties or other
arrangements that provide for the reciprocal recognition and enforcement of
foreign judgments with the United States. In addition, according to the PRC
Civil Procedures Law, courts in the PRC will not enforce a foreign judgment
against us or our directors and officers if they decide that the judgment
violates basic principles of PRC law or national sovereignty, security or the
public interest. So it is uncertain whether a PRC court would enforce a judgment
rendered by a court in the United States.
RISKS RELATED TO THE MARKET FOR OUR STOCK GENERALLY
Our common stock is quoted on the OTC Bulletin Board
which may have an unfavorable impact on our stock price and liquidity.
Our common stock is quoted on the OTC Bulletin Board. The OTC
Bulletin Board is a significantly more limited market than the New York Stock
Exchange or Nasdaq system. The quotation of our shares on the OTC Bulletin Board
may result in a less liquid market available for existing and potential
stockholders to trade shares of our common stock, could depress the trading
price of our common stock and could have a long-term adverse impact on our
ability to raise capital in the future.
The market price of our common stock is volatile, leading
to the possibility of its value being depressed at a time when you may want to
sell your holdings.
The market price of our common stock is volatile, and this
volatility may continue. Numerous factors, many of which are beyond our control,
may cause the market price of our common stock to fluctuate significantly. In
addition to market and industry factors, the price and trading volume for our
common stock may be highly volatile for specific business reasons. Factors such
as variations in our revenues, earnings and cash flow, announcements of new
investments, cooperation arrangements or acquisitions, and fluctuations in
market prices for our products could cause the market price for our shares to
change substantially.
Securities class action litigation is often instituted against
companies following periods of volatility in their stock price. This type of
litigation could result in substantial costs to us and divert our management's
attention and resources.
Moreover, the trading market for our common stock will be
influenced by research or reports that industry or securities analysts publish
about us or our business. If one or more analysts who cover us downgrade our
common stock, the market price for our common stock would likely decline. If one
or more of these analysts cease coverage of us or fail to regularly publish
reports on us, we could lose visibility in the financial markets, which, in
turn, could cause the market price for our common stock or trading volume to
decline.
Furthermore, securities markets may from time to time
experience significant price and volume fluctuations for reasons unrelated to
operating performance of particular companies. These market fluctuations may
adversely affect the price of our common stock and other interests in our
company at a time when you want to sell your interest in us.
15
We may be subject to penny stock regulations and
restrictions and you may have difficulty selling shares of our common
stock.
The SEC has adopted regulations which generally define
so-called "penny stocks" to be an equity security that has a market price less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exemptions. If our common stock becomes a "penny stock", we may
become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule.
This rule imposes additional sales practice requirements on broker-dealers that
sell such securities to persons other than established customers and "accredited
investors" (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. As a result, this rule may
affect the ability of broker-dealers to sell our securities and may affect the
ability of purchasers to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. Disclosure is
also required to be made about sales commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.
There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest.
Certain provisions of our Articles of Incorporation may
make it more difficult for a third party to effect a change-of-control.
Our Articles of Incorporation authorizes our board of directors
to issue up to 1,000,000 shares of preferred stock. The preferred stock may be
issued in one or more series, the terms of which may be determined at the time
of issuance by the board of directors without further action by the
stockholders. These terms may include preferences as to dividends and
liquidation, conversion rights, redemption rights and sinking fund provisions.
The issuance of any preferred stock could diminish the rights of holders of our
common stock, and therefore could reduce the value of such common stock. In
addition, specific rights granted to future holders of preferred stock could be
used to restrict our ability to merge with, or sell assets to, a third party.
The ability of our board of directors to issue preferred stock could make it
more difficult, delay, discourage, prevent or make it more costly to acquire or
effect a change-in-control, which in turn could prevent our stockholders from
recognizing a gain in the event that a favorable offer is extended and could
materially and negatively affect the market price of our common stock.
16
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made statements under the captions "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and "Business" and in other sections of
this prospectus that are forward-looking statements. In some cases, you can
identify these statements by forward-looking words such as "may," "might,"
"will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential," or "continue," the negative of these terms, and other
comparable terminology, although not all forward-looking statements contain
these identifying words. These forward-looking statements, which are subject to
risks, uncertainties, and assumptions, may include projections of our future
financial performance based on our growth strategies and anticipated trends in
our business. These statements are only predictions based on our current
expectations and projections about future events. There are important factors
that could cause our actual results, level of activity, performance, or
achievements to differ materially from the results, level of activity,
performance, or achievements expressed or implied by the forward-looking
statements. Those factors include, but are not limited to, the highly
competitive nature of the markets in which we sell our products, changes in
demand for our products and services, our ability to develop new products and
services, competitive pressures, changes in laws and regulations governing our
business and the other factors discussed under the caption "Risk Factors."
Although we believe the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
level of activity, performance, or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy or completeness of any of
these forward-looking statements. You should not rely upon forward-looking
statements as predictions of future events. We are under no duty to update any
of these forward-looking statements after the date of this prospectus to conform
our prior statements to actual results or revised expectations.
USE OF PROCEEDS
We will not receive proceeds from the sales by the selling
stockholders. If the warrants are exercised for cash, then we will receive the
proceeds of payable by the selling stockholders upon exercise of the warrants.
We will use these proceeds, if received, for general working capital purposes.
BUSINESS
Business Overview
We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading Chinese Golden Grass grower and
producer in China. We specialize in developing, processing, marketing and
distributing a variety of agricultural and nutraceutical products consisting of
Chinese Golden Grass, organic and specialty food products. In
addition, we plan to produce and market other products developed from Cordyceps
Militaris within the coming months and years, including specialty beverage
products as indicated in more detail below.
Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in north-eastern mountainous China. It is a precious
ingredient in traditional Chinese medicine, as Cordyceps Militaris is widely
believed in China to offer high medical and health benefits by nourishing the
yin,
boosting the
yang,
and invigorating the meridians of the
lungs and kidneys. According to Georges Halpern's
Healing Mushrooms,
certain research has shown that Cordyceps Militaris may boost our immune
system, and can be used as a supplement for the purposes of combating certain
effects of fatigue and aging, as well as reducing blood pressure, the
occurrences of certain tumors, and combating arteriosclerosis and certain
gastrointestinal disorders. In addition, Cordyceps Militaris has significantly
high economic values. According to Halpern
,
wild Cordyceps Militaris can
cost as much as $10,000 per kilogram. Due to the extremely sensitive growing
conditions of Cordyceps Militaris, it is very difficult to grow the plant in a
man-made environment. Through several years of laboratory tests, we developed
the technology to commercially grow and produce Cordyceps Militaris in 2006. We
generated 75.32% and 68.46% of our revenues from Chinese Golden Grass for the
nine months ended September 30, 2009 and for the fiscal year of 2008,
respectively. We believe that we own 19% of the world wide market share in the
cultivated Chinese Golden Grass industry. We plan to continue to focus on
Chinese Golden Grass, which is our fastest growing product line with the
greatest market demand and a significantly high profit margin.
17
We also sell organic and specialty food products through our
subsidiary, Harbin Shuaiyi, which was formed in 2001. After years of
development, we believe that we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.
Our Industry
The nutraceutical industry is currently made up of many small-
and medium-sized companies that manufacture and distribute products generally
intended to, or marketed for the purpose of maintaining, and sometimes
improving, health and general well being. According to China Enterprises
Association, there are currently over 3,000 manufacturers of nutraceutical
products in China, with an annual production value of over $6.25 billion. Of
these manufacturers, large enterprises with registered capital of over $12.5
million only account for 1.45%; medium-sized enterprises with registered capital
under $12.5 million, but over $6.25 million, make up 38%; and workshop-style
enterprises with registered capital below $12,500 make up 12.5% of the total
number of manufacturers.
Widespread economic development in China has not only increased
the disposable income of Chinese consumers, it has also lead to an increase in
consumer awareness of the risks of dietary imbalances and the importance of
maintaining appropriate levels of vitamins and minerals in the human body. Along
with a growing middle class, all of these facts have rapidly increased China's
480 million urban consumers' demand for nutraceutical products. According to
China Personal Health & Supplemental Industry Survey 2005
, the sales
of nutraceutical products in China are expected to reach RMB 70 billion
(approximately $8.75 billion) in 2009, with a compounded annual growth rate of
15.24% . We believe that the next era of nutrition will focus on naturally
occurring properties provided from plants, fruits, and vegetables, which support
good health.
Because of the rarity and high prices of the wild collected
variety, attempts have long been made to cultivate Cordyceps Militaris. By the
mid-1980s, the majority of Cordyceps Militaris available in the worldwide
marketplace were artificially cultivated. Because of the development of modern
biotechnology-based cultivation methods, the availability of this previously
rare health supplement has greatly increased in the last 20 years. The demand
for Cordyceps Militaris has also compounded exponentially, in this same time
frame, partly because of the opening of China to trade with the West in the
1970s, exposing many more people around the world to the concepts and practices
of traditional Chinese medicine. As Cordyceps Militaris has always been highly
revered in traditional Chinese medicine, we believe that with increased exposure
to traditional Chinese medicine, the demand for this plant has also increased.
Such an increase has lead to overharvesting of the wild stocks and a subsequent
shortage of wild collected varieties of Cordyceps Militaris. International
markets for Cordyceps Militaris are mainly in the United States, Canada, Japan,
Korea, Hong Kong and Southeast Asia. The European and Australian markets are
also emerging. According to
Market Survey of Cordyceps Militaris
2008,
published by China Market Monitoring Center in 2008, the current
international market demand for Cordyceps Militaris is about 1,000 tons a year,
while the Chinese domestic market demand is about 500 tons a year with an annual
growth rate of over 13%. With about 50 Cordyceps Militaris manufacturers in
China having an aggregate production capacity of only 250 tons a year, there is
a big gap between supply and demand and therefore a great potential for our
Chinese Golden Grass market.
18
Our Competitive Strengths
We believe that our success to date and potential for future
growth can be attributed to a combination of our strengths, including the
following:
High-end niche products.
We sell organic and specialty food
  products and Chinese Golden Grass products that the followers of traditional
  Chinese medicine believe have high nutrient concentration, potential health
  benefits and high value. Our products are positioned in the high-end market as
  premium healthy food and are distinguished from the common nutraceutical
  products in the market.
Leading market position and significantly high margin.
We
  believe we have established ourselves as a dominant player in China's Chinese
  Golden Grass industry. We believe that we currently own approximately 19% of
  world market of Chinese Golden Grass. By successfully commercializing our
  Cordyceps Militaris planting technology, we believe that we have achieved
  economies of scale and accordingly significantly high margin that no other
  material competitor can match in the near future.
Leading-edge R&D team.
Our research and development team
  has a strong and extensive technology background and has been an early
  participant in the Chinese Golden Grass market. Currently we have 21
  technicians in our R&D department. The head of our research and
  development team, Mr. Lichen Wang, is a lead expert in the field of edible
  fungus in China. Mr. Wang graduated with a Bachelor's degree in edible fungus
  and has served as the deputy director of several research institutes of edible
  fungus in Northeast China.
Experienced management team with a strong track record.
Our
  management team has extensive operating experience and industry knowledge.
  Lianyun Han, our founder and chief executive officer, has more than 10 years
  experience in operational management and business development. Daniel K. Lee,
  our chief financial officer, has auditing, accounting and financial management
  experience in U.S. public companies. We believe that our management team's
  experience and capabilities have contributed greatly to our significant growth
  in the past three years.
Our Growth Strategy
As a leading nutraceutical producer in China, we believe we are
well positioned to capitalize on future industry growth in China. We are
dedicated to providing healthy and high nutritional products to our consumers.
We will implement the following strategic plans to take advantage of industry
opportunities and our competitive strengths:
Focus on brand development
.
With intense price
  competition among many similar or identical products in the industry, we
  believe that building brand awareness is the primary means to generate and
  sustain profitable growth in the future. We believe that developing close
  cooperative relationships with research centers of well-known universities in
  China and globally is key to building brand equity. We also market our
  products through an integrated marketing program that includes advertising in
  relevant media outlets, attending trade shows such as Harbin International
  Fair for Trade and Economic Corporation and Beijing Agriculture Exposition and
  offering seminars and lectures to local communities regarding the products and
  their heath benefits.
Introducing new products
.
We constantly evaluate our
  products and seek to adapt to changing market conditions by updating our
  products to reflect new trends in consumer preferences. We endeavor to expand
  our market presence by introducing additional competitive nutraceutical
  products to our product offerings. Our new products under development include
  specialty beverage products.
Increase production capacity.
Our existing production lines
  of Chinese Golden Grass have been running at close to full capacity while the
  market demand for our existing products continues to increase. We plan to
  develop an additional 4.1 million square meters to grow Cordyceps Militaris
  with a designed annual production capacity of 65 tons by the end of 2010. We
  also own 75 buildings in our company compound and only 10 of them are currently used to plant
  Cordyceps Militaris. We plan to convert more buildings into biotechnologically
  controlled cultivation plants to grow and process Cordyceps Militaris.
19
Further expand our distribution network to increase the prevalence
  of our products nationwide.
Our current sales depend heavily on the
  sales of our large-pack products to pharmaceutical companies. To support our
  rapid growth in sales, we plan to further expand our distribution network by
  selling our small-pack products through drug stores, supermarkets and
  franchise stores. We have one-year contracts with our major distributors which
  normally extend for one more year by the end of the contracts. We maintain
  constant communications with these distributors to keep us informed regarding
  consumer preferences and market trends in order to develop new products. We
  also organize monthly product promotion meetings with the distributors to
  increase the sales of small package products.
Technology innovation.
We believe that the development of
  new technology is critical to our success. We will continuously improve the
  quality of our existing and future products through new technologies. We
  expect to maintain our long-term partnership with Chinese universities and
  research institutes in order to develop new technologies.
Our Products and Production Process
Chinese Golden Grass
Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in the north-eastern mountainous regions of China. As a
precious ingredient in traditional Chinese medicine, Cordyceps Militaris is
widely believed in China to offer high medical and health benefits by nourishing
the
yin,
boosting the
yang,
and invigorating the meridians of the
lungs and kidneys. Due to the extremely sensitive growing conditions of
Cordyceps Militaris, it is very difficult to grow the plants in man-made
environments. Through several years laboratory tests, we developed the
technology to commercially grow and produce Cordyceps Militaris in 2006. Our
production process primarily includes planting, purifying and packaging.
Our present production capacity of Chinese Golden Grass is
approximately 55 tons annually. We generated 75.32% and 68.46% of our revenues
from Chinese Golden Grass for the nine months ended September 30, 2009 and for
the fiscal year of 2008, respectively. We believe that we own approximately 19%
worldwide market share in the entire cultivated Chinese Golden Grass industry.
We plan to continue to focus on Chinese Golden Grass, which is our fastest
growing product with the greatest market demand and a significantly high profit
margin. To achieve this end, we plan to increase our annual production capacity
of 65 tons by the end of 2010.
Organic and Specialty Food
Growth in domestic demand for organic products has been driven
by rising incomes in China. Through our indirect subsidiary, Harbin Shuaiyi, we
act as either a sales agent or a distributor to market and sell organic and
specialty food products supplied by third-party producers. These products mainly
include Northeast Peculiar Rice. Northeast Peculiar Rice is grown in accordance
with organic product standards established by the Chinese Ministry of
Agriculture. To qualify as "organic," food must be produced in an environment
which relies upon natural resources, without the use of conventional pesticides,
artificial fertilizers, in an appropriate ecological environment, and must
undergo a series of scientific and technological quality control processes. Our
Northeast Peculiar Rice is rich in protein, fiber fats, amino acids and calcium,
iron, zinc, selenium and other elements and vitamins. After years of
development, we believe we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.
New products under development
We plan to further diversify our Cordyceps Militaris based
product mix to cater to different customer tastes and preferences. Currently, we
have the following two products under development. In 2010, we will be targeting
mass consumer markets by introducing two specialty beverage products with the
health benefits of enhancing immunity, reducing fatigue, enhancing circulations,
among other benefits derived from our Cordyceps Militaris.
20
Cordycepin
. Cordycepin is the major bioactive compound of Cordyceps
  Militaris. Cordycepin has been used as raw materials in various nutraceutical
  products, cosmetics and drugs worldwide. According to Georges Halpern's
Healing Mushrooms
, Cordycepin is medicinally used to treat bacterial
  infections such as tuberculosis and leprosy as well as possibly inhibiting HIV
  replication.
Specialty Beverage Products
. This convenient and delicious Chinese
  traditional healthcare cereal beverage has various nutritional ingredients of
  Cordyceps Militaris, including Cordycepin and polysaccharides. We expect to
  begin manufacturing and selling this product by the first half of 2010.
Marketing and Sales
Currently, we have 115 experienced marketing personnel who are
responsible for market research, promotion and advertisement. We strengthen our
market presence by employing various types of marketing strategies. We
participate in trade shows such as Harbin International Fair for Trade and
Economic Cooperation and Beijing Agriculture Exposition and offer seminars and
lectures to local communities regarding the health benefits of our products.
These activities help to promote our reputation and name recognition in the
industry.
Our sales depend heavily on the sales of our large-pack
products to pharmaceutical companies. To support our rapid growth in sales, we
plan to further expand our distribution network by selling our small-pack
products through drug stores, supermarkets and franchise stores.
Raw Materials and Suppliers
Our raw materials primarily consist of carbamide, wheat,
glucose, citric acid, bitter salt, peptone, and pupa powder. The price for such
material fluctuates depending upon market conditions. However, since we have
long-term suppliers and clients, the influence of material price fluctuation is
not currently material to the Company.
We have established long-term relationships with our key
suppliers. However, we do not have long term supply contracts and we do not
exclusively rely on our key suppliers. We have adopted a dual supplier system
for raw materials. Therefore, if our primary suppliers cannot supply us with our
raw material for any reason, we are able to acquire raw material from another
supplier. All of our suppliers must meet our quality standards and delivery
requirements consistently in order to remain on our approved supplier list. If
deliveries are delayed repeatedly, we terminate the partnership with such
supplier.
The flexible sourcing arrangements are designed to ensure the
stable supply of raw materials and promote healthy competition among our
suppliers. We believe our supplier arrangements encourage our suppliers to
provide high quality raw materials timely and efficiently.
Our Major Suppliers in 2008
The following table lists top suppliers of our raw materials in
2008:
Purchasing
value
Rank
Company Name
Unit (Kg)
in 2008 ($)
Location
Material
1
Harbin Zhenfengyuan
      Bio-technology Co., Ltd
13,865
448,539
Harbin
Peptone
11,264
Pupa Powder
11,720
Vitamin-C
2
Nehe Laocai Grain Depot.
351,980
125,209
Nehe
Wheat
3
Zhaoyuan Xinan Rice Co., Ltd.
100,000
48,935
Zhaoyuan
Rice
4
Harbin Jiancheng Fine Chemical
      Plant
13,512
32,859
Harbin
Glucose
9,230
Citric acid,
1,000
Bitter salt
5
Zhaoyuan Xinzhan Yuanxiang Goods
      and
80,000
32,239
Zhaoyuan
Corn
Materials Co., Ltd.
6
Daqing Qingzhong Seed Co., Ltd.
60,700
14,852
Daqing
Potato
21
Our Major Customers
The following table provides information on our major clients
in fiscal year 2008.
MAJOR CLIENTS IN 2008
Sales
(in Millions of
Percentage of
No.
Name
Description of Client
US Dollars)
Total Sales
1
Si Chuan Ai Da Biotech Co.
      Ltd.
Health Products Producer
1.079
8.31%
in China
2
Hangzhou KangYuanTang Ganoderma
      Lucidum
Health Products Producer
1.052
8.09%
Co., Ltd.
in China
3
Zhejiang Yinlong Trading Company
Trading company in China
1.043
8.03%
4
Beijing Ruichenboji Technology
      Development
Trading company in China
0.935
7.2%
Co., Ltd.
5
Disha Pharmaceutical Co., Ltd.
Pharmaceutical Products
0.913
7.02%
Producer in China
6
Xi'an Yizhiliu Pharmaceutical
      Co., Ltd
Pharmaceutical Products
0.911
7.01%·
Producer in China
7
Zhejiang Wanfeng Group
      Pharmaceutical Co.,
Pharmaceutical Products
0.728
5.6%
Ltd.
Producer in China
8
General Hospital of Shandong CAPF
Pharmaceutical Products
0.546
4.2%
9
Beijing Green Grass Tang Biotech
      Co., Ltd.
Sales Agent of the Company
0.133
1.02%
10
Shandong Linyi Hongyun Trading Company
Sales Agent of the Company
0.121
0.93%
22
Our Competition
Most of our competitors for sales of Chinese Golden Grass
products are small-sized local producers and generally have a much lower
production capacity. Compared to these competitors, we believe we have a much
higher production capacity and more advanced growing and production technology.
Our major competitors in China include Heilongjiang Xinyisheng Pharmaceutical
Co., Ltd., Liangshan County Ganoderma and Cordyceps Sci-Tech Development Co.,
Ltd., Jiangsu Xuzhou Kangyuan Cordyceps Biology Co., Ltd., Xuzhou Baofu
Cordyceps Co., Ltd. and Jinzhou Cordyceps Militaris Co., Ltd.
Research and Development
Our research and development activities focus on developing new
products and new technologies. We currently have 21 employees dedicated to
research and development. Since 2003, we have also maintained a close
cooperation relationship with China Institute of Science, one of the most
prestigious academic institutions of scientific and technological research in
China, to improve commercially growing Cordyceps Militaris.
As described below, on April 10, 2006, we spent RMB 30 million
(approximately $4.4 million) in acquiring the technologies of Cordyceps
Militaris cultivation from Mr. Runjiao Wang. In 2007 and 2008, our research and
development expenses were insignificant.
Intellectual Property
We currently have the following patents pending approval:
Patent No. /
Expiration
Patent Name
Patent type
Application No.
Date
Status
Technology of Using Plastic Ware to
      Cultivate
Cordyceps Militaris
Invention
200810064305.3
N/A
Pending
Planting Cordyceps militaris by the method
      of
making liquid spawn
Invention
200810064705.4
N/A
Pending
Formulation of Cordyceps Militaris and
      Green Bean  Paste Beverage
Invention
200810064387.1
N/A
Pending
Formulation of Cordyceps Militaris and
      Corn
Beverage
Invention
200810064389.0
N/A
Pending
Formulation of Cordyceps Militaris and
      Millet
Beverage
Invention
200810064390.3
N/A
Pending
Formulation of Cordyceps Militaris and Red
      Bean
Paste Beverage
Invention
200810064388.6
N/A
Pending
On April 10, 2006, Daqing Shuaiyi entered into an exclusive
licensing agreement with Mr. Runjiao Wang, pursuant to which Mr. Wang agreed to
grant Daqing Shuaiyi an exclusive right to use the cultivation technology of Cordyceps Militaries that Mr. Wang developed. According to this licensing
agreement, Daqing Shuaiyi is allowed to use this technology exclusively in China
for ten years beginning on April 10, 2006. In consideration of the rights
granted to Daqing Shuaiyi under this licensing agreement, Daqing Shuaiyi agreed
to pay Mr. Wang a licensing fee in an amount of RMB 30 million (approximately $4.4
million). In addition, Daqing Shuaiyi has the right of first refusal with
respect to the cultivation technology when the licensing agreement expires.
23
We have applied for the trademark of "
帅亿东方神
" with the Trademark
Office of the State Administration for Industry and Commerce of China. Under
Chinese laws, we are allowed to use "
帅亿东方神
" for the sales and marketing of our
products even if our trademark application is still pending. Once our
application is approved, the trademark will have a term of ten years and may be
continually renewed thereafter.
We rely on trade secret protection and confidentiality
agreements to protect our proprietary information and knowhow. Our management
and each of our research and development personnel have entered into a standard
confidentiality agreement, which includes a clause acknowledging that all
inventions, designs, trade secrets, works of authorship, developments and other
processes generated by them on our behalf are our property, and assigning to us
any ownership rights that they may claim in those works. Despite our
precautions, it may be possible for third parties to obtain and use, without our
consent, intellectual property that we own or are licensed to use. Unauthorized
use of our intellectual property by third parties, and the expenses incurred in
protecting our intellectual property rights, may adversely affect our business.
See "Risk factors—Risks Related to Our Business—Our inability to
protect our trademarks, patent and trade secrets may prevent us from
successfully marketing our products and competing effectively."
Regulation
Because our operating subsidiaries are located in the PRC, we
are regulated by the national and local laws of the PRC. Currently only the
general rules of commerce in China are applicable to us.
We are also subject to the PRC's foreign currency regulations.
The PRC government has controlled Renminbi reserves primarily through direct
regulation of the conversion of Renminbi into other foreign currencies. Although
foreign currencies, which are required for "current account" transactions, can
be bought freely at authorized PRC banks, the proper procedural requirements
prescribed by PRC law must be met. At the same time, PRC companies are also
required to sell their foreign exchange earnings to authorized PRC banks and the
purchase of foreign currencies for capital account transactions still requires
prior approval of the PRC government.
Our Employees
As of December 31, 2009, we employed a total of 302 full-time
employees. The following table sets forth the number of our employees by
function as of December 31, 2009.
FUNCTION
NUMBER OF EMPLOYEES
Capital Department
5
Sales Department
132
Production Department
121
R&D Department
21
Financial Department
13
Administrative Office
10
TOTAL
302
Our employees are not represented by a labor organization or
covered by a collective bargaining agreement. We have not experienced any work
stoppages.
24
We are required under PRC law to make contributions to the
employee benefit plans at specified percentages of the after-tax profit. In
addition, we are required by the PRC law to cover employees in China with
various types of social insurance. We believe that we are in material compliance
with the relevant PRC laws.
Seasonality
The production and sale of our primary product, Chinese Golden
Grass, historically have not been subject to seasonal variations.
Insurance
We do not have any business liability, interruption or
litigation insurance coverage for our operations in China. Insurance companies
in China offer limited business insurance products. While business interruption
insurance is available to a limited extent in China, we have determined that the
risks of interruption, cost of such insurance and the difficulties associated
with acquiring such insurance on commercially reasonable terms make it
impractical for us to have such insurance. Therefore, we are subject to business
and product liability exposure. See "Risk Factors – We do not carry any business
interruption insurance, third-party liability insurance for our production
facilities or insurance that covers the risk of loss of our products in
shipment."
Litigation
From time to time, we may become involved in various lawsuits
and legal proceedings, which arise, in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will
have a material adverse affect on our business, financial condition or operating
results.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading Chinese Golden Grass grower and
producer in China. We specialize in developing, processing, marketing and
distributing a variety of agricultural and nutraceutical products consisting of
Chinese Golden Grass, organic and specialty food products. In addition, we plan
to produce and market other products developed from Cordyceps Militaris within
the coming months and years, including specialty beverage products.
Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. We sell our products through an extensive nationwide
sales and distribution network covering four provinces and eight cities in
China. Our Chinese Golden Grass products are grown and processed by our
indirect, wholly-owned subsidiary, Daqing Shuaiyi, and are mainly sold to
pharmaceutical companies for further processing into drugs and nutraceutical
products. We generated approximately 91.34% of our revenues from sales of
Chinese Golden Grass during the third quarter of 2009. We believe that we own
approximately 19% worldwide market share in the entire cultivated Chinese Golden
Grass industry.
We also sell organic and specialty food products through our
subsidiary, Harbin Shuaiyi, which was formed in 2001. After years of
development, we believe that we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.
Our sales revenue grew by 41.3% in the fiscal year ended
December 31, 2008 to approximately $12.98 million, from approximately $9.19
million for 2007. Our gross margin for 2008 was 64.6%.
Industry Wide Factors that are Relevant to Our
Business
We expect several key demographic, healthcare, and lifestyle
trends to drive the growth of our business in the coming future:
Increased Focus on Healthy Living
:
Our management
  believes that as China becomes more affluent, its citizens are becoming more
  health conscious. They are leading more active lifestyles and becoming increasingly focused on healthy living,
  nutrition, and supplementation. According to
the Nutrition Business
Journal
, a higher percentage of today's global population is involved
  to some degree in health and wellness than a few years ago. We believe that
  growth in the health supplements industry will continue to be driven by
  consumers who increasingly embrace health and wellness as a critical part of
  their lifestyles.
25
Aging Population
:
The average age of the Chinese
  population is increasing. According to
World Population
Prospects:
  The 2004 Revision
(2005), the percentage of elderly persons in China is
  projected to triple between 2006 and 2050, from 8 percent to 24 percent, a
  total of 322 million people. We believe that these consumers are significantly
  more likely to use health supplements than younger persons and have higher
  levels of disposable income to pursue healthy lifestyles.
Rising Healthcare Costs and Use of Preventive Measures
:
Healthcare related costs have increased substantially in China. A survey
  released by China's Ministry of Health found that the percentage of
  out-of-pocket health expenditures in China has increased from 35.7% in 1990 to
  55.5% in 2003. To reduce medical costs and avoid the complexities of dealing
  with the healthcare system, and given increasing incidence of medical problems
  and concern over the use and effects of prescription drugs, many consumers
  take preventive measures, including alternative medicines and nutritional
  supplements.
Taxation
United States
Nutrastar International Inc. is subject to United States tax at
a tax rate of 34%. No provision for income taxes in the United States has been
made as Nutrastar International Inc. had no income taxable in the United
States.
British Virgin Islands
New Resources was incorporated in the BVI. Under the current
law of the BVI, New Resources is not subject to income or capital gains tax. In
addition, dividend payments are not subject to withholding tax in the BVI.
PRC
In 2007, the PRC government promulgated the new Enterprise
Income Tax Law, or EIT Law, and the relevant implementation rules, which became
effective on January 1, 2008. Under the EIT Law and its implementation rules,
all domestic and foreign investment companies will be subject to a uniform
enterprise income tax at the rate of 25% and dividends from PRC subsidiaries to
their non-PRC shareholders will be subject to a withholding tax at a rate of
20%, which is further reduced to 10% by the implementation rules, if the non-PRC
shareholder is considered to be a non-PRC tax resident enterprise without any
establishment or place within China or if the dividends payable has no
connection with the non-PRC shareholder's establishment or place within China,
unless any such non-PRC shareholder's jurisdiction of incorporation has a tax
treaty with China that provides for a different withholding arrangement. In
addition, pursuant to the EIT Law, enterprises established under the laws of
non-PRC jurisdictions, but whose "de facto management body" is located in the
PRC, should be treated as resident enterprises for PRC tax purposes. However, it
is currently uncertain whether we may be deemed a resident enterprise, or how to
interpret whether any income or gain is derived from sources within China. See
"Risk Factors - Under the New EIT Law, we may be classified as a "resident
enterprise" of China. Such classification will likely result in unfavorable tax
consequences to us and our non-PRC shareholders. If we, as a BVI company with
substantially all of our management located in China, were treated as a resident
enterprise for PRC tax purposes, we will be subject to PRC tax on our worldwide
income at the 25% uniform tax rate, which would have an impact on our effective
tax rate.
The EIT Law and the Implementing Rules also imposes a unified
EIT of 25% on both foreign invested enterprises and domestic enterprises,
effective January 1, 2008. As a result, our PRC subsidiaries were subject to the
EIT rates of 25% in both 2008 and 2009.
Results of Operations
Nine Months Ended September 30, 2009 Compared to Nine Months
Ended September 30, 2008
26
The following tables set forth key components of our results of
operations for the periods indicated, in dollars and as a percentage of revenue.
Nine Months Ended
Nine Months Ended
September 30, 2009
September 30, 2008
As a
As a
percentage of
percentage of
In Thousands
revenues
In Thousands
revenues
Revenues
11,549
100
%
10,167
100
%
Cost of goods sold
(3,733
)
(32.3
)%
(3,579
)
(35.2
)%
Gross Profit
7,816
67.7
%
6,588
64.8
%
Selling expenses
(281
)
(2.4
)%
(138
)
(1.4
)%
General and administrative expenses
(944
)
(8.2
)%
(827
)
(8.1
)%
Income from operations
6,591
57.1
%
5,623
55.3
%
Other income and (expenses)
Interest income
50
0.4
%
19
0.18
%
Other
      income
-
-
4
0.04
%
Exchange loss
(7
)
(0.06
)%
-
-
Income before income tax
6,634
57.4
%
5,646
55.5
%
Provision for income tax
(891
)
(7.7
)%
(775
)
(7.6
)%
Net income
5,743
49.7
%
4,871
47.9
%
Revenues
. Revenues increased approximately $1.3 million,
or 12.8%, to approximately $11.5 million for the nine months ended September 30,
2009, from approximately $10.2 million for the same period in 2008. This
increase was mainly attributable to the increase of our sales and output volume
of our product, Chinese Golden Grass, driven by the continued increase in market
demand for our products as well as the sales of our small package Chinese Golden
Grass products, which consisted a larger portion of our total revenues during
the nine months ended September 30, 2009 as compared to the same period last
year.
Cost of Goods Sold.
Our cost of goods sold increased
approximately $0.15 million, or 4.2%, to approximately $3.73 million for the
nine months ended September 30, 2009, from approximately $3.58 million during
the same period in 2008. This increase was mainly due to the increase in our raw
materials and labor costs, which were generally in line with the increase in our
sales. As a percentage of revenues, the cost of goods sold decreased to 32.3%
during the nine moths ended September 30, 2009 from 35.2% in the same period in
2008. Such increase of gross margin was mainly attributable to the fact that a
larger portion of our total revenues was generated from our small package
Chinese Golden Grass products with higher unit selling price as compared to the
same period of 2008. Because the gross margin of small package products is
higher than that of larger package products, the percentage of cost of sales to
total sales revenue decreased during the nine months ended September 30, 2009.
Gross Profit.
Our gross profit increased by
approximately $1.2 million, or 18.2%, to approximately $7.8 million for the nine
months ended September 30, 2009 from approximately $6.6 million during the same
period in 2008. Gross profit as a percentage of revenues, or gross margin, was
67.7% for the nine month ended September 30, 2009, an increase of 2.9% from
64.8% during the same period in 2008. Such percentage increase was mainly due to
the increased sales of our higher margin small package Chinese Golden Grass
products.
Selling Expenses
. Our selling expenses increased
approximately $0.14 million, or 100%, to approximately $0.28 million for the
nine months ended September 30, 2009 from approximately $0.14 million during the
same period in 2008. As a percentage of revenues, selling expenses increased to
2.4% for the nine months ended September 30, 2009 from 1.4% for the same period
in 2008. The increase in the amount and percentage of selling expenses was
mainly attributable to the increase of salaries and travelling expenses of our
sales representatives and more marketing activities to promote our products.
General and Administrative Expenses
. General and
administrative expenses increased approximately $0.11 million, or 13.3%, to
approximately $0.94 million for the nine months ended September 30, 2009 from
approximately $0.83 million for the same period in 2008. As a percentage of
revenues, general and administrative expenses increased to 8.2% for the nine
months ended September 30, 2009 from 8.1% for the same period in 2008. The
increase in the amount of general and administrative expenses was mainly
attributable to the increase of services expenses associated with being a public
company during the nine months ended September 30, 2009.
27
Income Before Income Tax
. Income before income tax
increased approximately $0.98 million, or 17.3%, to approximately $6.63 million
during the nine months ended September 30, 2009 from approximately $5.65 million
during the same period in 2008. As a percentage of revenues, income before
income tax increased to 57.4% during the nine months ended September 30, 2009
from 55.5% during the same period in 2008. The increase in income before income
tax is mainly attributable to the increase in our gross profit as a result of
the increase in our sales.
Income Taxes
. Income tax increased approximately $0.11
million to approximately $0.89 million for the nine months ended September 30,
2009 from approximately $0.78 million for the same period in 2008. We paid more
tax in 2009 because of the increase in sales and taxable income.
Net Income
. Net income increased by approximately $0.87
million, or 17.9% to approximately $5.74 million for the nine months ended
September 30, 2009 from approximately $4.87 million for the same period of 2008,
as a result of the factors described above.
Fiscal Year ended December 31, 2008 Compared to Fiscal Year
Ended December 31, 2007
The following table summarizes the results of our operations
during the fiscal years ended December 31, 2008 and 2007, and provides
information regarding the dollar and percentage increase or (decrease) from the
fiscal year ended December 31, 2007 to the fiscal year ended December 31, 2008.
(All amounts, other than percentage, in thousands of US dollars)
Year Ended December 31, 2008
Year Ended December 31, 2007
As a
percentage
of
As a percentage
In Thousands
revenues
In Thousands
of revenues
Revenues
12,989
100%
9,195
100
%
Cost of goods sold
(4,605
)
(35.5%
)
(3,512
)
(38.2
)%
Gross Profit
8,384
64.5%
5,683
61.8
%
Selling expenses
(196
)
(1.5%
)
(72
)
(0.8
)%
General and administrative expenses
(1,416
)
(10.9%
)
(436
)
(4.7
)%
Loss on disposal of fixed assets
(31
)
(0.24%
)
Income from operations
6,741
51.9%
5,175
56.3
%
Other income and (expenses)
Interest income
30
0.23%
53
0.58
%
Other income
11
0.09%
52
0.6
%
Interest
      expenses
(23
)
(0.2
)%
Exchange loss
(20
)
(0.16%
)
Merger costs
(2,068
)
(15.9%
)
—
Income before income tax
4,694
36.1%
5,257
57.2
%
Provision for income tax
(975
)
(7.5%
)
(85
)
(0.9
)%
Net income
3,719
28.6%
5,172
56.3
%
28
Revenues
. Revenues increased approximately $3.8 million,
or 41.3%, to approximately $13.0 million in fiscal year 2008 from approximately
$9.2 million for 2007. This increase was mainly attributable to the increase of
our sales and output volume of our product, Chinese Golden Grass. At the same
time, the Company introduced its small package Chinese Golden Grass which has a
higher unit selling price in the second half of 2008.
Cost of Goods Sold
. Our cost of goods sold increased
approximately $1.1million, or 31.4%, to approximately $4.6 million in 2008 from
approximately $3.5 million in 2007. This increase was mainly due to the increase
of our sales. As a percentage of revenues, the cost of goods sold decreased to
35.5% in 2008 from 38.2 % in 2007. Such increase of gross margin was mainly
attributable to the increase of sales volume of small package products with
higher unit selling prices. Because the gross margin of small package products
is higher than big package products, the percentage of cost of sales to total
sales revenue decreased in 2008.
Gross Profit
. Our gross profit increased approximately
$2.7 million, or 47.4%, to approximately $8.4 million in 2008 from approximately
$5.7 million in 2007. Gross profit as a percentage of revenues was 64.5% in
2008, an increase of 2.8% from 61.8% in 2007. Such percentage increase was
mainly due to the fact that we increased the sales of our small package Chinese
Golden Grass products with higher unit selling prices.
Selling Expenses
.
S
elling expenses increased
approximately $0.12 million, or171%, to $0.19 million in 2008 from $0.07 million
in 2007. As a percentage of revenues, selling expenses increased to 1.5% in 2008
from 0.8% in 2007. The dollar increase of selling expenses was mainly
attributable to the increase of salaries and travelling expense of our sales
representatives and more marketing activities to promote our products.
General and Administrative Expenses
. General and
administrative expenses increased approximately $1 million, or 250%, to
approximately $1.4 million in 2008 from approximately $0.4 million in 2007. As a
percentage of revenues, general and administrative expenses increased to 10.9%
in 2008 from 4.7% in 2007. We increased our general and administrative expenses
as we incurred more professional fees during the going public process in
2008.
Merger Cost.
We incurred expenses related to our merger
during 2008 of approximately $2.07 million. In accordance with the requirements
of and guidance in Staff Accounting Bulletin No. 107 and SFAS 123(R), we charged
$1,693,326 to merger costs based on the grant-date fair value of the 91,088
shares of Series A Preferred Stock transferred by our majority shareholder to
our consultants in the merger. On December 23, 2008, the Company also entered
into a subscription agreement with Tan Zhen Investment Limited, pursuant to
which the Company issued and sold to such investor 20,168 shares of our Series A
Preferred Stock for $375,000, or $18.59 per share, which was expended on payment
of merger costs.
Income Before Income Tax
. Income before income tax
decreased approximately $0.6 million, or 11.3%, to approximately $4.7 million in
2008 from approximately $5.3 million in 2007. As a percentage of revenues,
income before income tax decreased to 36.1% in 2008 from 57.2% in 2007. The
decrease of income before income tax is mainly attributable to the increase of
the general and administrative expenses, including legal and audit fees during
the going public process. In addition, under US GAAP, the amount of preferred
stock that was issued to certain service providers as compensation for the
restructuring and related counseling was recorded in the profit and loss
adjustment.
Income Tax
. Income tax increased approximately $0.91
million to approximately $1 million in 2008 from approximately $0.09 million in
2007. We paid more tax in 2008 because of one of our subsidiaries, Daqing
Shuaiyi, was subject to a 12.5% income tax rate in 2008, while in 2007 it was
fully exempt from 33% income tax rate.
Net Income
. Net income decreased approximately $1.5
million, or 28.9%, to $3.7 million in 2008 from approximately $5.2 million in
2007, as a result of the factors described above.
29
Business Segment Information
Our business operations can be categorized into two segments
based on the type of products we manufacture and sell, specifically (i) Chinese
Golden Grass, and (ii) other agricultural products.
For the nine months ended September 30, 2009, our sales revenue
from our Chinese Golden Grass was approximately $8.70 million, and our sales
revenue from our other agricultural products was approximately $2.85
million.
We grow and sell our Chinese Golden Grass through our
subsidiary, Daqing Shuaiyi. Our subsidiary, Harbin Shuaiyi is mainly engaged in
the business of selling our other agricultural products.
Additional information regarding our products can be found at
Note 16 in our unaudited consolidated financial statements for the nine-month
period ended September 30, 2009 contained in this prospectus.
Liquidity and Capital Resources
As of September 30, 2009, we had cash and cash equivalents
(excluding restricted cash) of approximately $15.4 million. The following table
provides detailed information about our net cash flow for all financial
statement periods presented in this prospectus.
Cash Flow
(All amounts in thousands of U.S.
dollars)
Nine Months Ended September 30,
Year Ended December 31,
2009
2008
2008
2007
Net cash provided by operating activities
$
7,086
$
4,592
$
6,467
$
4,503
Net cash provided by (used in) investing activities
(928
)
(891
)
744
(9,327
)
Net cash provided by (used in) financing activities
62
6.5
(438
)
(1,015
)
Net cash flow
6,236
3,955
7,050
(5,170
)
Operating Activities
Net cash provided by operating activities was approximately
$7.09 million for the nine-month period ended September 30, 2009, which is an
increase of approximately $2.50 million from approximately $4.59 million net
cash provided by operating activities for the same period of 2008. The increase
of the cash provided by operating activities was mainly attributable to the
increases in our net profit and the decrease in our account receivables.
Net cash provided by operating activities was approximately
$6.5 million in fiscal year ended December 31, 2008, which is an increase of
approximately $2.0 million from approximately $4.5 million net cash provided by
operating activities in fiscal year ended December 31, 2007. Such increase of
net cash provided by operating activities was primarily attributable to the fact
that our depreciation, amortization and adjustment of merger cost were not
reflected in the cash outflow.
Investing Activities
Our primary uses of cash for investing activities are payments
for the acquisition of property, plant and equipment.
Net cash used in investing activities for the nine-month period
ended September 30, 2009 was approximately $0.93 million, which is an increase
of approximately $0.04 million from net cash used in investing activities of
approximately $0.89 million for the same period of 2008. The increase of the
cash used in investing activities was mainly due to the payment to the original
shareholders of Heilongjiang Shuaiyi for the transfer of their equity interests
in Heilongjiang Shuaiyi to New Resources in connection with the Company's
restructuring.
30
Net cash provided by investing activities was approximately
$0.74 million in fiscal year 2008, an increase of approximately $10.06 million
from approximately $9.32 million net cash used in investing activities in fiscal
year 2007. Such increase of net cash provided by investing activities was
primarily attributable to the sales of our idle fixed assets in an amount of
$1,151,411.
Financing Activities
Net cash provided by financing activities for the nine-month
period ended September 30, 2009 was approximately $0.06 million, which is an
increase of approximately $0.05 million from approximately $0.01 million net
cash provided by financing activities for the same period of 2008. During the
nine months ended September 30, 2009, we borrowed approximately $0.06 million
from our Chairman, Lianyun Han as working capital of the Company.
Net cash used in financing activities for the fiscal year ended
December 31, 2008 was approximately $0.44 million as compared to approximately
$1.02 million used in financing activities in fiscal year 2007. The decrease of
the net cash used in financing activities was mainly attributable to the
proceeds of $427,449 we received from the issuance of preferred stock to certain
investors on December 23, 2008.
On December 17, 2009, we completed a private placement
transaction and sold 1,000,000 shares of our common stock to certain accredited
investors at $2.50 per share for a total of $2.5 million pursuant to a
securities purchase agreement, or the Securities Purchase Agreement. In
addition, we issued to each of the investors two warrants to purchase in
aggregate 500,000 shares of our common stock, including a Series A warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B warrant having a term of three years with an exercise price of $4.00
per share, both of which are subject to the usual adjustments for certain
corporate events.
We believe that our cash on hand, cash flow from operations as
well as the proceeds we received from the recent private placement transaction
will meet our expected capital expenditure and working capital for the next 12
months. However, we may in the future require additional cash resources due to
changed business conditions, implementation of our strategy to expand our
production capacity or other investments or acquisitions we may decide to
pursue. If our own financial resources are insufficient to satisfy our capital
requirements, we may seek to sell additional equity or debt securities or obtain
additional credit facilities. The sale of additional equity securities could
result in dilution to our stockholders. The incurrence of indebtedness would
result in increased debt service obligations and could require us to agree to
operating and financial covenants that would restrict our operations. Financing
may not be available in amounts or on terms acceptable to us, if at all. Any
failure by us to raise additional funds on terms favorable to us, or at all,
could limit our ability to expand our business operations and could harm our
overall business prospects.
Effects of Inflation
Inflation and changing prices have not had a material effect on
our business and we do not expect that inflation or changing prices will
materially affect our business in the foreseeable future. However, our
management will closely monitor the price change and continually maintain
effective cost control in operations.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity or capital expenditures or capital resources that is
material to an investor in our securities.
Critical Accounting Policies
Principle of consolidation
These condensed consolidated financial statements include the
financial statements of Nutrastar International Inc. and its subsidiaries. All
significant inter-company balances or transactions have been eliminated on
consolidation.
Basis of preparation
31
These interim condensed consolidated financial statements are
unaudited. In the opinion of management, all adjustments and disclosures
necessary for a fair presentation of these interim condensed consolidated
financial statements have been included. The results reported in the condensed
consolidated financial statements for any interim periods are not necessarily
indicative of the results that may be reported for the entire year. The
accompanying condensed consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission and do not include all information and footnotes necessary for a
complete presentation of financial statements in conformity with accounting
principles generally accepted in the United States. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2008.
Use of estimates
The preparation of these condensed consolidated financial
statements in conformity with generally accepted accounting principles requires
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the related disclosure of contingent assets and
liabilities at the date of these condensed consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period. The
Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances.
Accordingly, actual results may differ from these estimates under different
assumptions or conditions.
Foreign currency
The Company uses United States dollars ("US Dollar" or "US$" or
"$") for financial reporting purposes. However, the Company maintains the books
and records in its functional currency, Chinese Renminbi ("RMB"), being the
primary currency of the economic environment in which its operations are
conducted. In general, the Company translates its assets and liabilities into
U.S. dollars using the applicable exchange rates prevailing at the balance sheet
date, and the statement of income is translated at average exchange rates during
the reporting period. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the Company's financial statements
are recorded as accumulated other comprehensive income.
The exchange rates used to translate amounts in RMB into U.S.
Dollars for the purposes of preparing the consolidated financial statements were
as follows:-
As of September
As of December
30, 2009
31, 2008
Balance sheet items, except for equity
      accounts
US$1=RMB6.8290
US$1=RMB6.8346
Three months ended September
      30,
2009
2008
Items in the statements of income and cash
      flows
US$1=RMB 6.8310
US$1=RMB 6.8390
Nine months ended September
      30,
2009
2008
Items in the statements of income and cash
      flows
US$1=RMB6.8321
US$1=RMB6.9921
Research and development costs
Research and development costs are expensed to operations as
incurred. Research and development costs were $26,923 and $21,590 for the nine
months ended September 30, 2009 and 2008, respectively. Research and development
costs were $8,783 and $7,896 for the three months ended September 30, 2009 and
2008, respectively.
Advertising costs
The Company expenses all advertising costs as incurred.
Advertising costs charged to selling expenses were $1,098 and $83 for the nine
months ended September 30, 2009 and 2008, respectively. There were no any
advertising costs incurred for the three months ended September 30, 2009 and
2008
32
Shipping and handling costs
Substantially all costs of shipping and handling of products to
customers are included in selling expenses. Shipping and handling costs for the
nine months ended September 30, 2009 and 2008 were nil and $271, respectively.
There were no any shipping and handling costs incurred for the three months
ended September 30, 2009 and 2008
Earnings per share
All per share data including earnings per share has been
retroactively restated to reflect the reverse acquisition on December 23, 2008
whereby the 689,390 shares of preferred stock issued by the Company (the nominal
acquirer) to the shareholder of New Resources (the nominal acquiree) are deemed
to be the number of shares outstanding for the period prior to the reverse
acquisition. For the period after the reverse acquisition, the number of shares
considered to be outstanding is the actual number of shares outstanding during
that period.
The Company effected a 1-for-114.59 Reverse Split of its common
stock and all outstanding shares of Series A Preferred Stock were automatically
converted to common stock. The weighted average number of shares for the
purposes of calculating the earnings per share has been retroactively adjusted
as if the Reverse Split took effect as of the beginning of the earliest period
presented. As holders of Series A Preferred Stock were entitled to vote with the
holders of common stock on all matters on a an as-converted to common stock
basis, basic and diluted earnings per share have been calculated and presented
on the basis that all shares of the Company's common stock and Series A
Preferred Stock are considered a single class and on an as-converted to common
stock basis before the Reverse Split.
Fair value measurements
ASC Topic 820,
Fair Value Measurement and Disclosures
,
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair
value hierarchy which requires classification based on observable and
unobservable inputs when measuring fair value. There are three levels of inputs
that may be used to measure fair value:
Level 1
- Quoted prices in active markets for identical
assets or liabilities.
Level 2
- Observable inputs other than Level 1 prices
such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the
assets or liabilities.
Level 3
- Unobservable inputs that are supported by
little or no market activity and that are significant to the fair value of the
assets or liabilities.
The carrying values of cash and cash equivalents, trade
receivables and payables, and short-term debts approximate their fair values due
to their short maturities.
There were no assets and liabilities measured at fair value on
a nonrecurring basis as of September 30, 2009.
New Accounting Pronouncements
New accounting pronouncement adopted
In June 2009, the FASB established the FASB Accounting
Standards Codification
TM
(ASC) as the single source of authoritative
U.S generally accepted accounting principles (GAAP) recognized by the FASB to be
applied to nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission ("SEC") under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. The ASC
superseded all previously existing non-SEC accounting and reporting standards,
and any prior sources of U.S. GAAP not included in the ASC or grandfathered are
not authoritative. New accounting standards issued subsequent to June 30, 2009
are communicated by the FASB through Accounting Standards Updates (ASUs). The
ASC did not change current U.S. GAAP but changes the approach by referencing
authoritative literature by topic (each a "Topic") rather than by type of
standard. The ASC has been effective for the Company effective July 1, 2009.
Adoption of the ASC did not have a material impact on the Company's Condensed
Consolidated Financial Statements, but references in the Company's Notes to Consolidated Financial Statements to former FASB
positions, statements, interpretations, opinions, bulletins or other
pronouncements are now presented as references to the corresponding Topic in the
ASC.
33
Effective January 1, 2009, the first day of fiscal 2009, the
Company adopted FASB ASC 350-30 and ASC 275-10-50 (formerly FSP FAS 142-3,
"Determination of the Useful Life of Intangible Assets"), which amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." The Company will
apply ASC 350-30 and ASC 275-10-50 prospectively to intangible assets acquired
subsequent to the adoption date. The adoption of these revised provisions had no
impact on the Company's Condensed Consolidated Financial Statements.
Effective January 1, 2009, the Company adopted FASB ASC
815-10-65 (formerly SFAS 161, "Disclosures about Derivative Instruments and
Hedging Activities"), which amends and expands previously existing guidance on
derivative instruments to require tabular disclosure of the fair value of
derivative instruments and their gains and losses., This ASC also requires
disclosure regarding the credit-risk related contingent features in derivative
agreements, counterparty credit risk, and strategies and objectives for using
derivative instruments. The adoption of this ASC did not have a material impact
on the Company's Condensed Consolidated Financial Statements.
During 2008, the Company adopted FASB ASC 820-10 (formerly FSP
FAS 157-2, "Effective Date of FASB Statement 157"), which deferred the
provisions of previously issued fair value guidance for nonfinancial assets and
liabilities to the first fiscal period beginning after November 15, 2008.
Deferred nonfinancial assets and liabilities include items such as goodwill and
other nonamortizable intangibles. Effective January 1, 2009, the Company adopted
the fair value guidance for nonfinancial assets and liabilities. The adoption of
FASB ASC 820-10 did not have a material impact on the Company's Condensed
Consolidated Financial Statements.
Effective January 1, 2009, the Company adopted FASB ASC
810-10-65 (formerly SFAS 160, "Noncontrolling Interests in Consolidated
Financial Statements — an amendment of ARB No. 51"), which amends previously
issued guidance to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which
is sometimes referred to as minority interest, is an ownership interest in the
consolidated entity that should be reported as equity. Among other requirements,
this Statement requires that the consolidated net income attributable to the
parent and the noncontrolling interest be clearly identified and presented on
the face of the consolidated income statement. The adoption of the provisions in
this ASC did not have a material impact on the Company's Condensed Consolidated
Financial Statements.
Effective January 1, 2009, the Company adopted FASB ASC 805-10,
(formerly SFAS 141R, "Business Combinations"), which establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in an acquiree and the goodwill acquired. In addition,
the provisions in this ASC require that any additional reversal of deferred tax
asset valuation allowance established in connection with fresh start reporting
on January 7, 1998 be recorded as a component of income tax expense rather than
as a reduction to the goodwill established in connection with the fresh start
reporting. The Company will apply ASC 805-10 to any business combinations
subsequent to adoption.
Effective January 1, 2009, the Company adopted FASB ASC 805-20
(formerly FSP FAS 141R-1, "Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies"), which amends
ASC 805-10 to require that an acquirer recognize at fair value, at the
acquisition date, an asset acquired or a liability assumed in a business
combination that arises from a contingency if the acquisition-date fair value of
that asset or liability can be determined during the measurement period. If the
acquisition-date fair value of such an asset acquired or liability assumed
cannot be determined, the acquirer should apply the provisions of ASC Topic 450,
Contingences
, to determine whether the contingency should be recognized
at the acquisition date or after such date. The adoption of ASC 805-20 did not
have a material impact on the Company's Condensed Consolidated Financial
Statements.
Effective July 1, 2009, the Company adopted FASB ASC 825-10-65
(formerly FASB Staff Position ("FSP") No. FAS 107-1 and Accounting Principles
Board 28-1, "Interim Disclosures about Fair Value of Financial Instruments"),
which amends previous guidance to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. The adoption of FASB ASC 825-10-65
did not have a material impact on the Company's Condensed Consolidated Financial
Statements.
34
Effective July 1, 2009, the Company adopted FASB ASC 320-10-65
(formerly FSP FAS 115-2 and FAS 124-2, "Recognition and Presentation of
Other-Than-Temporary Impairments"). Under ASC 320-10-65, an other-than-temporary
impairment must be recognized if the Company has the intent to sell the debt
security or the Company is more likely than not will be required to sell the
debt security before its anticipated recovery. In addition, ASC 320-10-65
requires impairments related to credit loss, which is the difference between the
present value of the cash flows expected to be collected and the amortized cost
basis for each security, to be recognized in earnings while impairments related
to all other factors to be recognized in other comprehensive income. The
adoption of ASC 320-10-65 did not have a material impact on the Company's
Condensed Consolidated Financial Statements.
Effective July 1, 2009, the Company adopted FASB ASC 820-10-65
(formerly FSP FAS 157-4, "Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly"), which provides guidance on how to determine
the fair value of assets and liabilities when the volume and level of activity
for the asset or liability has significantly decreased when compared with normal
market activity for the asset or liability as well as guidance on identifying
circumstances that indicate a transaction is not orderly. The adoption of ASC
820-10-65 did not have a material impact on the Company's Condensed Consolidated
Financial Statements.
Effective July 1, 2009, the Company adopted FASB ASC 855-10
(formerly SFAS 165, "Subsequent Events"), which establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date,
but before financial statements are issued or are available to be issued.
Adoption of ASC 855-10 did not have a material impact on the Company's Condensed
Consolidated Financial Statements.
New accounting pronouncement to be adopted
In December 2008, the FASB issued ASC 715,
Compensation –
Retirement Benefits
(formerly FASB FSP FAS 132(R)-1, "Employers' Disclosures
about Postretirement Benefit Plan Assets"), which expands the disclosure
requirements about plan assets for defined benefit pension plans and
postretirement plans. The Company is required to adopt these disclosure
requirements in the fourth quarter of 2009. It is expected the adoption of these
disclosure requirements will have no material effect on the Company's
Consolidated Financial Statements.
In June 2009, the FASB issued SFAS No. 166, "Accounting for
Transfers of Financial Assets – an amendment of FASB Statement No. 140," (not
yet reflected in FASB ASC). SFAS No. 166 limits the circumstances in which a
financial asset should be derecognized when the transferor has not transferred
the entire financial asset by taking into consideration the transferor's
continuing involvement. The standard requires that a transferor recognize and
initially measure at fair value all assets obtained (including a transferor's
beneficial interest) and liabilities incurred as a result of a transfer of
financial assets accounted for as a sale. The concept of a qualifying
special-purpose entity is removed from SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," along
with the exception from applying FIN 46(R), "Consolidation of Variable Interest
Entities." The standard is effective for the first annual reporting period that
begins after November 15, 2009 (i.e. the Company's fiscal year beginning January
1, 2010), for interim periods within the first annual reporting period, and for
interim and annual reporting periods thereafter. Earlier application is
prohibited. It is expected the adoption of this Statement will have no material
effect on the Company's Consolidated Financial Statements.
In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB
Interpretation No. 46(R)," (not yet reflected in FASB ASC). The standard amends
FIN No. 46(R) to require a company to analyze whether its interest in a variable
interest entity ("VIE") gives it a controlling financial interest. A company
must assess whether it has an implicit financial responsibility to ensure that
the VIE operates as designed when determining whether it has the power to direct
the activities of the VIE that significantly impact its economic performance.
Ongoing reassessments of whether a company is the primary beneficiary are also
required by the standard. SFAS No. 167 amends the criteria to qualify as a
primary beneficiary as well as how to determine the existence of a VIE. The
standard also eliminates certain exceptions that were available under FIN No.
46(R). This Statement will be effective as of the beginning of each reporting
entity's first annual reporting period that begins after November 15, 2009 (i.e.
the Company's fiscal year beginning January 1, 2010), for interim periods within
that first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. Comparative disclosures will be
required for periods after the effective date. As such, the Company will adopt
this Statement for interim and annual periods ending after January 1, 2010. It
is expected the adoption of this Statement will have no material effect on the
Company's Consolidated Financial Statements.
35
In August, 2009, the FASB issued ASC Update No. 2009-05
("Update 2009-05") to provide guidance on measuring the fair value of
liabilities under FASB ASC 820 (formerly SFAS 157, "Fair Value Measurements").
The Company is required to adopt Update 2009-05 in the fourth quarter of 2009.
It is expected the adoption of this Update will have no material effect on the
Company's Consolidated Financial Statements.
In October 2009, the FASB concurrently issued the following ASC
Updates:
ASU No. 2009-14 -
Software (Topic 985): Certain Revenue Arrangements
  That Include Software Elements
(formerly EITF Issue No. 09-3)
.
This standard removes tangible products from the scope of software revenue
  recognition guidance and also provides guidance on determining whether
  software deliverables in an arrangement that includes a tangible product, such
  as embedded software, are within the scope of the software revenue guidance.
ASU No. 2009-13 -
Revenue Recognition (Topic 605): Multiple-Deliverable
  Revenue Arrangements
(formerly EITF Issue No. 08-1). This standard
  modifies the revenue recognition guidance for arrangements that involve the
  delivery of multiple elements, such as product, software, services or support,
  to a customer at different times as part of a single revenue generating
  transaction. This standard provides principles and application guidance to
  determine whether multiple deliverables exist, how the individual deliverables
  should be separated and how to allocate the revenue in the arrangement among
  those separate deliverables. The standard also expands the disclosure
  requirements for multiple deliverable revenue arrangements.
These Accounting Standards Updates should be applied on a
prospective basis for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010, with earlier application
permitted. Alternatively, an entity can elect to adopt these standards on a
retrospective basis, but both these standards must be adopted in the same period
using the same transition method. The Company expects to apply this standard on
a prospective basis for revenue arrangements entered into or materially modified
beginning January 1, 2011. The Company is currently evaluating the potential
impact these standards may have on its financial position and results of
operations.
Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company's
Condensed Consolidated Financial Statements upon adoption.
HISTORY AND CORPORATE STRUCTURE
General
We were originally incorporated in the State of Nevada on
December 22, 2002. On October 15, 2003, we acquired all the outstanding common
stock of YzApp Solutions Inc., a company under common control. We sold our
ownership in YzApp Solutions Inc. on December 3, 2008. Following incorporation,
we engaged in the business of developing software which allowed us to act as an
application service provider acting as a conduit between retailers and financial
institutions. Because this business was not successful, we were focused on the
identification of suitable businesses with which to enter into a business
opportunity or business combination until December 23, 2008, when we completed
our reverse acquisition of New Resources. As a result of our reverse acquisition
of New Resources, we are no longer a shell company and active business
operations were revived.
On May 19, 2009, we filed amended and restated articles of
incorporation with the Nevada Secretary of State to amend our articles of
incorporation to, among other things, (1) change our name from "YzApp
International Inc." to "Shuaiyi International New Resources Development Inc.,"
(2) increase the total number of shares of common stock that we have the
authority to issue from 50,000,000 to 190,000,000 shares and (3) effect a
1-for-114.59 reverse split of our outstanding common stock.
On January 11, 2010, we changed our name to Nutrastar
International Inc. to more accurately reflect our marketing and branding
strategy and our products. Our common stock has been quoted on
the OTC Bulletin Board under the new symbol NUIN.OB since January 20, 2010.
36
Background and History of New Resources and Heilongjiang
Shuaiyi
New Resources is a holding company, which was incorporated in
the BVI under the BVI Business Company Act on March 13, 2008. New Resources was
wholly-owned by New Zealand WAYNE's Investment Holdings Co., Ltd., or the
Shareholder, a BVI company, before the Company acquired New Resources on
December 23, 2008.
Heilongjiang Shuaiyi was established on July 11, 2006 under the
laws of the PRC. Heilongjiang Shuaiyi has two wholly-owned subsidiaries, Daqing
Shuaiyi and Harbin Shuaiyi. On July 28, 2008, pursuant to a restructuring plan
intended to ensure compliance with regulatory requirements of the PRC, the nine
original shareholders of Heilongjiang Shuaiyi, or the Founders, including the
Company's chairperson and chief executive officer, Lianyun Han, entered into an
equity transfer agreement, or the Equity Transfer Agreement with New Resources,
pursuant to which the Founders transferred all of their equity interests in
Heilongjiang Shuaiyi to New Resources for a purchase price of RMB 60 million
(approximately $8.8 million). As a result, New Resources became the 100% owner
of Heilongjiang Shuaiyi and, indirectly, Daqing Shuaiyi and Harbin Shuaiyi. On
November 24, 2008, Heilongjiang Shuaiyi obtained the Certificate of Approval for
Establishment of Enterprises of Foreign Investment issued by Heilongjiang
Provincial Government and a new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008.
On September 12, 2008, the Shareholder entered into separate
Earn-In Agreements with the Founders of Heilongjiang Shuaiyi, which entitle the
Founders to acquire a majority interest in the Shareholder upon the satisfaction
of the conditions set forth in the Earn-In Agreements. Pursuant to the Earn-In
Agreements, each Founder has an option to purchase shares of the Shareholder's
ordinary shares at a purchase price of $0.01 per share (the par value of the
Shareholder's ordinary shares),
provided
that the aggregate price with
respect to the shares eligible to be purchased relating to the satisfaction of
condition (4) below is the sum of $0.01 per share, multiplied the number of such
shares, plus $1,000, upon the satisfaction of each of the following conditions:
(1) six months have expired since the date of the Share Exchange Agreement,
provided
that on or before that date, the Founder and Heilongjiang
Shuaiyi have entered into a binding employment agreement and the Founder is
employed by Heilongjiang Shuaiyi pursuant to that agreement on such date; (2)
the SEC has declared a registration statement filed by the Company under the
Securities Act effective, or investors who purchased common stock from the
Company pursuant to a securities purchase agreement being able to sell their
common stock under Rule 144; (3) Heilongjiang Shuaiyi and its subsidiaries have
achieved not less than $1,560,000 in after-tax net income, as determined under
United States generally accepted accounting principals, or US GAAP, for the six
months ended June 2009; and (4) Heilongjiang Shuaiyi has achieved not less than
$3,900,000 in pre-tax profits, as determined under US GAAP for the fiscal year
ending 2009. Notwithstanding the foregoing, for purposes of determining whether
or not the financial thresholds described above have been achieved, the purchase
of the shares by the Founder or any other person designated by the Founder shall
not be deemed to be an expense, charge, or other deduction from revenues of the
Company even though US GAAP may require contrary treatment. On February 12,
2009, each Founder and the Shareholder entered into an amendment to the Earn-In
Agreements, or the First Amendment, to amend the definition of the first
condition. As a result, pursuant to the First Amendment, in order to satisfy the
first condition for each Founder, only Ms. Lianyun Han needs to enter into a
binding employment agreement with Heilongjiang Shuaiyi within six months after
the share exchange transaction dated December 23, 2008.
Each Founder may purchase 25% of the total number of shares
that he or she is eligible to purchase under his or her Earn-In Agreement, as
amended, upon the satisfaction of each condition described above. The aggregate
number of shares eligible for purchase by all of the Founders under the Earn-In
Agreements is 100,000. Therefore, upon purchase of the above shares by the
Founders, the total number of outstanding shares of the Shareholder will be
100,001 and the Founders will be the controlling shareholders of the
Shareholder.
Pursuant to the Earn-in Agreement, as amended, the Shareholder
further agrees, among others, that throughout the exercise period of the Earn-in
Agreement, without the prior written approval of the Founders:
it will not increase the number of authorized shares of the Shareholder's
  common stock, or any increased authorized shares will be deemed as part of the
  option shares that the Founders are entitled to acquire under the Earn-In
  Agreements;
(ii) keeps available the services of current officers and employees of the
  Shareholder and Heilongjiang Shuaiyi; and
(iii) New Resources and Heilongjiang Shuaiyi will not declare or pay any
  dividend or make any other distribution, nor do they repurchase, redeem or
  otherwise reacquire any equity of shares of capital stock or other securities.
37
The sole purpose of the Earn-In Agreements is to enable
Founders to reacquire ultimate controlling legal ownership of Heilongjiang
Shuaiyi in compliance with regulatory requirements of China.
On December 8, 2008, Heilongjiang Shuaiyi entered into separate
loan agreement and promissory notes, or the Notes, with the Founders, pursuant
to which Heilongjiang Shuaiyi borrowed an aggregate of RMB 60 million
(approximately $8.8 million) from the Founders, which amount is exactly equal to
the proceeds that they are entitled to receive for the transfer of their
ownership of Heilongjiang Shuaiyi under the Equity Transfer Agreement. The Notes
bear no interest and are payable in successive equal yearly payments beginning
on the tenth anniversary of the Notes, December 8, 2018, and within the first
month of each year thereafter. The final payment is due on January 1, 2028. On
February 12, 2009, Heilongjiang Shuaiyi and the Founders amended the Notes,
pursuant to which the Founders subordinate any right to receive any payment with
respect to this loan to the payment or provision for payment in full of all
claims of all present and future creditors of Heilongjiang Shuaiyi. During and
after this restructuring plan, there has been no change to the composition of
the board of directors of Heilongjiang Shuaiyi. Heilongjiang Shuaiyi's board of
directors, chaired by Ms. Han, has continued to comprise representatives of the
Founders. Therefore, Heilongjiang Shuaiyi is still under the same operating and
management control of the Founders. Through this subordinated loan, the Founders
will not receive any cash amount, nor will there be any cash flow out of the
combined entity during the whole period from the date of the Equity Transfer
Agreement though the expiry of the Earn-in Agreements, at which time it is
expected that the Founders will have reacquired the ultimate legal controlling
ownership of Heilongjiang Shuaiyi.
The loan to Heilongjiang Shuaiyi by the Founders is an integral
and inseparable part of the restructuring plan and has the sole purpose of
achieving the restructuring in compliance with PRC regulations. Furthermore, by
providing the subordinated loan to Heilongjiang Shuaiyi and obtaining the
Shareholder's agreement on not declaring any dividend throughout the exercise
period of the Earn-in Agreements without the prior written approval of the
Founders, the Founders continue to bear the residual risks and rewards relating
to Heilongjiang Shuaiyi. As a result, this restructuring plan will be accounted
for as a recapitalization of Heilongjiang Shuaiyi with no adjustment to the
historical basis of the assets and liabilities of Heilongjiang Shuaiyi. New
Resources' financial statements for the subsequent period in which the
restructuring occurred will report Heilongjiang Shuaiyi's results of operation
will be consolidated from the beginning of the first period presented in New
Resources' financial statements as if the restructuring had occurred as of the
beginning of that period.
The following charts demonstrate the ownership information of
the relevant entities before and after the consummation of the restructuring
plan:
Before the Equity Transfer Agreement:
38
After the consummation of the restructuring plan
Acquisition of New Resources
On December 23, 2008, pursuant to a share exchange agreement,
or Share Exchange Agreement, we completed a reverse acquisition transaction of
New Resources whereby we issued to the Shareholder 689,390 shares of our Series
A Preferred Stock, constituting approximately 94% of our issued and outstanding
capital stock on a fully-diluted basis, in exchange for all of the issued and
outstanding capital stock of New Resources. New Resources thereby became our
wholly owned subsidiary and the Shareholder became our controlling
stockholder.
Immediately following closing of the reverse acquisition of New
Resources, the Shareholder transferred 176,529 of the 689,390 shares issued to
it under the share exchange to 14 individuals and entities, pursuant to a
securities allocation agreement that the Shareholder entered into with these
people on December 23, 2008. Among them, ten individuals and entities received
91,088 shares from the Shareholder for providing consulting services to New
Resources and its subsidiaries in assisting them to consummate the share
exchange transaction contemplated by the Share Exchange Agreement prior to
December 23, 2008. The remaining 85,441 shares were gifted from the Shareholder
to four individuals and entities who did not provide services to New Resources
or its subsidiaries.
Upon the closing of the reverse acquisition, Eugene M. Weiss,
our then sole director and officer, submitted a resignation letter pursuant to
which he resigned from all offices that he held effective immediately and from
his position as our director that became effective on January 12, 2009. Lianyun
Han was appointed to our board of directors effective as of the closing of the
reverse acquisition on December 23, 2008. In addition, our board of directors on
December 23, 2008 increased the size of our board of directors to five (5) and
appointed Nana Jiang, Chunming Zhang, John Jing Zhang and Xi Zhu to fill the
vacancies created by such increase, which appointments became effective upon the
effectiveness of the resignation of Mr. Weiss on January 12, 2009. In addition,
our executive officers were replaced by the New Resources executive officers
upon the closing of the reverse acquisition as indicated in more detail
below.
For accounting purposes, the share exchange transaction was
treated as a reverse acquisition with New Resources as the acquiror and the
Company as the acquired party. Unless the context suggests otherwise, when we
refer in this prospectus to business and financial information for periods prior to
the consummation of the reverse acquisition, we are referring to the business
and financial information of our subsidiary Heilongjiang Shuaiyi because
Heilongjiang Shuaiyi currently conducts all our business operations.
39
The following chart reflects our organizational structure as of
the date of this prospectus:
MANAGEMENT
Directors and Executive Officers
The following sets forth information about our directors and
executive officers as of the date of this prospectus:
Name
Age
Position
Lianyun Han
52
Chairperson, CEO and President
Daniel K. Lee
39
Chief Financial Officer and Treasurer
Hongbing Hua
42
Chief Marketing Officer
Nana Jiang
31
Director
Chunming Zhang
39
Director
John Jing Zhang
37
Director
Xi Zhu
26
Director
Lianyun Han.
Ms. Han has extensive experience in
operational management and business development. Ms. Han is the founder of our
company and has been our Chief Executive Officer, President and the chairperson
of our board of directors since the completion of the reverse acquisition of New
Resources on December 23, 2008. Ms. Han has been the chairman and chief
executive officer of our subsidiary Heilongjiang Shuaiyi since its formation in
2006. From 1998 to 2006, Ms. Han was the president of Heilongjiang Shuaiyi
Technology Development Co., Ltd., a company that is engaged in the business of
developing, manufacturing, marketing and selling high-tech agricultural
products. Ms. Han holds a Bachelor's degree in Chinese Language and Literature
from Harbin Normal University.
Daniel K. Lee.
Mr. Lee has extensive financial and
investment experience with U.S. financial institutions including Morgan Stanley
& Co., Roth Capital Partners, Punk, Ziegel, & Knoell. He is the
pioneering Wall Street analyst to first initiate equity research coverage on
leading US-listed Chinese companies in major food sectors including meat and
dairy processing, IT Services, nano-technology and real estate. His management
consulting and advisory experience encompasses European and Asian resort and hospitality, consumer
digital marketing and e-payment, aquaculture & seafood, etc. Mr. Lee is a
Chartered Financial Analyst and a Certified Public Accountant. He has a M.S. in
Accountancy from Zicklin School of Baruch College and B.S. Economics from The
Wharton School of University of Pennsylvania majoring in Finance and
Multinational Management.
40
Hongbing Hua.
Mr. Hua has over 15 years experience in
sales and marketing management. Prior to joining the Company, from 2003 to 2004,
Mr. Hua was the Project General Planning Principle of Wanglaoji Herbal Tea, JDB
Group, one of the largest herbal tea manufacturers in China. From 1998 to 2001,
he was the VP Sales & Marketing of Beijing Huiyuan Beverage and Food Group
Co., Ltd., a leading company engaged in the manufacture and sales of juice and
other beverage products in China. Mr. Hua holds a Bachelor's degree in
international finance from Tianjin University.
Chunming Zhang.
Mr. Zhang has decades of working
experience in production management. Mr. Zhang became our director on January
12, 2009. Mr. Zhang joined Heilongjiang Shuaiyi in 2006 as the production
manager. From 1998 to 2006, Mr. Zhang was the vice president of Heilongjiang
Shuangyasha Boiler Factory. Mr. Zhang holds a Bachelor's degree in economics
from Northeast Agricultural University.
Nana Jiang.
Ms. Jiang became our director on January 12,
2009. Ms. Jiang joined Heilongjiang Shuaiyi in 2006 as the managing accountant.
From 1998 to 2006, Ms. Jiang was the managing accountant of Heilongjiang Shuaiyi
Technology Development Co., Ltd., a company that is engaged in the business of
developing, manufacturing, marketing and selling high-tech agricultural
products. Ms. Jiang holds a Bachelor's degree in English from Harbin Normal
University.
John Jing Zhang.
Mr. Zhang became our director on
January 12, 2009. Mr. Zhang currently serves as the chief executive officer of
JC Global Capital Partners, LLC, a financial consulting firm located in
Shanghai, China that specializes in cross-border capital market transactions.
Prior to funding JC Global Capital Partners, LLC in September 2006, from
September 2003 to August 2006, Mr. Zhang was the Managing Director of FirsTrust
Group, a US merchant bank headquartered in Atlanta, GA, where he was responsible
for its entire China operation. Prior to joining FirsTrust Group, Mr. Zhang held
senior positions in two U.S. corporations, ASI Computer Technology, Inc. and CTX
International, Inc., a company that engages in the business of manufacturing and
selling LCD Flat Panel Displays. Mr. Zhang is also an independent director of
China Kangtai Catcus Bio-tech, Inc. Mr. Zhang holds an MBA from Emory
University.
Xi Zhu.
Mr. Zhu became our director on January 12, 2009.
Mr. Zhu has years of experience in auditing and financial consulting. Currently
he is a Senior Financial Advisor for JINDU Investment, a financial consulting
firm that specializes in PIPE deals. Prior to JINDU Investment, Mr. Zhu was an
auditor of in the International Business Department at BDO Qingdao Branch. BDO
is a world wide network of public accounting firms, serving international
clients. Mr. Zhu was an Auditor Assistant of Foreign Investment Service in Shan
Dong De Sheng Accounting Firm from 2005 to 2006. Mr. Zhu holds a Bachelor's
degree in Administrative Management from Qingdao University.
There are no agreements or understandings for any of our
executive officers or director to resign at the request of another person and no
officer or director is acting on behalf of nor will any of them act at the
direction of any other person.
Directors are elected until their successors are duly elected
and qualified.
Board Composition and Committees
The board of directors is currently composed of five members,
Ms. Lianyun Han, Ms. Nana Jiang, Mr. Chunming Zhang, Mr. John Jing Zhang and Mr.
Xi Zhu. All Board action requires the approval of a majority of the directors in
attendance at a meeting at which a quorum is present. We may increase the size
of our board of directors in the future but have not determined the approximate
time to take such action.
We currently do not have standing audit, nominating or
compensation committees. Our board of directors handles the functions that would
otherwise be handled by each of the committees. We intend, however, to establish
an audit committee, a nominating committee and a compensation committee of the
board of directors as soon as practicable. We envision that the audit committee
will be primarily responsible for reviewing the services performed by our
independent auditors, evaluating our accounting policies and our system of
internal controls. The nominating committee would be primarily responsible for
nominating directors and setting policies and procedures for the nomination of
directors. The nominating committee would also be responsible for overseeing the
creation and implementation of our corporate governance policies and
procedures. The compensation committee will be primarily responsible for
reviewing and approving our compensation and benefit policies, including
compensation of executive officers.
41
Our board of directors has not made a determination as to
whether any member of our board is an audit committee financial expert. Upon the
establishment of an audit committee, the board will determine whether any of the
directors qualify as an audit committee financial expert.
Family Relationships
There is no family relationship among any of our officers or
directors.
Code of Ethics
Our board of directors has adopted a code of ethics that
applies to Chief Executive Officer, President, Chief Financial Officer,
Principal Executive Officer, Principal Financial Officer, Principal Accounting
Officer, Controller and persons performing similar functions. The code of ethics
addresses, among other things, ethical conduct, conflicts of interest,
compliance with laws, regulations and policies, including disclosure
requirements under the federal securities laws, confidentiality, trading on
inside information, and reporting of violations of the code. A copy of the code
of ethics has been filed as Exhibit 14.1 to our Annual Report on Form 10-KSB
filed on November 20, 2007. We are in the process of building up the Company
website. Once our website is available, we will make the code of ethics
available on the website. Thereafter, any amendments or waivers to the code of
ethics will be posted on our website within four business days of such amendment
or waiver. Until such time, however, any amendments or waivers to our code of
ethics will be filed with the SEC in a Current Report on Form 8-K.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or
executive officers has been convicted in a criminal proceeding, excluding
traffic violations or similar misdemeanors, or has been a party to any judicial
or administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws, except for matters
that were dismissed without sanction or settlement. Except as set forth in our
discussion below in "Transactions with Related Persons, Promoters and Certain
Control Persons; Corporate Governance," none of our directors, director nominees
or executive officers has been involved in any transactions with us or any of
our directors, executive officers, affiliates or associates which are required
to be disclosed pursuant to the rules and regulations of the SEC.
EXECUTIVE COMPENSATION
Summary Compensation Table – 2009 and 2008
The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No executive
officer received total annual salary and bonus compensation in excess of
$100,000.
Salary
Bonus
Total
Name and Principal Position
Year
($)
($)
($)
Lianyun Han,
CEO and
      President
(1)
2009
2008
12,000
12,000
3,000
3,000
15,000
15,000
Eugene M. Weiss,
former President and
      Director
(2)
2009
2008
-
-
-
-
-
-
Joseph Meuse,
former
      President and Director
(3)
2009
2008
-
-
-
-
-
-
Brian Jaggard,
former CEO, President, CFO
and Director
(4)
2009
2008
-
-
-
-
-
-
42
(1)
On December 23, 2008, we acquired New Resources in a
      reverse acquisition transaction that was structured as a share exchange
      and in connection with that transaction, Ms. Lianyun Han became our Chief
      Executive Officer, President and director. Prior to the effective date of
      the reverse acquisition, Ms. Han served at New Resources' wholly owned
      subsidiary Heilongjiang Shuaiyi as its chairperson and chief executive
      officer. The annual, long term and other compensation shown in this table
      include the amount Ms. Han received from Heilongjiang Shuaiyi prior to the
      consummation of the reverse acquisition.
(2)
Eugene M. Weiss resigned from all offices he held with us
      upon the closing of the reverse acquisition of New Resources on December
      23, 2008. Mr. Weiss was our director until January 12, 2009.
(3)
Joseph Meuse resigned from his position as our President
      on August 8, 2008 and appointed Eugene Weiss as our sole officer and
      director.
(4)
Brian Jaggard resigned from his position as our President
      on August 1, 2008 and appointed Joseph Meuse as our sole officer and
      director.
Employment Agreements
Our indirect subsidiary Heilongjiang Shuaiyi entered into an
employment agreement with our CEO and President, Ms. Lianyun Han. Ms. Han's
employment agreement has a five-year term beginning on December 7, 2008 and
ending on December 7, 2013. Ms. Han's employment agreement provides for a
monthly salary of approximately $1,000 and an annual bonus of approximately
$3,000. Ms. Han is subject to customary non-competition and confidentiality
covenants under the agreement. The employment agreement does not entitle Ms. Han
to severance payments or payments following a change in control.
On August 18, 2009, Heilongjiang Shuaiyi and Mr. Hongbin Hua
entered into an employment agreement. The term of the employment agreement is
for five years commencing on August 18, 2009. The employment agreement provides,
among other things, that Mr. Hua's annual base salary will be RMB 1,000,000
(approximately $147,000), or Annual Salary. During the term of the employment
agreement, if either party terminates the employment for any reason, the other
party will be entitled to the compensation equal to 30% of the Annual Salary
from the terminating party. The Employment Agreement also contains covenants
prohibiting Mr. Hua from disclosing any confidential information of the
Company.
On November 16, 2009, the Company, Heilongjiang Shuaiyi and Mr.
Daniel K. Lee entered into an employment agreement. The term of the employment
agreement is for three and half years commencing on November 16, 2009. The
employment agreement provides, among other things, that Mr. Lee's annual base
salary will be after-tax $120,000. During the term of the employment agreement,
if either party terminates the employment for any reason, a minimum of thirty
(30) days notice must be given in writing to the other party. The Employment
Agreement also contains covenants prohibiting Mr. Lee from disclosing any
confidential information of the Company.
On January 1, 2010, the Company and Mr. Lee entered into a
stock option agreement, or the Stock Option Agreement under the Company's 2009
Equity Incentive Plan. Pursuant to the terms of the Stock Option Agreement, Mr.
Lee was granted options, or the Options to purchase an aggregate 250,000 shares
of common stock of the Company, among which, an option to purchase 100,000
shares will be vested in 2011 with an exercise price of $7.00 per share, an
option to purchase 100,000 shares will be vested in 2012 with an exercise price
of $10.00 per share and an option to purchase 50,000 shares will be vested in
2013 with an exercise price of $10.00 per share. Each of the Options expires
three years after its respective vesting date.
According to the Stock Option Agreement, in the event Mr. Lee's
employment with the Company is terminated for any reason except for death or
disability, he may exercise the Options only to the extent that the Options
would have been exercisable on the termination date and no later than three
months after the termination date. If Mr. Lee's employment is terminated because
of his death or disability, the Options may be exercised only to the extent that
such Options would have been exercisable by Mr. Lee on the termination date and
must be exercised by Mr. Lee no later than twelve months after the termination
date. If Mr. Lee is terminated for cause, the Options will terminate
immediately. In no event will the Options be exercised later than December 31,
2015.
43
On January 1, 2010, the Company also entered into a restricted
shares grant agreement, or the Restricted Shares Grant Agreement, under the
Company's 2009 Equity Incentive Plan with Mr. Lee. Pursuant to the terms of the
Restricted Shares Grant Agreement, the Company granted to Mr. Lee 140,000
restricted shares of the Company's common stock subject to the vesting schedule
therein. If Mr. Lee's service with the Company ceases for any reason other than
Mr. Lee's (a) death, (b) Disability, (c) Retirement, or (d) termination by the
Company without cause, any nonvested restricted shares will be automatically
forfeited to the Company.
We have not provided retirement benefits (other than a state
pension scheme in which all of our employees in China participate) or severance
or change of control benefits to our named executive officer.
Outstanding Equity Awards at Fiscal Year End
None of our executive officers received any equity awards,
including, options, restricted stock or other equity incentives during the
fiscal year ended December 31, 2009.
Compensation of Directors
The table below sets forth the compensation of our directors
for the fiscal year ended December 31, 2009:
Non-Equity
Incentive Plan
All Other
Fees Earned or
Stock Awards
Option Awards
Compensation
Compensation
Name
Paid in Cash ($)
($)
($)
($)
($)
Total ($)
Lianyun Han
(1)
15,000
-
-
-
-
15,000
Nana Jiang
3,470
-
-
-
-
3,470
Chunming Zhang
-
-
-
-
-
-
John Jing Zhang
-
-
-
-
-
-
Xi Zhu
-
-
-
-
-
-
(1)
Ms. Han does not receive additional compensation
for her service as our director. The compensation disclosed herein is her
compensation for serving as our CEO and President as disclosed in the Summary
Compensation Table above.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS;
CORPORATE GOVERNANCE
Transactions with Related Persons
The following includes a summary of transactions since the
beginning of the 2009 fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved exceeded or
exceeds the lesser of $120,000 or one percent of the average of our total assets
at year-end for the last two completed fiscal years, and in which any related
person had or will have a direct or indirect material interest (other than
compensation described under "Executive Compensation"). We believe the terms
obtained or consideration that we paid or received, as applicable, in connection
with the transactions described below were comparable to terms available or the
amounts that would be paid or received, as applicable, in arm's-length
transactions.
On January 10, 2008, Daqing Shuaiyi entered into a land lease agreement
  with Heilongjiang Shuaiyi Technology Development Co., Ltd., pursuant to which
  Daqing Shuaiyi leased a land use right for 20 years over a 410,000 square
  meter tract on which it has nine factory buildings to grow and cultivate
  Chinese Golden Grass.
On October 15, 2007, Heilongjiang Shuaiyi entered into a loan agreement
  with its wholly-owned subsidiary, Daqing Shuaiyi, pursuant to which
  Heilongjiang Shuaiyi agreed to loan RMB 35 million (approximately $5.1
  million) to Daqing Shuaiyi. The loan is non-interest bearing and unsecured.
  Daqing Shuaiyi is obligated under the loan agreement to pay off RMB 7
  million (approximately $1 million) by October 30 each year starting from 2008.
  The loan matures on October 15, 2012.
44
On September 12, 2008, the Shareholder entered into separate Earn-In
  Agreements with the Funders of Heilongjiang Shuaiyi, including our chairperson
  and chief executive officer, Lianyun Han. Pursuant to the Earn-In Agreements,
  each Founder has an option to purchase shares of the Shareholder's ordinary
  shares at a purchase price of $0.01 per share (the par value of the
  Shareholder's ordinary shares),
provided
that the aggregate price with
  respect to the shares eligible to be purchased relating to the satisfaction of
  condition (4) below is the sum of $0.01 per share, multiplied the number of
  such shares, plus $1,000, upon the satisfaction of each of the following
  conditions: (1) six months have expired since the date of the Share Exchange
  Agreement,
provided
that on or before that date, the Founder and
  Heilongjiang Shuaiyi have entered into a binding employment agreement and the
  Founder is employed by Heilongjiang Shuaiyi pursuant to that agreement on such
  date; (2) the SEC has declared a registration statement filed by the Company
  under the Securities Act effective, or investors who purchased common stock
  from the Company pursuant to a securities purchase agreement being able to
  sell their common stock under Rule 144; (3) Heilongjiang Shuaiyi and its
  subsidiaries have achieved not less than $1,560,000 in after-tax net income,
  as determined under US GAAP for the six months ended June 2009; and (4)
  Heilongjiang Shuaiyi has achieved not less than $3,900,000 in pre-tax profits,
  as determined under US GAAP for the fiscal year ending 2009. Notwithstanding
  the foregoing, for purposes of determining whether or not the financial
  thresholds described above have been achieved, the purchase of the shares by
  the Founder or any other person designated by the Founder shall not be deemed
  to be an expense, charge, or other deduction from revenues of the Company even
  though GAAP may require contrary treatment. Each Founder may purchase 25% of
  the total number of shares that he or she is eligible to purchase under his or
  her Earn-In Agreement upon the satisfaction of each condition described above
  and the aggregate number of shares eligible for purchase by all of the
  Founders under the Earn-In Agreements is 100,000. On February 12, 2009, each
  Founder and the Shareholder entered into the First Amendment to amend the
  definition of the first condition. As a result, pursuant to the First
  Amendment, in order to satisfy the first condition for each Founder, only Ms.
  Lianyun Han needs to enter into a binding employment agreement with
  Heilongjiang Shuaiyi within six months after the date of the Share Exchange
  Agreement.
On December 8, 2008, Heilongjiang Shuaiyi entered into separate loan
  agreement and promissory notes, or the Notes, with the Founders, pursuant to
  which Heilongjiang Shuaiyi borrowed an aggregate of RMB 60 million
  (approximately $8.8 million) from the Founders, including from our chairperson
  and chief executive officer. The Notes bear no interest and are payable in
  successive equal yearly payments beginning on the tenth anniversary of the
  Notes, December 8, 2018, and within the first month of each year thereafter.
  The final payment is due on January 1, 2028. On February 12, 2009,
  Heilongjiang Shuaiyi and the Founders amended the Notes, pursuant to which the
  Shuaiyi Founders subordinate any right to receive any payment with respect to
  this loan to the payment or provision for payment in full of all claims of all
  present and future creditors of Heilongjiang Shuaiyi.
On December 23, 2008, we entered into an amendment, or the Amendment, of
  that certain stock purchase agreement, or the SPA, dated August 6, 2008, by
  and among Allied China Investments, LLC, or ACI (formerly BMC Acquisitions
  Corp., LLC), Belmont Partners LLC, or Belmont, and the Company. ACI was our
  majority shareholder prior to our acquisition of New Resources pursuant to the
  Share Exchange Agreement on December 23, 2008. Pursuant to the SPA, the
  Company was required to issue to Belmont a number of shares of its common
  stock sufficient for Belmont to retain 1.1% ownership interest in the Company.
  Pursuant to the Amendment, ACI assumed the foregoing obligation of the Company
  and agreed to transfer its shares of the Company's common stock in order to
  satisfy such obligation. On the same day, we entered into a subscription
  agreement with ACI, pursuant to which we issued and sold to ACI 17,962 shares
  of our Series A Preferred Stock, par value $0.001, or the Series A Preferred
  Stock, for $52,530.50, or $2.92 per share.
Except as set forth in our discussion above, none of our
directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.
Promoters and Certain Control Persons
We did not have any promoters at any time during the past five
fiscal years.
45
Parents of the Company
New Zealand WAYNE's Investment Holdings Co., Ltd. currently
owns 62.53% of Nutrastar International Inc.
Director Independence
We currently do not have any independent directors, as the term
"independent" is defined by the rules of the Nasdaq Stock Market.
SELLING STOCKHOLDERS
This prospectus relates to the resale by the selling
stockholders named below from time to time of up to a total of 1,500,000 shares
of our common stock that were issued or are issuable to selling stockholders
pursuant to transactions exempt from registration under the Securities Act. All
of the common stock offered by this prospectus is being offered by the selling
stockholders for their own accounts. The selling stockholders are divided into
two categories: (1) investors from the private placement transaction; and (ii)
certain shareholder who received shares of our common stock before the private
placement transaction.
Private Placement Transaction
On December 17, 2009, we completed a private placement
transaction and sold 1,000,000 shares of our common stock to certain accredited
investors at $2.50 per share for a total of $2.5 million pursuant to a
securities purchase agreement, or the Securities Purchase Agreement. In
addition, we issued to each of the investors two warrants to purchase in
aggregate 500,000 shares of our common stock, including a Series A warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B warrant having a term of three years with an exercise price of $4.00
per share, both of which are subject to the usual adjustments for certain
corporate events. The shares underlying the warrants are being included in this
registration statement, but none of the warrants has been exercised.
Pursuant to the Securities Purchase Agreement, the Company
agreed to register the shares and the warrants within a pre-defined period. The
Company is subject to registration delay payments in cash in the amounts
prescribed by the Securities Purchase Agreement if it is unable to file the
registration statement, cause it to become effective or maintain its
effectiveness as required by the Securities Purchase Agreement.
In addition, pursuant to the Securities Purchase Agreement, the
majority stockholder of the Company, New Zealand WAYNE's Investment Holdings
Co., Ltd. agreed to place a total of 1,000,000 shares of the Company's common
stock held by it into escrow to secure the make good obligations described below
on behalf of the investors. Under the Securities Purchase Agreement, New Zealand
WAYNE's Investment Holdings Co., Ltd. agreed that: (i) in the event that the
Company's consolidated financial statements reflect less than $9,000,000 of
after-tax income for the fiscal year ending December 31, 2010, it will transfer
to the investors, on a pro rata basis, for no additional consideration, 500,000
shares of the Company common stock owned by it; and (ii) in the event that the
Company's consolidated financial statements reflect less than $11,000,000 of
after-tax net income for the fiscal year ending December 31, 2011, it will
transfer to the investors, on a pro rata basis, for no additional consideration,
500,000 shares of the Company's common stock owned by it.
The issuance of these shares of common stock and the warrants
was made in reliance upon exemptions provided by Section 4(2) of the Securities
Act for the offer and sale of securities not involving a public offering and
Regulation D promulgated thereunder.
Selling Stockholders
The following table sets forth certain information regarding
the selling stockholders and the shares offered by it in this prospectus.
Beneficial ownership is determined in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a selling stockholder and
the percentage of ownership of that selling stockholder, shares of common stock
and underlying shares of convertible preferred stock, options or warrants held
by that selling stockholder that are convertible or exercisable, as the case may
be, within 60 days of January 25, 2010 are included. Those shares, however, are
not deemed outstanding for the purpose of computing the percentage ownership of
any other selling stockholder. Each selling stockholder's percentage of
ownership in the following table is based upon 14,312,731 shares of common stock
outstanding as of January 25, 2010.
46
None of the selling stockholders has held a position as an
officer or director of the Company, nor has any material relationship of any
kind with us or any of our affiliates. All information with respect to share
ownership has been furnished by the selling stockholders. The shares being
offered are being registered to permit public secondary trading of the shares
and the selling stockholders may offer all or part of the shares owned for
resale from time to time. In addition, none of the selling stockholders has any
family relationships with our officers, directors or controlling stockholders.
Furthermore, no selling stockholder is a registered broker-dealer or an
affiliate of a registered broker-dealer.
The term "selling stockholders" also includes any transferees,
pledges, donees, or other successors in interest to the selling stockholders
named in the table below. To our knowledge, subject to applicable community
property laws, each person named in the table has sole voting and investment
power with respect to the shares of common stock set forth opposite such
person's name. We will file a supplement to this prospectus (or a post-effective
amendment hereto, if necessary) to name successors to any named selling
stockholder who is able to use this prospectus to resell the securities
registered hereby.
Shares
Shares of
Beneficial
Percentage of
Beneficially
Common Stock
Ownership
Common Stock
Owned Before
Included in
After the
Owned After
Name and Address
the Offering
Prospectus
Offering
(1)
Offering
(2)
Lead Success Investment
      Limited
(3)
#1706 Hongyuan Tiancheng, Section
B,
      Hulin Rd, Guli District, Fuzhou,
China 350003
450,000
(3)
450,000
(3)
0
3.11%
Chunlei Tang
9F Silver Tower, 218 Xizangnan
      Rd,
Shanghai, China 200021
132,353
(4)
132,353
(4)
0
*
Dong Lin
Secondly Industrial
      Zone, Baishi,
Sanxiang, Zhongshan City,
Guangdong, China 528463
264,706
(5)
264,706
(5)
0
1.84%
Hui Jiang
#18-8 Yaoditoudao Street, Daoli
District, Harbin, China 150000
176,472
(6)
176,472
(6)
0
1.23%
Youliang Wang
Five Group,
      Tuanjie Street,
Dongchang District, Tonghua, Jilin
Province, China
      134000
264,706
(7)
264,706
(7)
0
1.84%
Yuehong Luan
No.1610, 59-1, Xidawang Road,
Chaoyang District, Beijing, China
100022
211,763
(8)
211,763
(8)
0
1.47%
TOTAL:
1,500,000
1,500,000
10.13%
47
* Less than 1%.
(1)
Assumes that all securities offered are sold.
(2)
As of January 25, 2010, a total of 14,312,731 shares of
      our common stock are considered to be outstanding pursuant to SEC Rule
      13d-3(d)(1). For each beneficial owner above, any options exercisable
      within 60 days have been included in the denominator.
(3)
Includes 300,000 shares of our common stock and 150,000
      shares underlying the warrants to purchase shares of our common stock. Mr.
      Li Yi is the sole shareholder and director of Lead Success Investment
      Limited and has sole voting and investment control over the securities
      held by Lead Success Investment Limited.
(4)
Includes 88,235 shares of our common stock and 44,118
      shares underlying the warrants to purchase shares of our common
    stock.
(5)
Includes 176,470 shares of our common stock and 88,236
      shares underlying the warrants to purchase shares of our common
    stock.
(6)
Includes 117,648 shares of our common stock and 58,824
      shares underlying the warrants to purchase shares of our common
    stock.
(7)
Includes 176,470 shares of our common stock and 88,236
      shares underlying the warrants to purchase shares of our common
    stock.
(8)
Includes 141,177 shares of our common stock and 70,586
      shares underlying the warrant to purchase shares of our common
    stock.
We will not receive any proceeds from the sale of any shares by
the selling stockholders but we will receive funds from the exercise of the
warrants held by the selling stockholders if and when those warrants are
exercised for cash. We have agreed to bear expenses incurred by the selling
stockholders that relate to the registration of the shares being offered and
sold by the selling stockholders, including the SEC registration fee and legal,
accounting, printing and other expenses of this offering.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding beneficial
ownership of our common stock as of January 25, 2010 (i) by each person who is
known by us to beneficially own more than 5% of our common stock; (ii) by each
of our officers and directors; and (iii) by all of our officers and directors as
a group. Unless otherwise specified, the address of each of the persons set
forth below is in care of Nutrastar International Inc., 7/F Jinhua Mansion, 41
Hanguang Street, Nangang District, Harbin 150080, People's Republic of
China.
Name & Address of Beneficial
Office, if Any
Title of Class
Amount & Nature
Percent of Class
(2)
Owner
of Beneficial
Ownership
(1)
Officers and Directors
Lianyun Han
Chief Executive
Officer,
President, and
Chairman
Common Stock
$0.001 par
      value
8,949,424
(3)
62.53%
Daniel K. Lee
Chief Financial
Officer and
Treasurer
Common Stock
$0.001 par value
15,000
*
Hongbin Hua
Chief Marketing
Officer
Common Stock
$0.001 par
      value
0
*
John Jing Zhang
Director
Common Stock
$0.001 par value
543,899
(4)
3.80%
Chunming Zhang
Director
Common Stock
$0.001 par
      value
0
*
Nana Jiang
Director
Common Stock
$0.001 par value
0
*
Xi Zhu
Director
Common Stock
$0.001 par
      value
0
*
All officers and
      directors as a
group (6 persons named above)
Common Stock
$0.001 par value
9,508,323
66.43%
5% Securities Holder
New Zealand WAYNE's
Investment Holdings Co., Ltd.
4/F, Yushan Plaza
No.51 Yushan Road
Harbin, China 150090
Common Stock
$0.001 par value
8,949,424
(3)
62.53%
Lianyun Han
Chief Executive
Officer,
      President,
and Chairman
Common Stock
$0.001 par
      value
8,949,424
(3)
62.53%
Total Shares Owned by
Persons Named
      above:
Common Stock
$0.001 par value
9,508,323
66.43%
48
* Less than 1%.
1
Beneficial ownership is determined in accordance
with the rules of the SEC and includes voting or investment power with respect
to the ordinary shares.
2
A total of 14,312,731 shares of Common Stock as of
January 25, 2010 are considered to be outstanding pursuant to SEC Rule
13d-3(d)(1). For each beneficial owner above, any options exercisable within 60
days have been included in the denominator.
3
Includes 8,949,424 shares of Common Stock owned by
New Zealand WAYNE's Investment Holdings Co., Ltd. Pursuant to the Earn-In
Agreement, dated September 12, 2008, as amended, the Founders, including Ms.
Han, have the options to acquire a majority interest in New Zealand WAYNE's
Investment Holdings Co., Ltd. upon the satisfaction of certain conditions set
forth in the Earn-In Agreement. Upon the passage of six months after the date of
Share Exchange Agreement, which was entered into among the Company, New
Resources, along with the subsidiaries of New Resources, including Heilongjiang
Shuaiyi, Daqing Shuaiyi and Harbin Shuaiyi, and New Zealand WAYNE's Investment
Holdings Co., Ltd., dated December 23, 2008, Ms. Han will own at least a
majority ownership of Investment Holdings if she exercises her option pursuant
to the Earn-In Agreement. Ms. Han may be deemed to be a beneficial owner of the
shares held by Investment Holdings. In addition, pursuant to the Securities
Purchase Agreement, dated December 17, 2009, New Zealand WAYNE's Investment
Holdings Co., Ltd., agreed by the Founders, placed a total of 1,000,000 shares
held by it into escrow that may be released to the investors in the event we do
not meet the performance thresholds for 2010 and 2011.
4
Including 127,978 shares of Common Stock held by
his spouse.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue up to f 190,000,000
shares of
common stock. On May 19, 2009, we amended our articles of incorporation to effect a 1-for-114.59 reverse split of our
outstanding common stock.
49
Each outstanding share of common stock entitles the holder
thereof to one vote per share on all matters. Stockholders do not have
preemptive rights to purchase shares in any future issuance of our common stock.
The holders of shares of our common stock are entitled to dividends out of funds
legally available when and as declared by our board of directors. We have never
declared or paid cash dividends. Our board of directors does not anticipate
declaring a dividend in the foreseeable future. Should we decide in the future
to pay dividends, as a holding company, our ability to do so and meet other
obligations depends upon the receipt of dividends or other payments from our
operating subsidiaries and other holdings and investments. In addition, our PRC
operating subsidiaries, from time to time, may be subject to restrictions on its
ability to make distributions to us, including as a result of restrictive
covenants in loan agreements, restrictions on the conversion of local currency
into U.S. dollars or other hard currency and other regulatory restrictions.
All of the issued and outstanding shares of our common stock
are duly authorized, validly issued, fully paid and non-assessable. To the
extent that additional shares of our common stock are issued, the relative
interests of existing stockholders will be diluted.
Preferred Stock
We may issue up to 1,000,000 shares of preferred stock, par
value $0.001 per share, in one or more classes or series within a class as may
be determined by our board of directors, who may establish, from time to time,
the number of shares to be included in each class or series, may fix the
designation, powers, preferences and rights of the shares of each such class or
series and any qualifications, limitations or restrictions thereof. Any
preferred stock so issued by our board of directors may rank senior to the
common stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding up of us, or both.
On December 23, 2008, we issued 689,390 shares of our Series A
Preferred Stock to the Shareholder of New Resources. The total consideration for
the 689,390 shares of our Series A Preferred Stock is 50,000 shares of New
Resources, which is all the issued and outstanding capital stock of New
Resources. We did not receive any cash consideration in connection with the
share exchange. On December 23, 2008, we also issued and sold to ACI 17,962
shares of our Series A Preferred Stock for $52,530.50, or $2.92 per share. In
addition, on December 23, 2008, we issued and sold to Tan Zhen Investment
Limited 20,168 shares of our Series A Preferred Stock for $375,000, or $18.59
per share.
Following effectiveness of the reverse split and in accordance
with Section 6(a) of the Certificate of Designation of the Series A Preferred
Stock filed with the Nevada Secretary of State on December 22, 2008, all issued
and outstanding shares of the Series A Preferred Stock were automatically
converted into shares of common stock, on the basis of 17.45 shares of common
stock for each one share of Series A Preferred Stock, effective on May 29, 2009.
No shares of preferred stock are currently outstanding.
Warrant
In connection with our private placement which was closed on
December 17, 2009, we issued to each of the investors two warrants to purchase
in aggregate 500,000 shares of our common stock, including a Series A Warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B Warrant having a term of three years with an exercise price of $4.00
per share, both of which are subject to the usual adjustments for certain
corporate events. The shares underlying the warrants are being included in this
registration statement, but none of the warrants has been exercised.
Anti-takeover Effects of Our Articles of Incorporation and
By-laws
Our Articles of Incorporation and Bylaws contain certain
provisions that may have anti-takeover effects, making it more difficult for or
preventing a third party from acquiring control of the Company or changing our
board of directors and management. Our Articles of Incorporation provide that
our board of directors may issue, without further stockholder approval, up to
1,000,000 shares of preferred stock, par value $0.001 per share, in one or more
classes or series within a class. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of our outstanding voting stock. According to our Bylaws and Articles
of Incorporation, neither the holders of our common stock nor the holders of our
preferred stock have cumulative voting rights in the election of our directors.
The combination of the present ownership by a few stockholders of a significant
portion of our issued and outstanding capital stock and lack of cumulative
voting makes it more difficult for other stockholders to replace our board of
directors or for a third party to obtain control of the Company by replacing our
board of directors.
Anti-takeover Effects of Nevada Law
Business Combinations
50
The "business combination" provisions of Sections 78.411 to
78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada
corporation with at least 200 stockholders from engaging in various
"combination" transactions with any interested stockholder:
for a period of three years after the date of the transaction in which the
  person became an interested stockholder, unless the transaction is approved by
  the board of directors prior to the date the interested stockholder obtained
  such status; or
after the expiration of the three-year period, unless:
the transaction is approved by the board of directors or a majority of the
  voting power held by disinterested stockholders, or
if the consideration to be paid by the interested stockholder is at least
  equal to the highest of: (a) the highest price per share paid by the
  interested stockholder within the three years immediately preceding the date
  of the announcement of the combination or in the transaction in which it
  became an interested stockholder, whichever is higher, (b) the market value
  per share of common stock on the date of announcement of the combination and
  the date the interested stockholder acquired the shares, whichever is higher,
  or (c) for holders of preferred stock, the highest liquidation value of the
  preferred stock, if it is higher.
A "combination" is defined to include mergers or consolidations
or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in
one transaction or a series of transactions, with an "interested stockholder"
having: (a) an aggregate market value equal to 5% or more of the aggregate
market value of the assets of the corporation, (b) an aggregate market value
equal to 5% or more of the aggregate market value of all outstanding shares of
the corporation, or (c) 10% or more of the earning power or net income of the
corporation.
In general, an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years, did own)
10% or more of a corporation's voting stock. The statute could prohibit or delay
mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire our company even though such a transaction may
offer our stockholders the opportunity to sell their stock at a price above the
prevailing market price.
Although we do not believe that we are currently subject to
these "business combination" provisions since we only have approximately 68
stockholders of record, there can be no assurance that in the future such
provisions will not apply to us.
Control Share Acquisitions
The "control share" provisions of Sections 78.378 to 78.3793,
inclusive, of the NRS, which apply only to Nevada corporations with at least 200
stockholders, including at least 100 stockholders of record who are Nevada
residents, and which conduct business directly or indirectly in Nevada, prohibit
an acquiror, under certain circumstances, from voting its shares of a target
corporation's stock after crossing certain ownership threshold percentages,
unless the acquiror obtains approval of the target corporation's disinterested
stockholders. The statute specifies three thresholds: one-fifth or more but less
than one-third, one-third but less than a majority, and a majority or more, of
the outstanding voting power. Once an acquiror crosses one of the above
thresholds, those shares in an offer or acquisition and acquired within 90 days
thereof become "control shares" and such control shares are deprived of the
right to vote until disinterested stockholders restore the right. These
provisions also provide that if control shares are accorded full voting rights
and the acquiring person has acquired a majority or more of all voting power,
all other stockholders who do not vote in favor of authorizing voting rights to
the control shares are entitled to demand payment for the fair value of their
shares in accordance with statutory procedures established for dissenters'
rights.
Although we are not currently subject to these "control share"
provisions since we only have approximately 72 stockholders of record, there can
be no assurance that in the future such provisions will not apply to us.
51
Transfer Agent and Registrar
Our independent stock transfer agent is Interwest Transfer
Company, Inc, located in 1981 E. Murray Holladay Road, Suite 100, Salt Lake
City, Utah 84117. Their phone number is (801) 272-9294 and facsimile number is
(801) 277-3147.
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our common stock is quoted under the symbol "NUIN.OB" on the
OTC Bulletin Board but had not been traded in the OTC Bulletin Board except on a
limited and sporadic basis. The CUSIP number is 67060M 107.
The following table sets forth, for the periods indicated, the
high and low closing prices of our common stock. These prices reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may
not represent actual transactions. These prices have been adjusted to give
retroactive effect to the 1-for-114.59 reverse split of our common stock that
occurred on May 19, 2009. The last reported sale price of our common stock on
January 25, 2010 was $3.76 per share.
Closing Bid Prices
(1)
High
Low
Year Ended December 31,
      2010
1
st
Quarter (through January 25, 2010)
$5.00
$3.70
Year Ended December 31,
      2009
1
st
Quarter
$28.65
$5.73
2
nd
Quarter
$6.25
$5.73
3
rd
Quarter
$6.25
$6.25
4
th
Quarter
$6.25
$6.25
Year Ended December 31, 2008
1
st
Quarter
$13.75
$13.75
2
nd
Quarter
$13.75
$13.75
3
rd
Quarter
$13.75
$13.75
4
th
Quarter
$28.65
$13.75
(1) The above table sets forth the range of high and low
closing bid prices per share of our common stock as reported by
www.quotemedia.com
for the periods indicated.
Holders
On January 25, 2010, there were approximately 72 stockholders
of record of our common stock. The number of record holders does not include
persons who held our common stock in nominee or "street name" accounts through
brokers.
Dividends
We have never declared or paid a cash dividend. Any future
decisions regarding dividends will be made by our board of directors. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has complete discretion on whether to
pay dividends, subject to the approval of our stockholders. Even if our board of
directors decides to pay dividends, the form, frequency and amount will depend
upon our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
52
Securities Authorized for Issuance Under Equity
Compensation Plans
On June 3, 2009, our Board of Directors authorized the establishment of
the Shuaiyi International New Resources Development Inc. 2009 Equity Incentive
Plan, or the Plan, whereby we are authorized to issue shares of our Common Stock
to certain employees, consultants and directors. The maximum aggregate number of
shares of our common stock that may be issued under the Plan is 1,000,000
shares. The Plan, was approved by our shareholders on June 3, 2009.
On June 17, 2009, the Company granted to certain employees an
aggregate of 500,000 restricted shares pursuant to the Plan.
On January 1, 2010, as disclosed above, pursuant to the Plan,
the Company granted options to Mr. Daniel Lee to purchase an aggregate 250,000
shares of common stock of the Company, among which, an option to purchase
100,000 shares will be vested in 2011 with an exercise price of $7.00 per share,
an option to purchase 100,000 shares will be vested in 2012 with an exercise
price of $10.00 per share and an option to purchase 50,000 shares will be vested
in 2013 with an exercise price of $10.00 per share. Each of the Options expires
three years after its respective vesting date.
On January 1, 2010, pursuant to the Plan, the Company also
granted to Mr. Lee 140,000 restricted shares of the Company's common stock
subject to the vesting schedule therein.
SHARES ELIGIBLE FOR FUTURE SALE
As of January 25, 2010, 14,312,731 shares of our common stock
were issued and outstanding.
Shares Covered by this Prospectus
All of the 1,500,000 shares being registered in this offering
may be sold without restriction under the Securities Act, so long as the
registration statement of which this prospectus is a part is, and remains,
effective.
Rule 144
The SEC has recently adopted amendments to Rule 144 which
became effective on February 15, 2008 and apply to securities acquired both
before and after that date. Under these amendments, a person who has
beneficially owned restricted shares of our common stock or warrants for at
least six months is entitled to sell its securities provided that (1) such
person is not deemed to have been one of our affiliates at the time of, or at
any time during the three months preceding, a sale, (2) we are subject to the
Exchange Act reporting requirements for at least 90 days before the sale and (3)
if the sale occurs prior to satisfaction of a one-year holding period, we
provide current information at the time of sale.
Persons who have beneficially owned restricted shares of our
common stock or warrants for at least six months but who are our affiliates at
the time of, or at any time during the three months preceding, a sale, would be
subject to additional restrictions, by which such person would be entitled to
sell within any three-month period only a number of securities that does not
exceed the greater of:
1% of the total number of securities of the same class then outstanding,
  which will equal approximately 143,127shares immediately after this offering;
  or
the average weekly trading volume of such securities during the four
  calendar weeks preceding the filing of a notice on Form 144 with respect to
  such sale.
provided,
in each case, that we are subject to the
Exchange Act periodic reporting requirements for at least three months before
the sale.
53
However, since our shares are quoted on the OTC Bulletin Board,
which is not an "automated quotation system," our stockholders will not be able
to rely on the market-based volume limitation described in the second bullet
above. If, in the future, our securities are listed on an exchange or quoted on
NASDAQ, then our stockholders would be able to rely on the market-based volume
limitation. Unless and until our stock is so listed or quoted, our stockholders
can only rely on the percentage based volume limitation described in the first
bullet above.
Such sales by affiliates must also comply with the manner of
sale, current public information and notice provisions of Rule 144. The selling
stockholders will not be governed by the foregoing restrictions when selling
their shares pursuant to this prospectus.
Historically, the SEC staff has taken the position that Rule
144 is not available for the resale of securities initially issued by companies
that are, or previously were, blank check companies, like us. The SEC has
codified and expanded this position in the amendments discussed above by
prohibiting the use of Rule 144 for resale of securities issued by any shell
companies (other than business combination related shell companies) or any
issuer that has been at any time previously a shell company. The SEC has
provided an important exception to this prohibition, however, if the following
conditions are met:
the issuer of the securities that was formerly a shell company has ceased
  to be a shell company;
the issuer of the securities is subject to the reporting requirements of
  Section 13 or 15(d) of the Exchange Act;
the issuer of the securities has filed all Exchange Act reports and
  material required to be filed, as applicable, during the preceding 12 months
  (or such shorter period that the issuer was required to file such reports and
  materials), other than Current Reports on Form 8-K; and
the least one year has elapsed from the time that the issuer filed current
  comprehensive disclosure with the SEC reflecting its status as an entity that
  is not a shell company.
As a result, it is likely that pursuant to Rule 144 our
stockholders, who were stockholders of ours prior to the reverse acquisition of
New Resources that concluded on December 23, 2008, were able to sell the their
shares of our common stock from and after December 31, 2009 (the one year
anniversary of our filing of the Current Report on Form 8-K reporting the
reverse acquisition of New Resources) without registration.
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell, transfer
or otherwise dispose of any or all of their shares of common stock or interests
in shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.
The selling stockholders may use any one or more of the
following methods when disposing of shares or interests therein:
ordinary brokerage transactions and transactions in which the
  broker-dealer solicits purchasers;
block trades in which the broker-dealer will attempt to sell the shares as
  agent, but may position and resell a portion of the block as principal to
  facilitate the transaction;
purchases by a broker-dealer as principal and resale by the broker-dealer
  for its account;
an exchange distribution in accordance with the rules of the applicable
  exchange;
privately negotiated transactions;
short sales effected after the date the registration statement of which
  this Prospectus is a part is declared effective by the SEC;
through the writing or settlement of options or other hedging
  transactions, whether through an options exchange or otherwise;
broker-dealers may agree with the selling stockholders to sell a specified
  number of such shares at a stipulated price per share; and
a combination of any such methods of sale.
54
The selling stockholders may, from time to time, pledge or
grant a security interest in some or all of the shares of common stock owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this Prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests
therein, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in
short sales of the common stock in the course of hedging the positions they
assume. The selling stockholders may also sell shares of our common stock short
and deliver these securities to close out their short positions, or loan or
pledge the common stock to broker-dealers that in turn may sell these
securities. The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The aggregate proceeds to the selling stockholders from the
sale of the common stock offered by them will be the purchase price of the
common stock less discounts or commissions, if any. Each of the selling
stockholders reserves the right to accept and, together with their agents from
time to time, to reject, in whole or in part, any proposed purchase of common
stock to be made directly or through agents. We will not receive any of the
proceeds from this offering.
Broker-dealers engaged by the selling stockholders may arrange
for other broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchase of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders also may resell all or a portion of
the shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided that they meet the criteria and conform to the
requirements of that rule.
The broker-dealers or agents that participate in the sale of
the common stock or interests therein and the selling stockholders who are
affiliates of broker-dealers may be "underwriters" within the meaning of Section
2(11) of the Securities Act. Any discounts, commissions, concessions or profit
they earn on any resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling stockholders who are
"underwriters" within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act. We know
of no existing arrangements between any of the selling stockholders and any
other stockholder, broker, dealer, underwriter, or agent relating to the sale or
distribution of the shares, nor can we presently estimate the amount, if any, of
such compensation. See "Selling Stockholders" for description of any material
relationship that a stockholder has with us and the description of such
relationship.
To the extent required, the shares of our common stock to be
sold, the names of the selling stockholders, the respective purchase prices and
public offering prices, the names of any agents, dealer or underwriter, any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this
Prospectus.
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states, the
common stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and
is complied with.
We have advised the selling stockholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this Prospectus (as it
may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the
prospectus delivery requirements of the Securities Act. The selling stockholders
may indemnify any broker-dealer that participates in transactions involving the
sale of the shares against certain liabilities, including liabilities arising
under the Securities Act.
55
We have agreed to pay certain fees and expenses incurred by us
incident to the registration of the shares. We have agreed to indemnify the
selling stockholders against liabilities, including liabilities under the
Securities Act and state securities laws, relating to the registration of the
shares offered by this Prospectus.
LEGAL MATTERS
The validity of the common stock offered by this prospectus
will be passed upon for us by Holland & Hart LLP, Reno, Nevada.
EXPERTS
The audited consolidated financial statements of Nutrastar
International Inc. for the fiscal year ended December 31, 2008 included in this
prospectus and in the registration statement have been audited by AGCA, Inc.,
independent registered public accounting firm, to the extent and for the periods
sent forth in their respective reports appearing elsewhere herein and in the
registration statement, and are included in reliance on such reports, given the
authority of said firms as experts in auditing and accounting.
The audited consolidated financial statements of Heilongjiang
Shuaiyi New Energy Development Co., Ltd. for the fiscal year ended December 31, 2007
included in this prospectus and in the registration statement have been audited
by AGCA CPA Limited (formerly GC Alliance Limited), independent registered public accounting firm, to the
extent and for the periods sent forth in their respective reports appearing
elsewhere herein and in the registration statement, and are included in reliance
on such reports, given the authority of said firms as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1
under the Securities Act with respect to the common stock offered in this
offering. This prospectus does not contain all of the information set forth in
the registration statement. For further information with respect to us and the
common stock offered in this offering, we refer you to the registration
statement and to the attached exhibits. With respect to each such document filed
as an exhibit to the registration statement, we refer you to such exhibit for a
more complete description of the matters involved.
You may inspect our registration statement and the attached
exhibits and schedules without charge at the public reference facilities
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may
obtain copies of all or any part of our registration statement from the SEC upon
payment of prescribed fees. You may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330.
Our SEC filings, including the registration statement and the
exhibits filed with the registration statement, are also available from the
SEC's website at www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC.
56
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
NUTRASTAR INTERNATIONAL INC. AND
      SUBSIDIARIES FINANCIAL STATEMENTS
FOR THE NINE-MONTH PERIOD
      ENDED SEPTEMBER 30, 2009 (UNAUDITED)
Condensed Consolidated Balance Sheets as of September 30,
      2009 (Unaudited) and December 31, 2008 (Audited)
F-2
Condensed Consolidated Statements of Income
      and Comprehensive Income (Unaudited) for the Three Months and Nine Months
      Ended September 30, 2009 and 2008
F-3
Condensed Consolidated Statement of Stockholders' Equity
      (Unaudited) for the Nine Months Ended September 30, 2009
F-4
Condensed Consolidated Statements of Cash
      Flows (Unaudited) for the Nine Months Ended September 30, 2009 and 2008
F-5
Notes to Condensed Consolidated Financial Statements
F-7
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
      FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND
      2007
Reports of Independent Registered Public Accounting Firm
F-19
Consolidated Balance Sheets
F-21
Consolidated Statements of Income and Comprehensive Income
F-22
Consolidated Statements of Stockholders'
      Equity
F-23
Consolidated Statements of Cash Flows
F-24
Notes to Consolidated Financial Statements
F-25
F-1
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS
EXPRESSED IN US DOLLAR)
As of
September 30,
December 31,
2009
2008
Unaudited
Audited
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
15,434,465
$
9,198,243
Accounts receivable, net
362,880
283,822
Other receivables
11,422
14,105
Inventories
631,310
1,168,079
Total current assets
16,440,077
10,664,249
OTHER ASSETS
Intangible assets, net
2,856,961
3,183,995
Property, plant and equipment, net
10,484,822
10,902,976
Total other assets
13,341,783
14,086,971
Total assets
$
29,781,860
$
24,751,220
LIABILITIES AND SHAREHOLDERS'
      EQUITY
CURRENT LIABILITIES
Accounts payable
$
120,972
$
3,206
Other payables and accruals
484,851
472,959
Payable for intangibles – Current portion
878,606
877,886
Income tax payable
83,167
119,486
Due to related parties
77,409
8,998
Acquisition payable
8,735,810
8,778,861
Total current liabilities
10,380,815
10,261,396
NON-CURRENT LIABILITIES
Payable for intangibles, net of current portion
-
877,886
Total liabilities
10,380,815
11,139,282
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS' EQUITY
Preferred Stock, $0.001 par value, 1,000,000 shares
      authorized, none and 727,520 shares issued and outstanding
-
727
Common stock, $0.001 par value,
      190,000,000 shares authorized, 13,297,731 and 11,746,041 shares issued and
      outstanding
13,298
11,746
Additional paid-in capital
2,216,891
2,192,716
Statutory reserves
1,923,755
1,326,239
Retained earnings
14,277,395
9,131,744
Accumulated other comprehensive
      income
969,706
948,766
Total shareholders' equity
19,401,045
13,611,938
Total liabilities and shareholders' equity
$
29,781,860
$
24,751,220
See accompanying notes to
      condensed consolidated financial statements
F-2
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND
COMPREHENSIVE INCOME (UNAUDITED)
(AMOUNTS EXPRESSED IN US
DOLLAR)
For the Three Months
For the Nine Months
Ended September 30,
Ended September 30,
2009
2008
2009
2008
Revenue
$
3,565,961
$
4,413,082
$
11,549,244
$
10,167,285
Cost of goods sold
(793,101
)
(1,346,285
)
(3,733,026
)
(3,579,138
)
Gross profit
2,772,860
3,066,797
7,816,218
6,588,147
Selling expenses
(87,901
)
(88,985
)
(281,025
)
(137,904
)
General and administrative
      expenses
(330,660
)
(258,361
)
(943,903
)
(826,754
)
Income from operations
2,354,299
2,719,451
6,591,290
5,623,489
Other income (expenses):
Interest income
18,507
8,369
50,150
18,742
Exchange loss
(3,709
)
-
(7,218
)
-
Other
13
-
165
3,864
Income before income tax
2,369,110
2,727,820
6,634,387
5,646,095
Provision for income tax
(340,056
)
(361,336
)
(891,220
)
(774,996
)
Net income
2,029,054
2,366,484
5,743,167
4,871,099
Other comprehensive income:
Foreign currency
      translation adjustment
25,251
144,928
20,940
1,170,908
Total comprehensive income
$
2,054,305
$
2,511,412
$
5,764,107
$
6,042,007
Earnings per share:
Basic
$
0.15
$
0.20
$
0.44
$
0.41
Diluted
$
0.15
$
0.20
$
0.44
$
0.41
Weighted average number of shares outstanding:
Basic
13,297,731
12,032,289
12,989,613
12,032,289
Diluted
13,297,731
12,032,289
12,989,613
12,032,289
See accompanying
      notes to condensed consolidated financial statements
F-3
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
AND COMPREHENSIVE INCOME
(AMOUNTS EXPRESSED IN US
DOLLAR)
Accumulated
Preferred Stock
Common Stock
Additional
Other
Number
Number
Paid-in
Statutory
Retained
Comprehensive
of Shares
Amount
of Shares
Amount
Capital
Reserves
Earnings
Income
Total
At December 31, 2008 (Audited)
727,520
$
727
11,746,041
$
11,746
$
2,192,716
$
1,326,239 $
9,131,744
$
948,766
$
13,611,938
Net income
-
-
-
-
-
-
5,743,167
-
5,743,167
Foreign currency translation adjustment
-
-
-
-
-
-
-
20,940
20,940
Comprehensive income
-
-
-
-
-
-
-
-
5,764,107
Appropriation of statutory reserves
-
-
-
-
-
597,516
(597,516
)
-
-
Conversion of preferred stock into common
      stock
(727,520
)
(727
)
12,695,223
12,695
(11,968
)
-
-
-
-
1-for-114.59 Reverse Split
-
-
(11,643,533
)
(11,643
)
11,643
-
-
-
-
Issuance of shares to employees and
      consultants under 2009 Equity Incentive Plan (Note 11)
-
-
500,000
500
24,500
-
-
-
25,000
At September 30, 2009 (Unaudited)
-
-
13,297,731
$
13,298
$
2,216,891
$
1,923,755
$
14,277,395
$
969,706
$
19,401,045
See accompanying notes to condensed consolidated financial
statements
F-
4
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(AMOUNTS EXPRESSED IN US DOLLAR)
For the Nine Months
Ended September 30,
2009
2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
5,743,167
$
4,871,099
Adjustments to reconcile net income
      to cash provided by operating activities:
Share-based compensation expense
25,000
-
Depreciation and
      amortization
756,396
840,337
Loss from disposition of property,
      plant and equipment
-
636
Impairment losses on
      trade and other receivables
-
5,567
Loss on write-down of inventories
-
123
(Increase) decrease in assets:
Accounts receivable
(78,790
)
(784,792
)
Deposits
      and other receivables
2,693
38,355
Inventories
537,483
(300,116
)
Trade
      receivable due from related parties
-
(7,963
)
Increase (decrease) in liabilities:
Accounts
      payable
117,710
(27,974
)
Other payables and
      accruals
11,498
(221,769
)
Income
      tax payable
(36,400
)
178,285
Trade payable due to
      related parties
6,751
-
Net cash
      provided by operating activities
7,085,508
4,591,788
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment
-
(31,689
)
Purchase of intangible asset
-
(1,266
)
Settlement of payable for intangibles
(878,207
)
(858,111
)
Payment of acquisition payable
(50,269
)
-
Net cash used in investing
      activities
(928,476
)
(891,066
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from related parties
61,621
6,541
Net cash provided by financing
      activities
61,621
6,541
Foreign currency translation
      adjustment
17,569
247,722
INCREASE IN CASH AND CASH
      EQUIVALENTS
6,236,222
3,954,985
CASH AND CASH EQUIVALENTS, at
      the beginning of the period
9,198,243
2,148,348
CASH AND CASH EQUIVALENTS, at
      the end of the period
$
15,434,465
$
6,103,333
NON-CASH INVESTING AND
      FINANCING ACTIVITIES:
Machinery acquired in exchange for
      issuance of capital
$
-
$
1,282,234
SUPPLEMENTAL DISCLOSURE
      INFORMATION
Income taxes paid
$
593,008
$
650,999
See accompanying
      notes to condensed consolidated financial statements
F-
5
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
DESCRIPTION OF BUSINESS AND
ORGANIZATION
Shuaiyi International New Resources Development Inc. ("the
Company" or "Shuaiyi International") was formerly known as YzApp International
Inc. and incorporated in the State of Nevada on December 22, 2002. On December
23, 2008, the Company completed a reverse acquisition of New Zealand WAYNE'S New
Resources Development Co., Ltd. ("New Resources"). As a result of the reverse
acquisition of New Resources, the Company is no longer a shell company and
active business operations have been revived.
As of September 30, 2009, details of the subsidiaries of the
Company are as follows:
Domicile and date
Percentage of
Principal
Subsidiaries' names
of incorporation
Paid-up capital
effective ownership
activities
New Zealand WAYNE'S
New Resources Development Co.,
      Ltd
("New Resources")
British Virgin Islands
March 13, 2008
$50,000
100%
Holding company of the other subsidiaries
Heilongjiang Shuaiyi
New Energy Development Co., Ltd
("Heilongjiang Shuaiyi")
People's Republic of China ("PRC")
July 11, 2006
RMB60,000, 000
100%
Principally engaged in investment holding
Daqing Shuaiyi
Biomass Technology Co., Ltd.
("Daqing Shuaiyi")
PRC
August
      8, 2005
RMB10,000, 000
100%
Growing and sales of Chinese Caterpillar Fungus, which is widely used for Chinese medicine
Harbin Shuaiyi Green and
Specialty Food Trading LLP.
("Harbin Shuaiyi")
PRC
May 18, 2001
RMB1,500,00 0
100%
Sales of agricultural products
NOTE 2
SUMMARIES OF SIGNIFICANT
ACCOUNTING POLICIES
Principle of consolidation
These condensed consolidated financial statements include the
financial statements of Shuaiyi International and its subsidiaries. All
significant inter-company balances or transactions have been eliminated on
consolidation.
Basis of preparation
These interim condensed consolidated financial statements are
unaudited. In the opinion of management, all adjustments and disclosures
necessary for a fair presentation of these interim condensed consolidated
financial statements have been included. The results reported in the condensed
consolidated financial statements for any interim periods are not necessarily
indicative of the results that may be reported for the entire year. The
accompanying condensed consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission and do not include all information and footnotes necessary for a
complete presentation of financial statements in conformity with accounting
principles generally accepted in the United States. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2008.
F-
6
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Use of estimates
The preparation of these condensed consolidated financial
statements in conformity with generally accepted accounting principles requires
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the related disclosure of contingent assets and
liabilities at the date of these condensed consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period. The
Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances.
Accordingly, actual results may differ from these estimates under different
assumptions or conditions.
Foreign currency
The Company uses United States dollars ("US Dollar" or "US$" or
"$") for financial reporting purposes. However, the Company maintains the books
and records in its functional currency, Chinese Renminbi ("RMB"), being the
primary currency of the economic environment in which its operations are
conducted. In general, the Company translates its assets and liabilities into
U.S. dollars using the applicable exchange rates prevailing at the balance sheet
date, and the statement of income is translated at average exchange rates during
the reporting period. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the Company's financial statements
are recorded as accumulated other comprehensive income.
The exchange rates used to translate amounts in RMB into U.S.
Dollars for the purposes of preparing the consolidated financial statements were
as follows:-
As of September 30, 2009
As of December 31, 2008
Balance sheet items, except for equity accounts
US$1=RMB6.8290
US$1=RMB6.8346
Three months ended September
      30,
2009
2008
Items in the statements of income and cash flows
US$1=RMB 6.8310
US$1=RMB 6.8390
Nine months ended September
      30,
2009
2008
Items in the statements of income and cash flows
US$1=RMB6.8321
US$1=RMB6.9921
Research and development costs
Research and development costs are expensed to operations as
incurred. Research and development costs were $26,923 and $21,590 for the nine
months ended September 30, 2009 and 2008, respectively. Research and development
costs were $8,783 and $7,896 for the three months ended September 30, 2009 and
2008, respectively.
Advertising costs
The Company expenses all advertising costs as incurred.
Advertising costs charged to selling expenses were $1,098 and $83 for the nine
months ended September 30, 2009 and 2008, respectively. There were no any
advertising costs incurred for the three months ended September 30, 2009 and
2008
Shipping and handling costs
Substantially all costs of shipping and handling of products to
customers are included in selling expenses. Shipping and handling costs for the
nine months ended September 30, 2009 and 2008 were nil and $271, respectively.
There were no any shipping and handling costs incurred for the three months
ended September 30, 2009 and 2008
Earnings per share
All per share data including earnings per share has been
retroactively restated to reflect the reverse acquisition on December 23, 2008
whereby the 689,390 shares of preferred stock issued by the Company (the nominal
acquirer) to the shareholder of New Resources (the nominal acquiree) are deemed
to be the number of shares outstanding for the period prior to the reverse
acquisition. For the period after the reverse acquisition, the number of shares
considered to be outstanding is the actual number of shares outstanding during
that period.
F-
7
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As discussed in note 10, the Company effected a 1-for-114.59
Reverse Split of its common stock and all outstanding shares of Series A
Preferred Stock were automatically converted to common stock. The weighted
average number of shares for the purposes of calculating the earnings per share
has been retroactively adjusted as if the Reverse Split took effect as of the
beginning of the earliest period presented. As holders of Series A Preferred
Stock were entitled to vote with the holders of common stock on all matters on a
an as-converted to common stock basis, basic and diluted earnings per share have
been calculated and presented on the basis that all shares of the Company's
common stock and Series A Preferred Stock are considered a single class and on
an as-converted to common stock basis before the Reverse Split.
Fair value measurements
ASC Topic 820,
Fair Value Measurement and Disclosures
,
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair
value hierarchy which requires classification based on observable and
unobservable inputs when measuring fair value. There are three levels of inputs
that may be used to measure fair value:
Level 1
-
Quoted prices in active markets for identical
      assets or liabilities.
Level 2
-
Observable inputs other than Level 1 prices
      such as quoted prices for similar assets or liabilities; quoted prices in
      markets that are not active; or other inputs that are observable or can be
      corroborated by observable market data for substantially the full term of
      the assets or liabilities.
Level 3
-
Unobservable inputs that are supported by
      little or no market activity and that are significant to the fair value of
      the assets or liabilities.
The carrying values of cash and cash equivalents, trade
receivables and payables, and short-term debts approximate their fair values due
to their short maturities.
There were no assets and liabilities measured at fair value on
a nonrecurring basis as of September 30, 2009.
Recent accounting pronouncement adopted
In June 2009, the FASB established the FASB Accounting
Standards Codification
TM
(ASC) as the single source of authoritative
U.S generally accepted accounting principles (GAAP) recognized by the FASB to be
applied to nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission ("SEC") under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. The ASC
superseded all previously existing non-SEC accounting and reporting standards,
and any prior sources of U.S. GAAP not included in the ASC or grandfathered are
not authoritative. New accounting standards issued subsequent to June 30, 2009
are communicated by the FASB through Accounting Standards Updates (ASUs). The
ASC did not change current U.S. GAAP but changes the approach by referencing
authoritative literature by topic (each a "Topic") rather than by type of
standard. The ASC has been effective for the Company effective July 1, 2009.
Adoption of the ASC did not have a material impact on the Company's Condensed
Consolidated Financial Statements, but references in the Company's Notes to
Consolidated Financial Statements to former FASB positions, statements,
interpretations, opinions, bulletins or other pronouncements are now presented
as references to the corresponding Topic in the ASC.
Effective January 1, 2009, the first day of fiscal 2009, the
Company adopted FASB ASC 350-30 and ASC 275-10-50 (formerly FSP FAS 142-3,
"Determination of the Useful Life of Intangible Assets"), which amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." The Company will
apply ASC 350-30 and ASC 275-10-50 prospectively to intangible assets acquired
subsequent to the adoption date. The adoption of these revised provisions had no
impact on the Company's Condensed Consolidated Financial Statements.
Effective January 1, 2009, the Company adopted FASB ASC
815-10-65 (formerly SFAS 161, "Disclosures about Derivative Instruments and
Hedging Activities"), which amends and expands previously existing guidance on
derivative instruments to require tabular disclosure of the fair value of
derivative instruments
and their gains and losses., This ASC also requires disclosure regarding the credit-risk related contingent features in derivative agreements, counterparty credit risk, and strategies and objectives for using derivative instruments. The adoption of
this ASC did not have a material impact on the Company's Condensed Consolidated Financial Statements.
F-
8
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During 2008, the Company adopted FASB ASC 820-10 (formerly FSP FAS 157-2, "Effective Date of FASB Statement 157"), which deferred the provisions of previously issued fair value guidance for nonfinancial assets and liabilities to the first fiscal
period beginning after November 15, 2008. Deferred nonfinancial assets and liabilities include items such as goodwill and other nonamortizable intangibles. Effective January 1, 2009, the Company adopted the fair value guidance for nonfinancial
assets and liabilities. The adoption of FASB ASC 820-10 did not have a material impact on the Company's Condensed Consolidated Financial Statements.
Effective January 1, 2009, the Company adopted FASB ASC 810-10-65 (formerly SFAS 160, "Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51"), which amends previously issued guidance to establish accounting
and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership
interest in the consolidated entity that should be reported as equity. Among other requirements, this Statement requires that the consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented
on the face of the consolidated income statement. The adoption of the provisions in this ASC did not have a material impact on the Company's Condensed Consolidated Financial Statements.
Effective January 1, 2009, the Company adopted FASB ASC 805-10, (formerly SFAS 141R, "Business Combinations"), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any noncontrolling interest in an acquiree and the goodwill acquired. In addition, the provisions in this ASC require that any additional reversal of deferred tax asset valuation allowance established in
connection with fresh start reporting on January 7, 1998 be recorded as a component of income tax expense rather than as a reduction to the goodwill established in connection with the fresh start reporting. The Company will apply ASC 805-10 to any
business combinations subsequent to adoption.
Effective January 1, 2009, the Company adopted FASB ASC 805-20 (formerly FSP FAS 141R-1, "Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies"), which amends ASC 805-10 to require that an
acquirer recognize at fair value, at the acquisition date, an asset acquired or a liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the
measurement period. If the acquisition-date fair value of such an asset acquired or liability assumed cannot be determined, the acquirer should apply the provisions of ASC Topic 450,
Contingences
, to determine whether the contingency should
be recognized at the acquisition date or after such date. The adoption of ASC 805-20 did not have a material impact on the Company's Condensed Consolidated Financial Statements.
Effective July 1, 2009, the Company adopted FASB ASC 825-10-65 (formerly FASB Staff Position ("FSP") No. FAS 107-1 and Accounting Principles Board 28-1, "Interim Disclosures about Fair Value of Financial Instruments"), which amends
previous guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The adoption of FASB ASC 825-10-65 did not have a material
impact on the Company's Condensed Consolidated Financial Statements.
Effective July 1, 2009, the Company adopted FASB ASC 320-10-65 (formerly FSP FAS 115-2 and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments"). Under ASC 320-10-65, an other-than-temporary impairment must be recognized if
the Company has the intent to sell the debt security or the Company is more likely than not will be required to sell the debt security before its anticipated recovery. In addition, ASC 320-10-65 requires impairments related to credit loss, which is
the difference between the present value of the cash flows expected to be collected and the amortized cost basis for each security, to be recognized in earnings while impairments related to all other factors to be recognized in other
comprehensive income. The adoption of ASC 320-10-65 did not have a material impact on the Company's Condensed Consolidated Financial Statements.
F-
9
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Effective July 1, 2009, the Company adopted FASB ASC 820-10-65 (formerly FSP FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly"), which provides guidance on how to determine the fair value of assets and liabilities when the volume and level of activity for the asset or liability has significantly decreased when compared with normal market activity for the asset or
liability as well as guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of ASC 820-10-65 did not have a material impact on the Company's Condensed Consolidated Financial Statements.
Effective July 1, 2009, the Company adopted FASB ASC 855-10 (formerly SFAS 165, "Subsequent Events"), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before
financial statements are issued or are available to be issued. Adoption of ASC 855-10 did not have a material impact on the Company's Condensed Consolidated Financial Statements.
New accounting pronouncement to be adopted
In December 2008, the FASB issued ASC 715,
Compensation – Retirement Benefits
(formerly FASB FSP FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets"), which expands the disclosure requirements
about plan assets for defined benefit pension plans and postretirement plans. The Company is required to adopt these disclosure requirements in the fourth quarter of 2009. It is expected the adoption of these disclosure requirements will have no
material effect on the Company's Consolidated Financial Statements.
In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140," (not yet reflected in FASB ASC). SFAS No. 166 limits the circumstances in which a financial asset
should be derecognized when the transferor has not transferred the entire financial asset by taking into consideration the transferor's continuing involvement. The standard requires that a transferor recognize and initially measure at fair
value all assets obtained (including a transferor's beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. The concept of a qualifying special-purpose entity is removed from SFAS No.
140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," along with the exception from applying FIN 46(R), "Consolidation of Variable Interest Entities." The standard is effective for
the first annual reporting period that begins after November 15, 2009 (i.e. the Company's fiscal year beginning January 1, 2010), for interim periods within the first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. It is expected the adoption of this Statement will have no material effect on the Company's Consolidated Financial Statements.
In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)," (not yet reflected in FASB ASC). The standard amends FIN No. 46(R) to require a company to analyze whether its interest in a variable interest
entity ("VIE") gives it a controlling financial interest. A company must assess whether it has an implicit financial responsibility to ensure that the VIE operates as designed when determining whether it has the power to direct the
activities of the VIE that significantly impact its economic performance. Ongoing reassessments of whether a company is the primary beneficiary are also required by the standard. SFAS No. 167 amends the criteria to qualify as a primary beneficiary
as well as how to determine the existence of a VIE. The standard also eliminates certain exceptions that were available under FIN No. 46(R). This Statement will be effective as of the beginning of each reporting entity's first annual reporting
period that begins after November 15, 2009 (i.e. the Company's fiscal year beginning January 1, 2010), for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application
is prohibited. Comparative disclosures will be required for periods after the effective date. As such, the Company will adopt this Statement for interim and annual periods ending after January 1, 2010. It is expected the adoption of this Statement
will have no material effect on the Company's Consolidated Financial Statements.
In August, 2009, the FASB issued ASC Update No. 2009-05 ("Update 2009-05") to provide guidance on measuring the fair value of liabilities under FASB ASC 820 (formerly SFAS 157, "Fair Value Measurements"). The Company is required to adopt Update 2009-05
in the fourth quarter of 2009. It is expected the adoption of this Update will
have no material effect on the Company's Consolidated Financial Statements.
F-
10
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In October 2009, the FASB concurrently issued the following ASC
Updates:
ASU No. 2009-14 -
Software (Topic 985): Certain Revenue
Arrangements That Include Software Elements
(formerly EITF Issue No. 09-3)
.
This standard removes tangible products from the scope of software
revenue recognition guidance and also provides guidance on determining whether
software deliverables in an arrangement that includes a tangible product, such
as embedded software, are within the scope of the software revenue guidance.
ASU No. 2009-13 -
Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangements
(formerly EITF Issue No. 08-1).
This standard modifies the revenue recognition guidance for arrangements that
involve the delivery of multiple elements, such as product, software, services
or support, to a customer at different times as part of a single revenue
generating transaction. This standard provides principles and application
guidance to determine whether multiple deliverables exist, how the individual
deliverables should be separated and how to allocate the revenue in the
arrangement among those separate deliverables. The standard also expands the
disclosure requirements for multiple deliverable revenue arrangements.
These Accounting Standards Updates should be applied on a
prospective basis for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010, with earlier application
permitted. Alternatively, an entity can elect to adopt these standards on a
retrospective basis, but both these standards must be adopted in the same period
using the same transition method. The Company expects to apply this standard on
a prospective basis for revenue arrangements entered into or materially modified
beginning January 1, 2011. The Company is currently evaluating the potential
impact these standards may have on its financial position and results of
operations.
Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company's
Condensed Consolidated Financial Statements upon adoption.
NOTE 3
ACCOUNTS RECEIVABLE,
NET
Accounts receivable consisted of the following:
September 30,
December 31,
2009
2008
Unaudited
Audited
Accounts receivable
$
362,880
$
283,822
Less: Allowance for doubtful debts
-
-
Accounts receivable, net
$
362,880
$
283,822
NOTE 4
INVENTORIES
Inventories by major categories are summarized as follows:
September 30,
December 31,
2009
2008
Unaudited
Audited
Raw materials
$
232,086
$
147,824
Work in progress
224,550
832,680
Finished goods
174,674
187,575
$
631,310
$
1,168,079
F-
11
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5
INTANGIBLE ASSETS, NET
Intangible assets, net consisted of the following:
September 30,
December 31,
2009
2008
Unaudited
Audited
Computer software, cost
$
1,454
$
1,453
Exclusive right to use a secret process, cost
4,394,794
4,391,193
Less: Accumulated amortization
(1,539,287
)
(1,208,651
)
$
2,856,961
$
3,183,995
In April 2006, the Company purchased from a third party a
ten-year exclusive right to use a secret process and method in the cultivation
and growing of Chinese Caterpillar Fungus, which is widely used for Chinese
medicine, for a cash consideration of RMB30,000,000, payable over five years.
The exclusive right is amortized over its term of ten years using the
straight-line method.
Amortization expenses for the nine months ended September 30,
2009 and 2008 were $329,495 and $322,388, respectively. Amortization expenses
for the three months ended September 30, 2009 and 2008 were $109,849 and
$109,879, respectively.
NOTE 6
PROPERTY, PLANT AND EQUIPMENT,
NET
Property, plant and equipment, net consisted of the
      following:
September 30,
December 31,
2009
2008
Unaudited
Audited
Cost:
Buildings
$
11,657,092
$
11,647,541
Office equipment
9,325
9,317
Machinery
98,984
98,903
Motor vehicles
54,835
54,790
Total cost
11,820,236
11,810,551
Less: Accumulated depreciation
(1,335,414
)
(907,575
)
Net book value
$
10,484,822
$
10,902,976
Depreciation expenses for the nine months ended September 30,
2009 and 2008 were $426,901 and $517,949, respectively. Depreciation expenses
for the three months ended September 30, 2009 and 2008 were $141,664 and
$173,914, respectively.
NOTE 7
OTHER PAYABLES AND
ACCRUALS
Other payables and accruals consisted of the following:
September 30,
December 31,
2009
2008
Unaudited
Audited
Accrued staff costs
$
337,407
$
235,421
Other taxes payable
142,030
232,481
Other payables
5,414
5,057
$
484,851
$
472,959
F-
12
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8
PAYABLE FOR INTANGIBLES
As described in Note 5, the Company purchased an exclusive
right from an independent party for a secret process and method for a stated
value of RMB 30,000,000 payable over 5 years from the date of purchase. The
agreement provides that all payments by the Company for the secret process and
method will be refundable if the secret process and method proves ineffective.
Under APB 21, "Interest on Receivables and Payables", the payable for
intangibles are stated without imputed interest as the noninterest factor fairly
represents the warranty for performance.
The following table presents the amounts payable for the
      next five years and thereafter:
12-month period ending September 30, 2011
$
878,606
2012 and thereafter
-
Total
878,606
Less: Current portion
(878,606
)
Non-current portion
$
-
NOTE 9
ACQUISITION PAYABLE
The acquisition payable represents the transfer price of RMB
60,000,000 payable by New Resources for the acquisition of 100% equity interest
in Heilongjiang Shuaiyi. As discussed in Note 15, the acquisition payable is due
for payment in full on or before December 1, 2009 by New Resources to Shuaiyi
Founders who are also shareholders of the Company. During the period, the
Company paid $50,269 to the Shuaiyi Founders.
NOTE 10
SHAREHOLDERS' EQUITY
Reverse Split of Common Stock
On May 19, 2009, the Company effected a one for 114.59 reverse
split of its outstanding common stock ("Reverse Split").
Series A Voting Convertible Preferred Stock
In accordance with the Company's Articles of Incorporation, the
Company's Board of Directors unanimously approved the filing of a Certificate of
Designation designating and authorizing the issuance of up to 800,000 shares of
Series A Voting Preferred Stock. The Certificate of Designation was filed on
December 22, 2008. The holders of the Company's Series A Preferred Stock were
entitled to vote on all matters together with all other classes of stock on an
as-converted to common stock basis. Holders of Series A Preferred Stock had
protective class voting veto rights on matters, such as business combination
transactions, payment of dividends, the issuance of other classes of stock with
senior rights, changes to oucharter documents and stock redemptions. Shares of
Series A Preferred Stock had a senior liquidation payment preference in the
event of a liquidation or sale of the Company.
Following effectiveness of the Reverse Split and in accordance
with the Certificate of Designation of the Series A Voting Convertible Preferred
Stock, all issued and outstanding shares of the Series A Preferred Stock were
automatically converted into 12,695,223 shares of common stock, on the basis of
17.45 shares of common stock for each one share of Series A Preferred Stock, on
or about May 29, 2009.
As of September 30, 2009 and December 31, 2008, the Company had
none and 727,520 shares of Series A Preferred Stock issued and outstanding,
respectively.
NOTE 11
EQUITY INCENTIVE PLAN
On June 3, 2009, the Company established the "Shuaiyi
International New Resources Development Inc. 2009 Equity Incentive Plan"(the
"Plan"). The purposes of the Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to employees, directors and consultants, and to promote the long-term
growth and profitability of the Company. The Plan permits the granting of Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units and Performance Shares as the Company's board of director may
determine. The maximum number of shares that may be issued under the Plan was
1,000,000.
F-
13
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On June 17, 2009, 500,000 restricted shares were issued under
the Plan and accordingly, remaining shares that can be issued under the Plan was
500,000 shares as of September 30, 2009.
NOTE 12
INCOME TAXES
The PRC subsidiaries within the Group are subject to PRC income
taxes on an entity basis on income arising in or derived from the tax
jurisdiction in which they operate, i.e. the PRC. The statutory PRC Enterprise
Income Tax ("EIT") rate for the Companies' PRC subsidiaries was generally 33%
for periods before January 1, 2008. However, one of the Companies' subsidiaries,
Daqing Shuaiyi, being engaged in growing and sales of agricultural products is
entitled to a preferential EIT treatment whereby Daqing Shuaiyi was granted an
EIT holiday for the two years ended December 31, 2007 and 2006 and a 50%
reduction on the EIT rate for the year ended December 31, 2008 and the two years
ending December 31, 2009 and 2010.
The Company's income tax expense consisted of:
For the Three Months
For the Nine Months
Ended September 30,
Ended September 30,
2009
2008
2009
2008
Unaudited
Unaudited
Unaudited
Unaudited
Current – PRC EIT
$
340,056
$
361,336
$
891,220 $
774,996
Deferred
-
-
-
-
$
340,056
$
361,336
$
891,220 $
774,996
On March 16, 2007, the PRC government promulgated a new tax
law, China's Unified Enterprise Income Tax Law ("New EIT Law"), which took
effect from January 1, 2008. Under the New EIT Law, foreign-owned enterprises as
well as domestic companies are subject to a uniform tax rate of 25%. The New EIT
Law provides for a five-year transition period from its effective date for those
enterprises which were established before the promulgation date of the New EIT
Law and which were entitled to a preferential EIT treatment. Accordingly, Daqing
Shuaiyi has continued to be entitled to the 50% reduction on its EIT rate for
the year ended December 31, 2008 and the two years ending December 31, 2009 and
2010.
NOTE 13
RELATED PARTY
TRANSACTIONS
(a)
Due to related
parties
Due to related parties consisted of the
      following:
September 30,
December 31,
2009
2008
Unaudited
Audited
Due to related company:
- Heilonjiang Shuaiyi Technology Development
      Co., Ltd. ("Shuaiyi Technology")
(i)
$
15,760
$
8,998
- Ms. Lianyun Han
(ii)
61,649
-
$
77,409
$
8,998
(i)
Shuaiyi Technology and the Company are under common
      control and management.
(ii)
Ms. Lianyun Han is the CEO and Chairman of the
      Company.
Due to Shuaiyi Technology relates to the land rental payable to
Shuaiyi Technology.
F-
14
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The amounts due to related parties were non-interest bearing,
unsecured and had no fixed repayment date.
(b)
Purchase of
goods
For the nine months ended September 30, 2009 and 2008, the
Company purchased rice amounting to $655,099 and $1,156,868, respectively, from
Shuaiyi Technology.
(c)
Lease of land
For the nine months ended September 30, 2009 and 2008, the
Company paid rental expense of $6,751 and $ 6,597, respectively, for land under
an operating lease to Shuaiyi Technology.
NOTE 14
CONCENTRATION OF RISK
(a)
Concentration of
credit risk
As of September 30, 2009 and December 31, 2008, 100% of the
Company's cash included cash on hand and deposits in accounts maintained within
the PRC where there is currently no rule or regulation in place for obligatory
insurance to cover bank deposits in the event of bank failure. However, the
Company has not experienced any losses in such accounts and believes it is not
exposed to any risks on its cash in bank accounts
For the nine months ended September 30, 2009 and 2008, all of
the Company's sales arose in the PRC. In addition, all accounts receivable as of
September 30, 2009 and December 31, 2008 also arose in the PRC.
There was one customer accounted for 10.20% of the Company's
revenue for the nine months ended September 30, 2009. There was no single
customer who accounted for more than 10% of the Company's revenue for the nine
months ended September 30, 2008.
As of September 30, 2009, five customers on an individual basis
accounted for 20%, 14%, 13%, 13% and 10% of accounts receivable of the Company.
As of December 31, 2008, three customers on an individual basis accounted for
32%, 23% and 15% of accounts receivable of the Company. Except as aforesaid,
there was no other single customer who accounted for more than 10% of the
Company's accounts receivable as of September 30, 2009 or December 31, 2008.
(b)
Concentration
of operating risk
Substantially all of the Company's operations are conducted in
China. The Company's operations are subject to various political, economic, and
other risks and uncertainties inherent in China. Among other risks, the
Company's operations are subject to the risks of restrictions on transfer of
funds; export duties, quotas, and embargoes; domestic and international customs
and tariffs; changing taxation policies; foreign exchange restrictions; and
political conditions and governmental regulations.
NOTE 15
COMMITMENTS AND CONTINGENCIES
(a)
Operating leases
The Company has entered into tenancy agreements for the lease
of exhibition hall and land with a third party and a related company (see Note
13(a)), respectively, for the purposes of the operation of its subsidiaries. The
Company's commitments for minimum lease payments under this operating lease for
the next five years and thereafter as of September 30, 2009 are as follows:
F-
15
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Remainder of 2009
$
7,962
2010
31,849
2011
9,006
2012
9,006
2013
9,006
Thereafter
126,080
Total
$
192,909
(b)
PRC employee costs
According to the prevailing laws and regulations of the PRC,
the Company's subsidiaries in the PRC are required to cover its employees with
medical, retirement and unemployment insurance programs. Management believes
that due to the transient nature of its employees, they do not need to provide
all employees with such social insurances, and have not paid the social
insurances for all employees.
In the event that any current or former employee files a
complaint with the PRC government, the Company's subsidiaries may be subject to
making up the social insurances as well as administrative fines. As the Company
believes that these fines would not be material, no provision has been made in
this regard.
(c)
Transfer price for equity interest in Heilongjiang Shuaiyi
On July 28, 2008, the Company's subsidiary, New Resources
entered into an equity transfer agreement with the Shuaiyi Founders to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB 60,000,000
(approximately $8.8 million). A new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008. According to PRC merger and acquisition rules, the
equity interest transfer price should be paid in full within three months
commencing from the issuance of the new business license to Heilongjiang
Shuaiyi. If the transfer price is not paid by this date, the Company may apply
to the relevant PRC business bureau for an extension of up to one year from the
date of the issuance of the license; provided, however, that 60% of the transfer
price will be required to be paid within six months from such date. However, if
the Company is unable to make the payment for the transfer price by the March 1,
2009 or extended deadline and the relevant PRC business bureau does not grant
the Company additional time to make the payment, the Company may be subject to
fines or penalties imposed by the PRC business bureau. In addition, the Company
may not be permitted to exercise any decision-making rights as a shareholder in
Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi's financial results
into the Company's financial statements.
On March 10, 2009, New Resources obtained the approval from the
relevant PRC business bureau for the extension of time allowed for the payment
of the transfer price to one year until December 1, 2009. The Company has
engaged financial advisors with a view to raising additional capital for the
Company. The Company believes that it will be able to make the payment for the
transfer price within the time allowed by the relevant PRC business bureau and
therefore has not accrued any amount related to this contingency. However, there
can be no assurance that the Company will be successful in raising sufficient
capital for the purpose of the payment of the transfer price to the Shuaiyi
Founders.
F-
16
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 16
SEGMENT INFORMATION
The Company operates in two business segments identified by
product, "Chinese Caterpillar Fungus" and "other agricultural products". The
Chinese Caterpillar Fungus segment consists of the growing and sales of Chinese
Caterpillar Fungus, which business is conducted through the Company's
subsidiary, Daqing Shuaiyi. The other agricultural products segment consists of
the sales of rice, flour and silage corn etc, agricultural products which
business is mainly conducted through the Company's subsidiary, Harbin
Shuaiyi.
Throughout the nine months ended September 30, 2009 and 2008,
all of the Company's operations were carried out in one geographical segment -
China.
Chinese
Other
Caterpillar
Agricultural
Corporate
Nine months ended September 30,
2009
Fungus
Products
unallocated
Consolidated
Segment revenue from external customers
$
8,696,141
$
2,853,103
$
-
$
11,549,244
Segment profit (loss)
$
6,287,874
$
578,505
$
(231,992
)
$
6,634,387
Income from operations before income taxes
$
6,634,387
Segment assets
$
25,239,717
$
1,182,395
$
3,359,748
$
29,781,860
Total assets
$
29,781,860
Other segment information:
Depreciation and
      amortization
$
748,444
$
5,889
$
2,063
$
756,396
Expenditure for segment
      assets
$
878,207
$
-
$
-
$
878,207
Chinese
Other
Caterpillar
Agricultural
Corporate
Nine months ended September 30,
2008
Fungus
Products
unallocated
Consolidated
Segment revenue from external customers
$
6,985,060
$
3,182,225
$
-
$
10,167,285
Segment profit (loss)
$
5,145,129
$
658,780
$
(157,814
)
$
5,646,095
Income from operations before income taxes
$
5,646,095
Segment assets
$
21,467,946
$
881,929
$
1,438,153
$
23,788,028
Total assets
$
23,788,028
Other segment information:
Depreciation and
      amortization
$
832,258
$
5,708
$
2,371
$
840,337
Expenditure for segment
      assets
$
884,338
$
4,598
$
2,130
$
891,066
F-
17
SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Chinese
Other
Caterpillar
Agricultural
Corporate
Three months ended September 30,
2009
Fungus
Products
unallocated
Consolidated
Segment revenue from external customers
$
3,257,025
$
308,936
$
-
$
3,565,961
Segment profit (loss)
$
2,415,268
$
19,468
$
(65,626
)
$
2,369,110
Income from operations before income taxes
$
2,369,110
Segment assets
$
25,239,716
$
1,182,396
$
3,359,748
$
29,781,860
Total assets
$
29,781,860
Other segment information:
Depreciation and
      amortization
$
248,862
$
1,962
$
688
$
251,512
Expenditure for segment
      assets
$
878,349
$
-
$
-
$
878,349
Chinese
Other
Caterpillar
Agricultural
Corporate
Three months ended September 30,
2008
Fungus
Products
unallocated
Consolidated
Segment revenue from external customers
$
3,591,681
$
821,401
$
-
$
4,413,082
Segment profit (loss)
2,708,344
$
73,652
$
(54,176
)
$
2,727,820
Income from operations before income taxes
$
2,727,820
Segment assets
$
21,467,946
$
881,929
$
1,438,153
$
23,788,028
Total assets
$
23,788,028
Other segment information:
Depreciation and
      amortization
$
278,338
$
4,597
$
860
$
283,795
Expenditure for segment
      assets
$
877,321
$
1,294
$
557
$
879,172
NOTE 17
SUBSEQUENT
EVENTS
The Company has evaluated events subsequent to the balance
sheet date through November 12, 2009, which represents the issue date of this
Form 10-Q. There were no events or transactions occurring during this subsequent
event report period which requires recognition or disclosure in the financial
statements.
F-
18
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board
of Directors and Stockholders of
YzApp International, Inc. and subsidiaries
We have
audited the accompanying balance sheet of YzApp International Inc. and
subsidiaries as of December 31, 2008 and the related statements of income and
comprehensive income, stockholders' equity, and cash flows for the year then
ended. YzApp International Inc.'s management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted
our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about 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, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of YzApp International Inc. and
subsidiaries as of December 31, 2008 and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
As discussed
in Notes 1 and 18 (c), the consolidated financial statements were prepared on
the assumption that New Zealand WAYNE'S New Resources Development Co., Ltd.
will be able to pay up the investment money related to Heilongjiang Shuaiyi New
Energy Development Co., Ltd. on or before December 1, 2009. In case New
Zealand WAYNE'S New Resources Development Co., Ltd. fails to pay the amount in
full on time, the basis of consolidation may not be appropriate.
/s/ AGCA,
  Inc.
Arcadia,
  California
March 24, 2009
F-19
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Heilongjiang Shuaiyi New Energy Development Co., Ltd. and Subsidiaries:
We have audited the accompanying consolidated balance sheet
of Heilongjiang Shuaiyi New Energy Development Co., (a wholly-owned subsidiary
of YzApp International Inc.) and its subsidiaries (the "Company") as of
December 31, 2007 and the related consolidated statements of income and
comprehensive income, cash flows and stockholders' equity for the year ended
December 31, 2007. 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 audits.
We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated 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 consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Heilongjiang Shuaiyi New Energy Development Co. Ltd. and its
subsidiaries as of December 31, 2007, and the consolidated result of their
operations and their cash flows for the year ended December 31, 2007 in
conformity with U.S. generally accepted accounting principles.
/s/ GC ALLIANCE LIMITED
Certified Public Accountants
Hong Kong, May 15, 2008
F- 20
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US DOLLAR)
December 31,
2008
2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
9,198,243
$
2,148,348
Accounts receivable, net
283,822
138,085
Inventories
1,168,079
649,372
Deposits, prepayments and other
receivables
14,105
147,850
Total current assets
10,664,249
3,083,655
OTHER ASSETS
Intangible assets, net
3,183,995
3,388,956
Property, plant and equipment, net
10,902,976
10,720,477
Total assets
$
24,751,220
$
17,193,088
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable
$
3,206
$
29,777
Other payables and accruals
472,959
476,629
Payable for intangibles – Current
portion
877,886
821,400
Income tax payable
119,486
75,420
Due to related parties
8,998
53
Acquisition payable
8,778,861
6,396,187
Total current liabilities
10,261,396
7,799,466
NON-CURRENT LIABILITIES
Payable for intangibles, net of current
  portion
877,886
1,642,800
Total liabilities
11,139,282
9,442,266
COMMITMENTS AND CONTINGENCIES (Note 18)
SHAREHOLDERS' EQUITY
Preferred Stock, $0.001 par value,
  1,000,000 shares authorized, 727,520 and 689,390 shares issued and outstanding
727
689
Common stock, $0.001 par value, 50,000,000
  shares authorized, 11,746,041 shares and none issued and outstanding
11,746
—
Additional paid-in capital
2,192,716
86,174
Statutory reserves
1,326,239
693,028
Retained earnings
9,131,744
6,045,906
Accumulated other comprehensive income
948,766
925,025
Total shareholders' equity
13,611,938
7,750,822
Total liabilities and shareholders'
equity
$
24,751,220
$
17,193,088
See accompanying notes to consolidated
financial statements
F-21
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(AMOUNTS EXPRESSED IN US DOLLAR)
Year Ended December 31,
2008
2007
NET REVENUE
$
12,989,760
$
9,194,589
Cost of sales
(4,604,948
)
(3,511,570
)
GROSS PROFIT
8,384,812
5,683,019
Selling expenses
(196,313
)
(71,750
)
General and administrative expenses
(1,416,111
)
(435,651
)
Loss on disposal of fixed assets
(31,247
)
—
Income from operations
6,741,141
5,175,618
Other income (expenses):
Interest income
29,741
53,496
Interest expense
—
(22,938
)
Exchange loss
(20,376
)
—
Merger costs
(2,068,326
)
—
Other
11,522
51,595
Total other income (expenses), net
(2,047,439
)
82,153
Income before income taxes
4,693,702
5,257,771
Provision for income taxes
(974,653
)
(85,243
)
NET INCOME
3,719,049
5,172,528
OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustments
23,741
756,782
TOTAL COMPREHENSIVE INCOME
$
3,742,790
$
5,929,310
Earnings per share
Basic
$
0.003
$
0.004
Diluted
$
0.003
$
0.004
Weighted average number of shares
  outstanding
Basic
1,397,873,464
1,378,780,000
Diluted
1,397,873,464
1,378,780,000
See accompanying notes to consolidated
financial statements
F-22
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS EXPRESSED IN US DOLLAR)
Preferred Stock
Common Stock
Additional
paid-in
capital
Accumulated
other
comprehensive
income
Number
of shares
Amount
Number
of shares
Amount
Statutory
reserves
Retained
earnings
Totals
Balance at January 1, 2007
689,390
$
689
—
$
—
$
62,444
$
154,355
$
1,390,631
$
168,243
1,776,362
Premium on capital
—
—
—
23,730
21,420
—
—
45,150
Net income
—
—
—
—
—
—
5,172,528
—
5,172,528
Foreign currency translation adjustment
—
—
—
—
—
—
—
756,782
756,782
Comprehensive income
5,929,310
Appropriation of statutory reserves
—
—
—
—
—
517,253
(517,253
)
—
—
Balance at December 31, 2007
689,390
689
—
—
86,174
693,028
6,045,906
925,025
7,750,822
Effect of reverse acquisition
—
—
11,746,041
11,746
(14,195
)
—
—
—
(2,449
)
Issue of shares
38,130
38
—
—
427,411
—
—
—
427,449
Share-based payment by shareholders
—
—
—
—
1,693,326
—
—
—
1,693,326
Net income
—
—
—
—
—
—
3,719,049
—
3,719,049
Foreign currency translation adjustment
—
—
—
—
—
—
—
23,741
23,741
Comprehensive income
3,742,790
Appropriation of statutory reserves
—
—
—
—
—
633,211
(633,211
)
—
—
Balance at December 31, 2008
727,520
$
727
11,746,041
$
11,746
$
2,192,716
$
1,326,239
$
9,131,744
$
948,766
13,611,938
See accompanying notes to consolidated
financial statements.
F-23
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN US DOLLAR)
Years Ended December 31,
2008
2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
3,719,049
$
5,172,528
Adjustments to reconcile net income to cash
  provided by operating activities:
Depreciation and amortization
1,123,447
548,289
Loss from disposition of property, plant
  and equipment
31,247
—
Merger costs
2,068,326
—
(Increase) decrease in assets:
Accounts receivable
(134,017
)
103,286
Deposits, prepayments and other
receivables
141,563
(83,517
)
Inventories
(466,314
)
(110,413
)
Increase (decrease) in liabilities:
Accounts payable
(28,151
)
(45,290
)
Other payables and accruals
(35,852
)
392,052
Income tax payable
38,245
29,404
Trade payable due to related parties
8,795
(1,502,898
)
Net cash provided by operating activities
6,466,338
4,503,441
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of merger costs related to reverse
  acquisition
(375,000
)
—
Purchase of property, plant and equipment
(32,501
)
(9,327,194
)
Proceeds from sale of property, plant and
  equipment
1,151,411
—
Net cash provided by (used in) investing
  activities
743,910
(9,327,194
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of preferred stock
427,449
—
Repayment of payables for intangibles
(865,292
)
(822,759
)
Repayments of short-term bank loans
—
(192,093
)
Net cash provided by (used in) financing
  activities
(437,843
)
(1,014,852
)
Foreign currency translation adjustment
277,490
669,048
INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS
7,049,895
(5,169,557
)
CASH AND CASH EQUIVALENTS, at the beginning
  of the year
2,148,348
7,317,905
CASH AND CASH EQUIVALENTS, at the end of
  the year
$
9,198,243
$
2,148,348
NON-CASH TRANSACTIONS
Share-based payment awarded by shareholders
  to consultants for services related to the reverse acquisition
$
1,693,326
$
—
SUPPLEMENTAL DISCLOSURE INFORMATION
Interest paid
$
—
$
22,938
Income taxes paid
$
892,547
$
72,220
See accompanying notes to consolidated
financial statements
F-24
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 1
DESCRIPTION OF BUSINESS AND ORGANIZATION
YzApp
International, Inc. ("the Company" or "YzApp") was incorporated in the State of
Nevada on December 22, 2002. On December 23, 2008, the Company completed a
reverse acquisition of New Zealand WAYNE'S New Resources Development Co., Ltd.
("New Resources"). As a result of the reverse acquisition of New Resources, the
Company is no longer a shell company and active business operations have been
revived.
As of December
31, 2008, details of the subsidiaries of the Company are as follows:
Subsidiaries' names
Domicile and
date of
incorporation
Paid-up capital
Percentage
of effective
ownership
Principal activities
New Zealand WAYNE'S
British Virgin
$50,000
100%
Holding company of
New Resources
Islands
the other subsidiaries
Development Co., Ltd
March 13, 2008
("New Resources")
Heilongjiang Shuaiyi New
People's
RMB60,000,000
100%
Principally engaged in
Energy Development Co.,
Republic of
investment holding
Ltd ("Heilongjiang
China ("PRC")
Shuaiyi")
July 11, 2006
Daqing Shuaiyi Biomass
PRC
RMB10,000,000
100%
Growing and sales of
Technology Co., Ltd.
August 8, 2005
Chinese Caterpillar
("Daqing Shuaiyi")
Fungus, which is
widely used for
Chinese medicine
Harbin Shuaiyi Green and
PRC
RMB1,500,000
100%
Sales of agricultural
Specialty Food Trading
May 18, 2001
products
LLP. ("Harbin Shuaiyi")
Reverse Acquisition
On December
23, 2008, the Company entered into a share exchange agreement ("
Share
Exchange Agreement
") under which the Company issued 689,390 shares of the
Company's series A preferred stock, par value $0.001, to the sole shareholder
of New Zealand WAYNE'S New Resources Development Co., Ltd ("
New Resources
")
in exchange for all the issued and outstanding shares of New Resources (the "
Share
Exchange
"). Immediately following the Share Exchange, the shareholder of
New Resources owned approximately 94% of the Company's total issued and
outstanding share capital on an as-if converted and fully-diluted basis.
As a result,
the Share Exchange has been accounted for as a reverse acquisition using the
purchase method of accounting, whereby New Resources is deemed to be the
accounting acquirer and the YZAPP to be the accounting acquiree. The financial
statements before the date of Share Exchange are those of New Resources with
the results of YZAPP being consolidated from the date of Share Exchange. The
equity section and the earnings per share have been retroactively restated to
reflect the reverse acquisition and no
goodwill has been recorded.
New Resources
was incorporated in the British Virgin Islands, which owns 100% of the
outstanding capital stock of Heilongjiang Shuaiyi. Heilongjiang Shuaiyi owns
100% equity interests in Daqing Shuaiyi and Harbin Shuaiyi.
F-25
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 1
DESCRIPTION OF BUSINESS AND ORGANIZATION (CONTINUED)
Recapitalization of Daqing Shuaiyi and Harbin
Shuaiyi
In September
2007, Heilongjiang Shuaiyi, Daqing Shuaiyi and Harbin Shuaiyi underwent a
restructuring exercise whereby Heilongjiang Shuaiyi acquired 100% equity
interests in Daqing Shuaiyi and Harbin Shuaiyi, and former ultimate controlling
shareholders of Daqing Shuaiyi and Harbin Shuaiyi have become the controlling
shareholders of Heilongjiang Shuaiyi.
Before and
after the restructuring, all of the three entities, Heilongjiang Shuaiyi,
Daqing Shuaiyi and Harbin Shuaiyi are under the common control.
This restructuring
exercise has been accounted for as combinations of entities under common
control using the "as if" pooling method of accounting, with no adjustment to
the historical basis of the assets and liabilities of Daqing Shuaiyi and Harbin
Shuaiyi and the operations were consolidated as though the restructuring
occurred as of the beginning of the first accounting period presented in these
financial statements.
The
shareholding percentages before and after this restructuring exercise were as
follows:
Heilongjiang Shuaiyi
Daqing Shuaiyi
Harbin Shuaiyi
Before
After
Before
After
Before
After
Shareholder
%
%
%
%
%
%
Heilongjiang Shuaiyi
—
—
—
100
—
100
Daqing
47.1
—
—
—
—
Lianyun Han, CEO of the Company
—
80.4
—
—
20
—
Weihan Zhang*
—
5.9
20
—
51
—
Heilongjiang Shuaiyi Science
Development Co. Ltd.**
52.9
—
60
—
—
—
Lianju Han
—
5.9
10
—
—
—
Xinjun Li
—
—
5
—
29
—
Nana Jiang
—
—
5
—
—
—
Lianxue Han
—
5.9
—
—
—
—
Fengxi Lang
—
1.9
—
—
—
—
100
100
100
100
100
100
*
Mr. Weihan Zhang is the
  son of Ms. Lianyun Han. Mr. Weihan Zhang and Ms. Lianyun Han are acting in
  concert and considered parties to the same control group.
**
Equity interests in
  Heilongjiang Shuaiyi Science Development Co. Ltd. are held as follows:
(i)44.47% by Ms. Lianyun
  Han;
(ii)40.86% by Mr. Weihan
  Zhang; and
(iii)14.67% by 9 other
  minority shareholders.
Before the
restructuring exercise, Ms. Lianyun Han together with her son, Mr. Weihan Zhang
had an effective interest of 78.7% in Heilongjiang Shuaiyi, 71.2% in Daqing
Shuaiyi, and 71% in Harbin Shuaiyi, respectively. Immediately after the
restructuring exercise, Ms. Lianyun Han together with her son, Mr. Weihan
Zhang, had an aggregate interest of 86.3% in Heilongjiang Shuaiyi, which holds
a 100% interest in each of Daqing Shuaiyi and Harbin Shuaiyi. In addition, Ms.
Lianyun Han has been the managing director of all the entities before and
after, and throughout, this restructuring exercise. As a result, there was no
change in control of the entities due to this restructuring exercise.
F-26
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 1
DESCRIPTION OF BUSINESS AND ORGANIZATION (CONTINUED)
Recapitalization of Daqing Shuaiyi and Harbin
Shuaiyi (continued)
The
considerations for the equity transfers in this restructuring exercise were
based on the face value of the paid-up capital of Daqing Shuaiyi and Harbin
Shuaiyi and satisfied in cash in compliance with the regulatory requirements in
the PRC. The acquisitions of Daqing Shuaiyi and Harbin Shuaiyi were funded by
the capital of Heilongjiang Shuaiyi, in which the former controlling
shareholders of Daqing Shuaiyi and Harbin Shuaiyi had already established a
majority ownership by way of cash contributions to Heilongjiang Shuaiyi's
paid-up capital.
Restructuring of Heilongjiang Shuaiyi
Pursuant to a
restructuring plan intended to ensure compliance with regulatory requirements
of the PRC, in July 2008, New Resources entered into an equity transfer
agreement ("
Equity Transfer Agreement
") to acquire 100% equity interest
in Heilongjiang Shuaiyi from Ms. Lianyun Han, the then controlling shareholder
and chairperson of board of directors of Heilongjiang Shuaiyi, and Heilongjiang
Shuaiyi's other individual shareholders (collectively "
Shuaiyi Founders
").
The Equity Transfer Agreement was approved by the relevant PRC government
authority on October 23, 2008. On November 24, 2008, Heilongjiang
Shuaiyi obtained the Certificate of Approval for Establishment of Enterprises
of Foreign Investment issued by Heilongjiang Provincial Government and a new
business license was issued to Heilongjiang Shuaiyi on December 1, 2008.
As part of the
restructuring plan, each of Shuaiyi Founders respectively entered into an
earn-in agreement ("
Earn-in Agreement
"), dated September 12, 2008 (as
amended on February 12, 2009) with New Zealand WAYNE's Investment Holdings Co.,
Ltd., Heilongjiang Shuaiyi's sole shareholder ("
Shareholder
"). Pursuant
to the Earn-in Agreements, Shuaiyi Founders obtained the right and option to
acquire controlling shares ("
Option Shares
") in Shareholder at the par
value of the Option Shares plus a nominal amount of $1,000, upon the satisfaction
of each of the following conditions: (1) six months have expired since the date
of the Share Exchange Agreement with YzApp, provided that on or before that
date, Ms. Lianyun Han and Heilongjiang Shuaiyi have entered into a binding
employment agreement and Ms. Lianyun Han is employed by Heilongjiang Shuaiyi
pursuant to that agreement on such date; (2) the U.S. Securities and Exchange
Commission has declared a registration statement filed by YzApp under the
Securities Act effective, or investors who purchased common stock from YzApp
pursuant to a securities purchase agreement being able to sell their common
stock under Rule 144; (3) Heilongjiang Shuaiyi and its subsidiaries have
achieved not less than $1,560,000 in after-tax net income, as determined under
US GAAP for the six months ended June 2009; and (4) Heilongjiang Shuaiyi and
its subsidiaries have achieved not less than $3,900,000 in pre-tax profits, as
determined under US GAAP for the fiscal year ending 2009.
As of December
31, 2008 and up to the date of approval of these financial statements, none of
these four conditions have been met. However, Heilongjiang Shuaiyi has already
entered into a binding employment agreement dated December 7, 2008 with Ms.
Lianyun Han who is employed as the managing director of Heilongjiang Shuaiyi
for a 5-year period from December 7, 2008 to December 7, 2013. Therefore,
condition 1 will be met only subject to the passage of time when the six-month
period expires on June 23, 2009. It is fully expected by all parties to the
Earn-in Agreement that the other three conditions will also be met such that
Shuaiyi Founders will reacquire the ultimate legal ownership of Heilongjiang
Shuaiyi.
F-27
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 1
DESCRIPTION OF BUSINESS AND ORGANIZATION (CONTINUED)
Restructuring of Heilongjiang Shuaiyi
(continued)
Pursuant to
the Earn-in Agreement, the Shareholder further agrees, among others, that
throughout the exercise period of the Earn-in Agreement, without the prior
written approval of Shuaiyi Founders:
(i)
it will not
  increase the number of authorized shares of the Shareholder's common stock,
  or any increased authorized shares will be deemed as part of the Option
  Shares;
(ii)
keeps
  available the services of current officers and employees of New Resources and
  Heilongjiang Shuaiyi;
(iii)
New
  Resources and Heilongjiang Shuaiyi do not declare or pay any dividend or make
  any other distribution, nor do they repurchase, redeem or otherwise reacquire
  any equity of shares of capital stock or other securities.
Also as part
of the restructuring plan, Heilongjiang Shuaiyi entered into separate loan
agreements dated December 8, 2008, as amended on February 12, 2009, and
promissory notes with Shuaiyi Founders, pursuant to which, Shuaiyi Founders
have agreed to lend to Heilongjiang Shuaiyi a loan in the aggregate amount of
RMB60,000,000 (approximately $8.8 million, "
Subordinated Loan
"). The amount
of the Subordinated Loan exactly equals to the transfer price payable to the
Shuaiyi Founders by New Resources for the acquisition of Heilongjiang Shuaiyi
in compliance with regulatory requirements of the PRC. The Subordinated Loan
ranks behind all other debts of Heilongjiang Shuaiyi, bears no interest and is
only repayable after 10 years, in successive equal yearly payments beginning on
the tenth anniversary of the Notes, December 8, 2018, and within the first
month of each year thereafter. The final payment will be due on January 1,
2028.
According to
the PRC rules and regulations, New Resources is required to settle the transfer
price for acquisition of Heilongjiang Shuaiyi by way of remittance of the
RMB60,000,000 to Shuaiyi Founders within three months from the issue of the new
business license. However, New Resources has obtained the approval of the
relevant business bureau for the extension of the time to one year until
December 1, 2009. As of December 31, 2008, New Resources had not paid the transfer
price and, accordingly, the Subordinated Loan has not been drawn yet.
During and
after this restructuring plan, there has been no change to the composition of
the board of directors of Heilongjiang Shuaiyi. The board of directors of
Heilongjiang Shuaiyi, chaired by Ms. Lianyun Han, has continued to comprise
representatives of Shuaiyi Founders. Therefore, Heilongjiang Shuaiyi is still
under the same operating and management control of Shuaiyi Founders. In
addition, due to the Subordinated Loan, Shuaiyi Founders will not receive any
cash amount, nor will there be any cash flow out of the combined entity during
the whole period from the date of the Equity Transfer Agreement though the
expiry of the Earn-in Agreement, at which time it is expected Shuaiyi Founders
will have reacquired the ultimate legal controlling ownership of Heilongjiang
Shuaiyi. Furthermore, by providing the Subordinated Loan to Heilongjiang
Shuaiyi and obtaining the agreement of the Shareholder on not declaring any
dividend throughout the exercise period of the Earn-in Agreement without the
prior written approval of Shuaiyi Founders, Shuaiyi Founders continue to bear
the residual risks and rewards relating to Heilongjiang Shuaiyi. As a result,
this restructuring has been accounted for as a recapitalization of Heilongjiang
Shuaiyi with no adjustment to the historical basis of the assets and
liabilities of Heilongjiang Shuaiyi. Results of Heilongjiang Shuaiyi have been
consolidated as though the restructuring occurred as of the beginning of the
first accounting period presented in these financial statements.
F-28
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Principle of
consolidation
These consolidated financial statements include
the financial statements of YzApp and its subsidiaries. All significant
inter-company balances or transactions have been eliminated on consolidation.
Basis of preparation
These consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America. These consolidated financial statements, in the
opinion of management, include all adjustments necessary for a fair statement
of consolidated results of operations, financial position and cash flows for
each period presented.
Use of estimates
The preparation of these consolidated financial
statements in conformity with generally accepted accounting principles requires
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the related disclosure of contingent assets and
liabilities at the date of these consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. The Company bases
its estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances. Accordingly, actual
results may differ from these estimates under different assumptions or
conditions.
Cash and cash
equivalents
Cash and cash equivalents consist of all cash
balances and highly liquid investments with an original maturity of three
months or less. Because of the short maturity of these investments, the
carrying amounts approximate their fair value. Restricted cash is excluded from
cash and cash equivalents.
Accounts receivable
Accounts receivable is stated at cost, net of
allowance for doubtful accounts. The
Company maintains allowances for doubtful accounts for estimated losses
resulting from the failure of customers to make required payments. The Company
reviews the accounts receivable on a periodic basis and makes allowances where
there is doubt as to the collectibility of individual balances. In evaluating
the collectibility of individual receivable balances, the Company considers
many factors, including the age of the balance, the customer's payment history,
its current credit-worthiness and current economic trends.
Inventories
Inventories are stated at the lower of cost,
determined on a weighted average basis, or market. Costs of inventories include
purchase and related costs incurred in bringing the products to their present
location and condition. Market value is determined by reference to selling
prices after the balance sheet date or to management's estimates based on
prevailing market conditions. The management will write down the inventories to
market value if it is below cost. The management also regularly evaluates the
composition of its inventories to identify slow-moving and obsolete inventories
to determine if valuation allowance is required.
F-29
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Financial
instruments
SFAS 107, "Disclosures about Fair Value of
Financial Instruments" requires disclosure of the fair value of financial
instruments held by the Company. The carrying amounts reported in the
consolidated balance sheet for cash, accounts and other receivables, accounts
and other payables and accrued expenses approximate their fair values based on
the short-term maturity of these instruments. The carrying amount of the
Company's payable for intangibles approximate fair value, as it is considered
the noninterest factor fairly represents the warranty for performance.
Effective
January 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements".
The standard provides enhanced guidance for using fair value to measure assets
and liabilities. The standard also responds to investors' requests for expanded
information about the extent to which companies measure assets and liabilities
at fair value, the information used to measure fair value, and the effect of
fair value measurements on earnings. The standard applies whenever other
standards require (or permit) assets or liabilities to be measured at fair
value. The standard does not expand the use of fair value in any new
circumstances. The adoption of SFAS No. 157 with respect to provisions
applicable to the Company did not have a material effect on the accompanying
consolidated financial statements.
Property, plant and
equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses, if any. Gains or losses on
disposals are reflected as gain or loss in the year of disposal. The cost of
improvements that extend the life of property, plant and equipment are
capitalized. These capitalized costs may include structural improvements,
equipment and fixtures. All ordinary repair and maintenance costs are expensed
as incurred.
Depreciation
for financial reporting purposes is provided using the straight-line method
over the estimated useful lives of the assets as follows:
Useful Life
(In years)
Buildings
20-40
Machinery
  and motor vehicles
5-10
Office
  equipment
5
The carrying
value of property, plant and equipment is assessed annually and when factors
indicating impairment is present, the carrying value of the property, plant and
equipment is reduced by the amount of the impairment. The Company determines
the existence of such impairment by measuring the expected future cash flows
(undiscounted and without interest charges) and comparing such amount to the
net asset carrying value. An impairment loss, if exists, is measured as the
amount by which the carrying amount of the asset exceeds the fair value of the
asset.
F-30
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Intangible assets
The Company's intangible assets include a ten-year
exclusive right to use a secret process and computer software. The Company's
amortization policy on intangible assets is as follows:
Useful Life
(In years)
Exclusive
  right
10
Computer
  software
4
The Company
accounts for its intangible assets pursuant to SFAS No. 142, "Goodwill and
Other Intangible Assets". Under SFAS 142, intangibles with definite lives
continue to be amortized on a straight-line basis over the lesser of their
estimated useful lives or contractual terms. Intangibles with indefinite lives
are evaluated at least annually for impairment by comparing the asset's
estimated fair value with its carrying value, based on cash flow methodology.
Impairment of
goodwill is tested at least annually at the reporting unit. The test consists
of two steps. Firstly, the Company identifies potential impairment by comparing
the fair value of the reporting unit to its carrying amount, including
goodwill. If the fair value of the reporting unit is greater than its carrying
amount, goodwill is not considered impaired. Secondly, if there is impairment
identified in the first step, an impairment loss is recognized for any excess
of the carrying amount of the reporting unit's goodwill over the implied fair
value of goodwill. The implied fair value of goodwill is determined by
allocating the fair value of the reporting unit in a manner similar to a
purchase price allocation, in accordance with SFAS No 141, "Business
Combinations". If the carrying value of a reporting unit exceeds its estimated
fair value, the Company compares the implied fair value of the reporting unit's
goodwill to its carrying amount, and any excess of the carrying value over the
fair value is charged to earnings. The Company's fair value estimates are based
on numerous assumptions and it is possible that actual fair value will be
significantly different than the estimates.
Impairment of
long-lived assets
The Company reviews and evaluates its long-lived
assets for impairment when events or changes in circumstances indicate that the
related carrying amounts may not be recoverable. An impairment is considered to
exist if the total estimated future cash flows on an undiscounted basis are
less than the carrying amount of the assets, including goodwill, if any. An
impairment loss is measured and recorded based on discounted estimated future
cash flows. In estimating future cash flows, assets are grouped at the lowest
level for which there is identifiable cash flows that are largely independent
of future cash flows from other asset groups.
Revenue recognition
Revenue is recognized when the following four
revenue criteria are met: persuasive evidence of an arrangement exists,
delivery has occurred, the selling price is fixed or determinable, and
collectibility is reasonably assured.
Sales revenue
is recognized net of sales discounts and returns at the time when the
merchandise is sold to the customer. Based on historical experience, management
estimates that sales returns are immaterial and has not made allowance for
estimated sales returns. Sales revenue is presented net of value added and
sales related taxes in accordance with the guidance in EITF 06-3.
F-31
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Research and
development costs
Research and development costs are expensed as incurred. Research and development costs  were $32,815 and $18,930 for the years ended December 31, 2008 and 2007,
respectively.
Advertising costs
The Company expenses all advertising costs as incurred. Advertising costs
charged to selling expenses were $3,258 and $158 for the years ended December
31, 2008 and 2007, respectively.
Shipping and
handling costs
Substantially all costs of shipping and handling
of products to customers are included in selling expense. Shipping and handling
costs for the years ended December 31, 2008 and 2007 were $298 and $294,
respectively.
Income taxes
The Company accounts for income taxes in
accordance with SFAS No. 109, "Accounting for Income Taxes". SFAS No. 109
requires an asset and liability approach for financial accounting and reporting
for income taxes and allows recognition and measurement of deferred tax assets
based upon the likelihood of realization of tax benefits in future years. Under
the asset and liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes. A valuation allowance is provided for deferred tax assets if it
is more likely than not these items will either expire before the Company is
able to realize their benefits, or that future deductibility is uncertain.
On January 1,
2007, the Company adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes
("FIN 48"). FIN 48 prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken (or expected to
be taken) in a tax return. This Interpretation also provides guidance on
derecognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, accounting for income taxes in interim
periods and income tax disclosures. The adoption of FIN 48 has not resulted in
any material impact on the Company's financial position or results.
Share-based payments
The Company accounts for share-based compensation awards to employees in
accordance with SFAS No. 123R, "Share-based Payment" which requires that
share-based payment transactions with employees be measured based on the
grant-date fair value of the equity instrument issued and recognized as
compensation expense over the requisite service period.
The Company accounts for share-based
compensation awards to non-employees in accordance with SFAS 123R and EITF Issue
No. 96-18, "Accounting for Equity Instruments That Are Issued To Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services", or
EITF 96-18. Under SFAS 123R and EITF 96-18, stock compensation granted to
non-employees has been determined as the fair value of the consideration
received or the fair value of equity instrument issued, whichever is more
reliably measured and is recognized as expenses as the goods or services are
received.
F-32
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Comprehensive income
SFAS No.130, "Reporting Comprehensive Income,"
establishes standards for reporting and displaying comprehensive income and its
components in the consolidated financial statements. Accumulated other
comprehensive income includes foreign currency translation adjustments.
Earnings per share
The Company reports earnings per share in accordance with the provisions of
SFAS 128, "Earnings per Share." SFAS 128 requires presentation of basic and
diluted earnings per share in conjunction with the disclosure of the
methodology used in computing such earnings per share. Basic earnings per share
excludes dilution and is computed by dividing income available to common
stockholders by the weighted average common shares outstanding during the
period. Diluted earnings per share takes into account the potential dilution
(using the treasury stock method) that could occur if securities or other
contracts to issue common stock were exercised and converted into common stock.
All per share
data including earnings per share has been retroactively restated to reflect
the reverse acquisition on December 23, 2008 whereby the 689,390 shares of
preferred stock issued by YzApp (the nominal acquirer) to the shareholder of
New Resources (the nominal acquiree) are deemed to be the number of shares
outstanding for the period prior to the reverse acquisition. For the period
after the reverse acquisition, the number of shares considered to be
outstanding is the actual number of shares outstanding during that period. As
holders of Series A Preferred Stock vote with the holders of common stock on
all matters on an as-converted to common stock basis, basic and diluted
earnings per share have been calculated and presented on the basis that all
shares of the Company's common stock and Series A Preferred Stock are
considered a single class and on an as-converted to common stock basis.
Foreign currency
The Company uses the United States dollars ("US
Dollar" or "US$" or "$") for financial reporting purposes. The Company
maintains the books and records in its functional currency, Chinese Renminbi
("RMB"), being the primary currency of the economic environment in which its
operations are conducted. In general, the Company translates its assets and
liabilities into U.S. dollars using the applicable exchange rates prevailing at
the balance sheet date, and the statement of income is translated at average
exchange rates during the reporting period. Equity accounts are translated at
historical rates. Adjustments resulting from the translation of the Company's
financial statements are recorded as accumulated other comprehensive income.
The exchange
rates used to translate amounts in RMB into U.S. Dollars for the purposes of
preparing the consolidated financial statements were as follows:-
December 31, 2008
December 31, 2007
Balance sheet items, except for capital
  accounts  and retained earnings, as of
  year end
US$1=RMB6.8346
US$1=RMB7.3046
Amounts included in the statements of
  income and statements of cash flows for
  the year
US$1=RMB6.9480
US$1=RMB7.6071
F-33
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Business
segmentation
The Company follows SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information", which requires that
companies disclose segment data based on how management makes decision about
allocating resources to segments and evaluating their performance.
The Company
believes that during the years ended December 31, 2008 and 2007, it operated in
two business segments –Growing and sales of Chinese Caterpillar Fungus, which is
widely used for Chinese medicine, and sales of agricultural products,
respectively. Throughout the years ended December 31, 2008 and 2007, all of the
Company's operations were carried out in one geographical segment - China.
Commitments and
contingencies
The Company follows SFAS No. 5, "Accounting for
Contingencies," in determining its accruals and disclosures with respect to
loss contingencies. Accordingly, estimated losses from loss contingencies are
accrued by a charge to income when information available prior to issuance of
the financial statements indicates that it is probable that a liability could
be been incurred and the amount of the loss can be reasonably estimated. Legal
expenses associated with the contingency are expensed as incurred. If a loss
contingency is not probable or reasonably estimable, disclosure of the loss
contingency is made in the financial statements when it is at least reasonably
possible that a material loss could be incurred.
Recent accounting
pronouncements
In December, 2007, the FASB issued SFAS No. 141(R), "Business
Combinations", and SFAS No. 160, "Accounting and Reporting of Noncontrolling
interest in Consolidated Financial Statements, an amendment of ARB No. 51"
(SFAS No. 160). These new standards will significantly change the financial
accounting and reporting of business combination transactions and
noncontrolling (or minority) interests in consolidated financial statements.
SFAS No. 141(R) and SFAS No. 160 are effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008
(that is, fiscal 2009 for the Company). Management does not expect that the
adoption of SFAS 141(R) and 160 will have a material effect on the Company's
consolidated financial statements.
In December
2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated
Financial Statements - An Amendment of ARB No. 51" ("SFAS No. 160"), which
establishes new accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary.
Specifically, this statement requires the recognition of a noncontrolling
interest (minority interest) as equity in the consolidated financial statements
and separate from the parent's equity. SFAS No. 160 is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008 (that is, fiscal 2009 for the Company). Management does not
expect that this Statement will have an effect on the Company's consolidated financial
statements.
In March 2008,
the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and
Hedging Activities – An Amendment of FASB Statement No. 133" ("SFAS No. 161"),
which changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity's financial position, financial performance, and
cash flows. This statement will be effective for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008 (that
is, fiscal 2009 for the Company). Management does not expect that this
Statement will have an effect on the Company's consolidated financial
statements.
F-34
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Recent accounting
pronouncements (continued)
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally
Accepted Accounting Principles". This Statement identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). This Statement is effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles. Management does not expect that this
Statement will have an effect on the Company's consolidated financial
statements.
In May 2008,
the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance
Contracts—an interpretation of FASB Statement No. 60". This Statement
interprets Statement 60, "Accounting and Reporting by Insurance Enterprises"
and amends existing accounting pronouncements to clarify their application to
the financial guarantee insurance contracts included within the scope of this
Statement. This Statement requires that an insurance enterprise recognize a
claim liability prior to an event of default (insured event) when there is
evidence that credit deterioration has occurred in an insured financial
obligation. This Statement also clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement to be
used to account for premium revenue and claim liabilities. This Statement is
effective for financial statements issued for fiscal years beginning after
December 15, 2008 (that is, fiscal 2009 for the Company), and all interim
periods within those fiscal years. Management does not expect that this
Statement will have an effect on the Company's consolidated financial
statements.
In June 2008,
the FASB issued EITF 08-4, "Transition Guidance for Conforming Changes to Issue
No. 98-5." The objective of EITF 08-4 is to provide transition guidance for
conforming changes made to EITF 98-5, "Accounting for Convertible Securities
with Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios", that result from EITF 00-27 "Application of Issue No. 98-5 to Certain
Convertible Instruments", and SFAS 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". This Issue is
effective for financial statements issued for fiscal years ending after
December 15, 2008 and has no effect on the Company's financial statements.
In October
2008, the FASB issued FSP FAS 157-3, "Determining the Fair Value of a Financial
Asset in a Market That Is Not Active" (FSP 157-3), which clarifies the
application of SFAS 157 when the market for a financial asset is inactive.
Specifically, FSP 157-3 clarifies how (1) management's internal assumptions
should be considered in measuring fair value when observable data are not
present, (2) observable market information from an inactive market should be
taken into account, and (3) the use of broker quotes or pricing services should
be considered in assessing the relevance of observable and unobservable data to
measure fair value. The Company adopted the provisions of FSP 157-3, which did
not impact the Company's financial position or results of operations.
In December
2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, "Disclosures by Public
Entities (Enterprises) about Transfers of Financial Assets and Interests in
Variable Interest Entities" ("FSP FAS 140-4 and FIN 46(R)-8"). FSP FAS 140-4
and FIN 46(R)-8 amends FAS 140 and FIN 46(R) to require additional disclosures
regarding transfers of financial assets and interest in variable interest
entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for interim or annual
reporting periods ending after December 15, 2008. FSP FAS 140-4 and FIN 46(R)-8
did not have any impact on the Company's financial statements.
F-35
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Recent accounting
pronouncements (continued)
In January 2009, the FASB issued FSP EITF 99-20-1, "Amendments to the
Impairment Guidance of EITF Issue No. 99-20, and EITF Issue No. 99-20,
Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets". FSP EITF 99-20-1 changes
the impairment model included within EITF 99-20 to be more consistent with the
impairment model of SFAS 115. FSP EITF 99-20-1 achieves this by amending the
impairment model in EITF 99-20 to remove its exclusive reliance on "market
participant" estimates of future cash flows used in determining fair value.
Changing the cash flows used to analyze other-than-temporary impairment from
the "market participant" view to a holder's estimate of whether there has been
a "probable" adverse change in estimated cash flows allows companies to apply
reasonable judgment in assessing whether an other-than-temporary impairment has
occurred. The adoption of FSP EITF 99-20-1, which is effective for annual
reporting periods ending after December 15, 2008, will not have a material
impact on the Company's consolidated financial statements.
NOTE 3
ACCOUNTS RECEIVABLE, NET
Accounts
receivable consisted of the following:
As of December 31,
2008
2007
Accounts
  receivable
$
283,822
$
138,085
Less:
  Allowance for doubtful debts
—
—
Accounts
  receivable, net
$
283,822
$
138,085
NOTE 4
INVENTORIES
Inventories by
major categories are summarized as follows:
As of December 31,
2008
2007
Raw
  materials
$
147,824
$
108,701
Work in
  progress
832,680
517,494
Finished
  goods
187,575
23,177
$
1,168,079
$
649,372
F-36
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 5
DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Deposits,
prepayments and other receivables consist of the following:
As of December 31,
2008
2007
Trade
  deposits
$
—
$
125,289
Other
  receivables
14,105
22,561
$
14,105
$
147,850
NOTE 6
INTANGIBLE ASSETS, NET
Intangible
assets, net consisted of the following:
As of December 31,
2008
2007
Computer software, cost
$
1,453
$
1,360
Exclusive right to use a secret process,
  cost
4,391,193
4,107,001
Less: Accumulated amortization
(1,208,651
)
(719,405
)
$
3,183,995
$
3,388,956
In April 2006,
the Company purchased from a third party a ten-year exclusive right to use a
secret process and method in the cultivation and growing of Chinese Caterpillar
Fungus, which is widely used for Chinese medicine, for a cash consideration of
RMB30,000,000, payable over five years. The exclusive right is amortized over
its term of ten years using the straight-line method.
Amortization
expenses for the years ended December 31, 2008 and 2007 were $432,597 and
$395,021, respectively.
NOTE 7
PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment, net consisted of the following:
As of December 31,
2008
2007
Cost:
Buildings
$
11,647,541
$
10,898,103
Office equipment
9,317
6,019
Machinery
98,903
64,525
Motor vehicles
54,790
51,265
Total cost
11,810,551
11,019,912
Less: Accumulated depreciation
(907,575
)
(299,435
)
Net book value
$
10,902,976
$
10,720,477
Depreciation
expenses for the years ended December 31, 2008 and 2007 were $690,850 and
$153,268, respectively.
F-37
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 8
OTHER PAYABLES AND ACCRUALS
Other payables
and accruals consisted of the following:
As of December 31,
2008
2007
Accrued
  staff costs
$
235,421
$
181,503
Advance from
  customers
—
276,538
Other taxes
  payable
232,481
1,886
Other
  payables
5,057
16,702
$
472,959
$
476,629
NOTE 9
PAYABLE FOR INTANGIBLES
As described
in Note 6, the Company purchased an exclusive right from an independent party
for a secret process and method for a stated value of RMB30,000,000 payable
over 5 years from the date of purchase. The agreement provides that all payments
by the Company for the secret process and method will be refundable if the
secret process and method proves ineffective. Under APB21, "Interest on
Receivables and Payables", the payable for intangibles are stated without
imputed interest as the noninterest factor fairly represents the warranty for
performance.
The following
table presents the amounts payable for the next five years and thereafter:
Year ending
  December 31,
2009
$
877,886
2010
877,886
2011 and
  thereafter
—
Total
1,755,772
Less:
  Current portion
(877,886
)
Non-current
  portion
$
877,886
NOTE 10
ACQUISITION PAYABLE
The
acquisition payable represents the transfer price of RMB60,000,000 payable by
New Resources for the acquisition of 100% equity interest in Heilongjiang
Shuaiyi, as further discussed in paragraphs under the heading "Restructuring of
Heilongjiang Shuaiyi" in Note 1. As further discussed in Note 18, the
acquisition payable is due for payment in full on or before December 1, 2009 by
New Resources to Shuaiyi Founders who are also shareholders of the Company.
F-38
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 11
SHAREHOLDERS' EQUITY
Series A Voting
Convertible Preferred Stock
In accordance
with the Company's Articles of Incorporation, the Company's Board of Directors
unanimously approved the filing of a Certificate of Designation
designating and authorizing the issuance of up to 800,000 shares of our Series
A Voting Preferred Stock. The Certificate of Designation was filed on December
22, 2008. The holders of the Company's Series A Preferred Stock are entitled to
vote on all matters together with all other classes of stock on an as-converted
to common stock basis. Holders of Series A Preferred Stock have protective class
voting veto rights on matters, such as business combination transactions,
payment of dividends, the issuance of other classes of stock with senior
rights, changes to our charter documents and stock redemptions. Shares of
Series A Preferred Stock have a senior liquidation payment preference in the
event of a liquidation or sale of the Company.
Shares of
Series A Preferred Stock will be, upon the occurrence of certain events,
convertible into shares of common stock on the basis of one share of Series A
Preferred Stock for 2,000 shares of common stock, which will be adjusted to a
conversion ratio of one share of Series A Preferred Stock for 17.45 shares of
common stock upon the effectiveness of a planned 1-for-114.59 reverse split of
the Company's outstanding common stock, as discussed in Note 20. All shares of
Series A Preferred Stock will be automatically converted into common stock upon
the effectiveness of such reverse stock split. Holders of Series A Preferred
Stock vote with the holders of common stock on all matters on an as-converted
to common stock basis.
As of December
31, 2008, the Company had 727,520 shares of Series A Preferred Stock issued and
outstanding.
On December
23, 2008, which was the date of the Share Exchange as set out in Note 1, the Company
entered into an amendment, (the "
Amendment
"), of a stock purchase agreement,
(the "SPA)", dated August 6, 2008, by and among ACI (formerly BMC Acquisitions
Corp., LLC), Belmont Partners LLC, or Belmont, and the Company. ACI was the
Company's majority shareholder prior to the Company's reverse acquisition of
New Resources. Pursuant to the SPA, the Company was required to issue to
Belmont a number of shares of its common stock sufficient for Belmont to retain
1.1% ownership interest in the Company. Pursuant to the Amendment, ACI assumed
the foregoing obligation of the Company and agreed to transfer its shares of
the Company's common stock in order to satisfy such obligation. On the same
day, the Company entered into a subscription agreement with ACI, pursuant to
which the Company issued and sold to ACI 17,962 shares of Series A Preferred
Stock for $52,530.50, or $2.92 per share.
On December
23, 2008, the Company also entered into a subscription agreement with Tan Zhen
Investment Limited, (the "
Investor
"), pursuant to which the Company issued and
sold to the Investor 20,168 shares of the Company's Series A Preferred Stock
for $375,000, or $18.59 per share.
F-39
YZAPP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 12
STATUTORY RESERVES
In accordance
with the PRC Companies Law, the Company's PRC subsidiaries were required to
transfer 10% of their profits after tax, as determined in accordance with
accounting standards and regulations of the PRC, to the statutory surplus
reserve and a percentage of not less than 5%, as determined by management, of
the profits after tax to the public welfare fund. With the amendment of the PRC
Companies Law which was effective from January 1, 2006, enterprises in the PRC
were no longer required to transfer any profit to the public welfare fund. Any
balance of public welfare fund brought forward from December 31, 2005 should be
transferred to the statutory surplus reserve. The statutory surplus reserve is
non-distributable.
NOTE 13
SHARE-BASED PAYMENT
Immediately
following closing of the Share Exchange as set out in Note 1, the Shareholder
transferred 91,088 shares out of the 689,390 shares of Series A Preferred Stock
issued to it under the Share Exchange Agreement to ten individuals and entities
for consulting services provided by them to New Resources and its subsidiaries
in assisting them to consummate the share exchange transaction contemplated by
the Share Exchange Agreement prior to December 23, 2008.
In accordance
with the requirements of and guidance in Staff Accounting Bulletin No. 107 and
SFAS 123(R), the Company charged $1,693,326 to merger costs based on the
grant-date fair value of the 91,088 shares of Series A Preferred Stock
transferred by the Shareholder to the Company's consultants. As the Company's
shares were scarcely traded, the Company has determined that the price of
$18.59 at which 20,168 shares of the Company's Series A Preferred Stock were
issued to the Investor, as discussed in Note 11, appropriately represented a
fair value of the Company's Series A Preferred Stock, because the Investor was
an independent third party before the transaction and the terms for the
issuance of those shares to the Investor were based on arm's length
negotiation. Accordingly, this being a current cash transaction between
unrelated willing parties provides the best evidence for the fair value of the
Company's shares in accordance with AICPA Practice Aid, "Valuation of
Privately-Held-Company Equity Securities Issued as Compensation".
NOTE 14
OTHER INCOME (EXPENSES), NET
Year ended
  December 31,
2008
2007
Service
  income
$
11,623
51,608
Other
  expenses
(101
)
(13
)
$
11,522
$
51,595
F-40
YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 15
INCOME TAXES
The PRC
subsidiaries within the Group are subject to PRC income taxes on an entity
basis on income arising in or derived from the tax jurisdiction in which they
operate, i.e. the PRC. The statutory PRC Enterprise Income Tax rate ("EIT") for
the years ended December 31, 2008 and 2007 is generally 33%. However, one of
the Companies' subsidiaries, Daqing Shuaiyi, being engaged in growing and sales
of agricultural products is entitled to a preferential EIT treatment whereby
Daqing Shuaiyi is granted an EIT holiday for the two years ended December 31,
2007 and 2006 and a 50% reduction on the EIT rate for the three years ended
December 31, 2008, 2009 and 2010.
The Company's
income tax expense consisted of:
Year ended
  December 31,
2008
2007
Current –
  PRC
$
(974,653
)
$
(85,243
)
Deferred
—
—
$
(974,653
)
$
(85,243
)
A
reconciliation of the provision for income taxes determined at the local income
tax to the Company's effective income tax rate is as follows:
Year ended
  December 31,
2008
2007
Pre-tax
  income
$
4,693,702
$
5,257,771
U.S.
  statutory corporate income tax rate
34
%
34
%
Income tax
  computed at U.S. statutory corporate income tax rate
(1,595,859
)
(1,787,642
)
Reconciling
  items:
Impact of tax holiday of Daqing Shuaiyi
868,500
1,665,410
Loss not recognised as deferred tax
assets
(713,687
)
—
Rate differential for PRC earnings
610,355
52,577
Non-deductible expenses
(143,962
)
(15,588
)
Effective
  tax expense
$
(974,653
)
$
(85,243
)
On March 16,
2007, the PRC government promulgated a new tax law, China's Unified Enterprise
Income Tax Law ("New EIT Law"), which took effect from January 1, 2008. Under
the New EIT Law, foreign-owned enterprises as well as domestic companies are
subject to a uniform tax rate of 25%. The New EIT Law provides a five-year
transition period from its effective date for those enterprises which were
established before the promulgation date of the New EIT Law and which were
entitled to a preferential EIT treatment. Accordingly, Daqing Shuaiyi will
continue to be entitled to the 50% reduction on its EIT rate for the three
years ended December 31, 2008, 2009 and 2010
F-41
YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 16
RELATED PARTY TRANSACTIONS
(a) Due to related parties
Due to related
parties consisted of the following:
As of
  December 31,
2008
2007
Due to
  related company:
-
  Heilonjiang Shuaiyi Technology Development Co., Ltd. ("Shuaiyi
  Technology")
$
8,998
$
53
Shuaiyi
Technology and the Company are under common control and management.
Due to Shuaiyi
Technology relates to the land rent payable to Shuaiyi Technology.
The amounts
due to related parties were non-interest bearing, unsecured and had no fixed
repayment date.
(b) Purchase of goods
For the years
ended December 31, 2008 and 2007, the Company purchased rice amounting to
$1,579,315 and $961,312, respectively, from Shuaiyi Technology.
(c) Purchase of buildings, machinery and
equipment
During the
year ended December 31, 2007, the Company acquired buildings of $9,332,932 from
Shuaiyi Technology.
(d) Lease of land
For the year
ended December 31, 2008, the Company paid rental expense of $8,851 for land to
Shuaiyi Technology.
F-42
YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 17
CONCENTRATION OF RISK
(a) Concentration of credit risk
As of December
31, 2008 and 2007, 100% of the Company's cash included cash on hand and
deposits in accounts maintained within the PRC where there is currently no rule
or regulation in place for obligatory insurance to cover bank deposits in the
event of bank failure. However, the Company has not experienced any losses in
such accounts and believes it is not exposed to any risks on its cash in bank
accounts
For the years
ended December 31, 2008 and 2007, all of the Company's sales arose in the PRC.
In addition, all accounts receivable as of December 31, 2008 and 2007 also
arose in the PRC.
Except for one
customer who accounted for 11% of the Company's revenue for the year ended
December 31, 2007, there was no other single customer who accounted for more
than 10% of the Company's revenue for either the year ended December 31, 2008
or 2007.
As of December
31, 2008, the largest three customers accounted for 32%, 23% and 15% of
accounts receivable of the Company. As of December 31, 2007, the largest three
customers accounted for 40%, 25% and 20% of accounts receivable of the Company.
(b) Concentration of operating risk
Substantially
all of the Company's operations are conducted in China. The Company's
operations are subject to various political, economic, and other risks and
uncertainties inherent in China. Among other risks, the Company's operations
are subject to the risks of restrictions on transfer of funds; export duties,
quotas, and embargoes; domestic and international customs and tariffs; changing
taxation policies; foreign exchange restrictions; and political conditions and
governmental regulations.
NOTE 18
COMMITMENTS AND CONTINGENCIES
(a) Operating leases
The Company
has entered into tenancy agreements for the lease of exhibition hall and land
with a third party and a related company (see Note 16(a)), respectively, for
the purposes of the operation of its subsidiaries. The Company's commitments
for minimum lease payments under this operating lease for the next five years
and thereafter as of December 31, 2008 are as follows:
Year ending
  December 31,
2009
$
31,823
2010
31,823
2011
8,998
2012
8,998
2013
8,998
Thereafter
125,977
Total
$
216,617
F-43
YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 18
COMMITMENTS AND CONTINGENCIES (CONTINUED)
(b) PRC employee costs
According to
the prevailing laws and regulations of the PRC, the Company's subsidiaries in
the PRC are required to cover its employees with medical, retirement and
unemployment insurance programs. Management believes that due to the transient
nature of its employees, they do not need to provide all employees with such
social insurances, and have not paid the social insurances for all employees.
In the event
that any current or former employee files a complaint with the PRC government,
the Company's subsidiaries may be subject to making up the social insurances as
well as administrative fines. As the Company believes that these fines would
not be material, no provision has been made in this regard.
(c) Transfer price for equity interest in
Heilongjiang Shuaiyi
On July 28,
2008, as set out in Note 1, the Company's subsidiary, New Resources entered
into an equity transfer agreement with the Shuaiyi Founders to acquire all of
their equity interests in Heilongjiang Shuaiyi for RMB60,000,000 (approximately
$8.8 million). A new business license was issued to Heilongjiang Shuaiyi on
December 1, 2008. According to PRC merger and acquisition rules, the equity
interest transfer price should be paid in full within three months commencing
from the issuance of the new business license to Heilongjiang Shuaiyi. If the
transfer price is not paid by this date, the Company may apply to the relevant
PRC business bureau for an extension of up to one year from the date of the
issuance of the license; provided, however, that 60% of the transfer price will
be required to be paid within six months from such date. However, if the
Company is unable to make the payment for the transfer price by the March 1,
2009 or extended deadline and the relevant PRC business bureau does not grant
the Company additional time to make the payment, the Company may be subject to
fines or penalties imposed by the PRC business bureau. In addition, the Company
may not be permitted to exercise any decision-making rights as a shareholder in
Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi's financial results
into the Company's financial statements.
On March 10,
2009, New Resources obtained the approval from the relevant PRC business bureau
for the extension of time allowed for the payment of the transfer price to one
year until December 1, 2009. The Company has engaged financial advisors with a
view to raising additional capital for the Company. The Company believes that
it will be able to make the payment for the transfer price within the time
allowed by the relevant PRC business bureau and therefore has not accrued any
amount related to this contingency. However, there can be no
assurance that the Company will be successful in raising sufficient capital for
the purpose of the payment of the transfer price to the Shuaiyi Founders.
F-44
YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 19
SEGMENT INFORMATION
The Company
believes that during the years ended December 31, 2008 and 2007, the Group
operated in two business segments identified by product, "Chinese Caterpillar
Fungus" and "other agricultural products". The Chinese Caterpillar Fungus
segment consists of the growing and sales of Chinese Caterpillar Fungus, which
was conducted through the Company's subsidiary, Daqing. The other agricultural
products segment consists of the sales of rice, flour and silage corn etc,
which were mainly conducted through the Company's subsidiary, Green &
Specialty.
Throughout the
years ended December 31, 2008 and 2007, all of the Company's operations were
carried out in one geographical segment - China.
Year ended
  December 31, 2008
Chinese
Caterpillar
Fungus
Other
Agricultural
Products
Corporate
unallocated
Consolidated
Segment revenue from
  external customers
$
8,892,894
$
4,096,866
$
—
$
12,989,760
Segment profit
$
6,547,634
$
759,133
$
(2,613,065
)
$
4,693,702
Income from operations
  before income taxes
$
4,693,702
Segment assets
$
21,282,501
$
956,782
$
2,511,937
$
24,751,220
Total assets
$
24,751,220
Other segment information:
Depreciation and amortization
$
1,114,118
$
6,089
$
3,240
$
1,123,447
Expenditure for segment assets
$
27,005
$
3,353
$
2,143
$
32,501
Year Ended
  December 31, 2007
Chinese
Caterpillar
Fungus
Other
Agricultural
Products
Corporate
unallocated
Consolidated
Segment revenue from
  external customers
$
5,974,944
$
3,219,645
$
—
$
9,194,589
Segment profit
$
4,734,749
$
523,792
$
(770
)
$
5,257,771
Income from operations
  before income taxes
$
5,257,771
Segment assets
$
15,873,699
$
708,820
$
610,569
$
17,193,088
Total assets
$
17,193,088
Other segment information:
Depreciation and
  amortization
$
544,703
$
1,087
$
2,499
$
548,289
Expenditure for segment assets
$
9,325,083
$
—
$
2,111
$
9,327,194
F-45
YZAPP
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
NOTE 20
SUBSEQUENT EVENTS
On December
31, 2008, the Company filed with the Securities and Exchange Commission (SEC) a
preliminary information statement on Schedule 14C, which was amended and filed
on February 23, 2009, pursuant to Section 14(c) of the Securities Exchange Act
of 1934 relating to a written consent of the majority stockholders of the
Company authorizing an amendment and restatement of the Company's Articles of
Incorporation to, among other things:
1.
change the
  Company's name to "Shuaiyi International New Resources Development Inc.";
2.
increase the
  Company's total authorized stock from 50,000,000 to 190,000,000 shares of
  Common Stock;
3.
effect and implement a 1-for-114.59 reverse split
of the outstanding shares of the Company's Common Stock; and
4.
include certain
  provisions regarding the Company's election not to be governed by certain
  provisions of the Nevada Revised Statutes restricting certain business
  combinations with interested stockholders and control share acquisitions.
Pending SEC's
review of the Company's preliminary information statement, the Company will
mail the definitive information statement on Schedule 14C to stockholders. The
Company will, when permissible following the expiration of the 20-day period
mandated by Rule 14c of the Exchange Act and the provisions of the Nevada
Revised Statutes, file the Restated Articles with the Nevada Secretary of
State's Office. The Restated Articles will become effective upon such filing
and the Company anticipates that such filing will occur approximately 20 days
after the definitive information statement on Schedule 14C is first mailed to
stockholders.
F-46
1,500,000 Shares
NUTRASTAR INTERNATIONAL INC.
Common Stock, $0.001 Par Value Per Share
______________
PROSPECTUS
______________
, 2010
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Other Expenses of Issuance and
Distributions
The following table sets forth the costs and expenses, other
than underwriting discounts and commissions, payable by us in connection with
the sale of common stock being registered. All amounts, other than the SEC
registration fee, are estimates. We will pay all these expenses.
Amount to be Paid
SEC Registration Fee
$
406.41
Printing Fees and Expenses
2,500
Legal Fees and Expenses
25,000
Accounting Fees and Expenses
10,000
Blue Sky Fees and Expenses
2,000
Transfer Agent and Registrar Fees
1,500
Miscellaneous
3,000
Total
$
44,406.41
Item 14. Indemnification of Directors and Officers
Section 78.138 of the Nevada Revised Statutes, or NRS, provides
that a director or officer will not be individually liable unless it is proven
that (i) the director's or officer's acts or omissions constituted a breach of
his or her fiduciary duties, and (ii) such breach involved intentional
misconduct, fraud or a knowing violation of the law.
Section 78.7502 of NRS permits a company to indemnify its
directors and officers against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending or completed action, suit or proceeding if the officer or director (i)
is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner
the officer or director reasonably believed to be in or not opposed to the best
interests of the corporation and, if a criminal action or proceeding, had no
reasonable cause to believe the conduct of the officer or director was unlawful.
Section 78.751 of NRS permits a Nevada company to indemnify its
officers and directors against expenses incurred by them in defending a civil or
criminal action, suit or proceeding as they are incurred and in advance of final
disposition thereof, upon receipt of an undertaking by or on behalf of the
officer or director to repay the amount if it is ultimately determined by a
court of competent jurisdiction that such officer or director is not entitled to
be indemnified by the company. Section 78.751 of NRS further permits the company
to grant its directors and officers additional rights of indemnification under
its articles of incorporation or bylaws or otherwise.
Section 78.752 of NRS provides that a Nevada company may
purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the
company, or is or was serving at the request of the company as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or
agent, or arising out of his status as such, whether or not the company has the
authority to indemnify him against such liability and expenses.
Our Amended and Restated Bylaws implement the indemnification
and insurance provisions permitted by Chapter 78 of the Nevada Revised Statutes
by providing that:
The Company shall indemnify its legal representative, officers and
  directors to the fullest extent permitted by the Nevada Revised Statutes
  against liability, reasonable expense or other matter whatsoever; and
The Company may at the discretion of the Board of Directors purchase and
  maintain insurance on behalf of any person who holds or who has held any
  position identified in the paragraph above against any and all liability
  incurred by such person in any such position or arising out of his status as
  such.
II-1
Insofar as indemnification by us for liabilities arising under
the Securities Act may be permitted to our directors, officers or persons
controlling the company pursuant to provisions of our articles of incorporation
and bylaws, or otherwise, we have been advised that in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable. In the event that a claim for indemnification by
such director, officer or controlling person of us in the successful defense of
any action, suit or proceeding is asserted by such director, officer or
controlling person in connection with the securities being offered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding, which may result in a claim for such
indemnification.
Item 15. Recent Sales of Unregistered Securities
On December 17, 2009, we completed a private placement
transaction under which we sold 1,000,000 shares of our common stock to certain
investors at $2.5 per share for a total of $2.5 million. In addition, we granted
to each of the investors two warrants to purchase in aggregate 500,000 shares of
our common stock, including a Series A warrant having a term of three years with
an exercise price of $3.25 per share and a Series B warrant having a term of
three years with an exercise price of $4.00 per share. The issuance of these
shares of common stock and the warrants was made in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D promulgated
thereunder.
On December 23, 2008, we issued 689,390 shares of our Series A
Preferred Stock to the Shareholder of New Resources. The total consideration for
the 689,390 shares of our Series A Preferred Stock is 50,000 shares of New
Resources, which is all the issued and outstanding capital stock of New
Resources. Such amount of shares of Series A Preferred Stock were subsequently
converted into 8,949,424 shares of our common stock on May 29, 2009. We did not
receive any cash consideration in connection with the share exchange. The number
of our shares issued to the Shareholder of New Resource was determined based on
an arms-length negotiation. The issuance of our shares to the Shareholder of New
Resource was made in reliance on the exemption provided by Section 4(2) of the
Securities Act for the offer and sale of securities not involving a public
offering and Regulation D promulgated thereunder.
On December 23, 2008, we issued and sold to ACI 17,962 shares
of our Series A Preferred Stock for $52,530.50, or $2.92 per share. Such amount
of shares of Series A Preferred Stock were subsequently converted into 313,437
shares of our common stock on May 29, 2009. The issuance of our shares to ACI
was made in reliance on the exemption provided by Section 4(2) of the Securities
Act for the offer and sale of securities not involving a public offering and
Regulation D promulgated thereunder.
On December 23, 2008, we issued and sold to Tan Zhen Investment
Limited 20,168 shares of our Series A Preferred Stock for $375,000, or $18.59
per share. Such amount of shares of Series A Preferred Stock were subsequently
converted into 351,932 shares of our common stock on May 29, 2009. The issuance
of our shares to the Investor was made in reliance on the exemption provided by
Section 4(2) of the Securities Act for the offer and sale of securities not
involving a public offering and Regulation D promulgated thereunder.
In instances described above where we indicate that we relied
upon Section 4(2) of the Securities Act in issuing securities, our reliance was
based upon the following factors: (a) the issuance of the securities was an
isolated private transaction by us which did not involve a public offering; (b)
there were only a limited number of offerees; (c) there were no subsequent or
contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the negotiations for
the sale of the stock took place directly between the offeree and us.
In instances described above where we issued securities in
reliance upon Regulation D, we relied upon Rule 506 of Regulation D of the
Securities Act. These stockholders who received the securities in such instances
made representations that (a) the stockholder is acquiring the securities for
his, her or its own account for investment and not for the account of any other
person and not with a view to or for distribution, assignment or resale in
connection with any distribution within the meaning of the Securities Act, (b)
the stockholder agrees not to sell or otherwise transfer the purchased shares
unless they are registered under the Securities Act and any applicable state
securities laws, or an exemption or exemptions from such registration are
available, (c) the stockholder has knowledge and experience in financial and
business matters such that he, she or it is capable of evaluating the merits and
risks of an investment in us, (d) the stockholder had access to all of our documents,
records, and books pertaining to the investment and was provided the opportunity
ask questions and receive answers regarding the terms and conditions of the
offering and to obtain any additional information which we possessed or were
able to acquire without unreasonable effort and expense, and (e) the stockholder
has no need for the liquidity in its investment in us and could afford the
complete loss of such investment. Management made the determination that the
investors in instances where we relied on Regulation D are accredited investors
(as defined in Regulation D) based upon management's inquiry into their
sophistication and net worth. In addition, there was no general solicitation or
advertising for securities issued in reliance upon Regulation D.
II-2
Item 16. Exhibits and Financial Statement Schedules
The following exhibits are included as part of this Form
S-1.
Exhibit No.
Description
2.1
Share Exchange Agreement, dated
      December 23, 2008, among the Company, New Zealand WAYNE's New Resources
      Development Co., Ltd., Heilongjiang Shuaiyi New Energy Development Co.,
      Ltd., Daqing Shuaiyi Biotech Co., Ltd., Harbin Shuaiyi Green &
      Specialty Food Trading LLC and New Zealand WAYNE's Investments Holdings
      Co., Ltd. [Incorporated by reference to Exhibit 2.1 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
3.1
Amended and Restated Articles of Incorporation
      filed with the Nevada Secretary of State on May 19, 2009 [Incorporated by
      reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed
      on May 26, 2009].
3.2
Certificate of Amendment filed
      with the Nevada Secretary of State on January 11, 2010 [Incorporated by
      reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed
      on January 14, 2010].
4.1
Form of Series A Warrant [Incorporated by
      reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed
      on December 21, 2009].
4.2
Form of Series B Warrant
      [Incorporated by reference to Exhibit 4.2 to the Company's Current Report
      on Form 8-K filed on December 21, 2009].
5
Opinion of Holland & Hart
    LLP as to the legality of the shares.*
10.1
Form of Securities Purchase
      Agreement, dated December 17, 2009 [Incorporated by reference to Exhibit
      10.1 to the Company's Current Report on Form 8-K filed on December 21,
      2009].
10.2
Subscription Agreement, dated December 23,
      2008, between the Company and Allied China Investments, LLC. [Incorporated
      by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.3
Amendment No. 1 to Stock
      Purchase Agreement, dated December 23, 3008, by and
among the Company,
      Allied China Investments, LLC and Belmont Partners LLC.
[Incorporated
      by reference to Exhibit 10.2 to the Company's Current Report on Form
8-K filed on December 31, 2008].
10.4
Subscription Agreement, dated December 23,
      2008, between the Company and Tan Zhen Investment Limited. [incorporated
      by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.5
Escrow Agreement, dated
      December 23, by and among the Company, Tan Zhen Investment Limited and
      Sichenzia Ross Friedman Ference LLP, as escrow agent. [incorporated by reference to Exhibit 10.4 to
      the Company's Current Report on Form 8-K filed on December 31, 2008].
II-3
10.6
Real Property Purchase
      Agreement, dated October 22, 2007, between Daqing Shuaiyi Biotech Co.,
      Ltd. and Heilongjiang Shuaiyi Technology Development Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.5 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
10.7
Land Lease Agreement, dated January 10, 2008,
      between Heilongjiang Shuaiyi Technology Development Co., Ltd. and Daqing
      Shuaiyi Biotech Co., Ltd. (English Translation) [incorporated by reference
      to Exhibit 10.6 to the Company's Current Report on Form 8-K filed on
      December 31, 2008].
10.8
Lease Agreement, dated December
      28, 2005, between Liye Qian and Harbin Shuaiyi Green & Specialty Food
      Trading LLC. (English Translation) [incorporated by reference to Exhibit
      10.7 to the Company's Current Report on Form 8-K filed on December 31,
      2008].
10.9
Lease Agreement, dated April 23, 2008, between
      Harbin Jinhua Keji Qiye Fuhuaqi Co., Ltd. and Harbin Shuaiyi Green &
      Specialty Food Trading LLC. (English Translation) [incorporated by
      reference to Exhibit 10.8 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.10
Exclusive Licensing Agreement,
      dated April 10, 2006, between Runjiao Wang and Daqing Shuaiyi Biotech Co.,
      Ltd. (English Translation) [incorporated by reference to Exhibit 10.9 to
      the Company's Current Report on Form 8-K filed on December 31, 2008].
10.11
Equity Transfer Agreement, dated July 28, 2008,
      by and among Heilongjiang Shuaiyi New Energy Development Co., Ltd.,
      Lianyun Han, Lianxue Han, Lianju Han, Weihan Zhang, Yuehong Luan, Chunming
      Zhang, Xunjun Li, Nana Jiang, Fengxi Lang and New Zealand WAYNE'S New
      Resources Development Co., Ltd. (English Translation) [incorporated by
      reference to Exhibit 10.10 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.12
Form of Earn-In Agreement,
      dated September 12, 2008. [incorporated by reference to Exhibit 10.11 to
      the Company's Current Report on Form 8-K filed on December 31, 2008].
10.13
Form of First Amendment to Earn-In Agreement,
      dated February 12, 2009. [incorporated by reference to Exhibit 10.16 to
      the Company's Current Report on Form 8-K/A filed on February 23, 2009].
10.14
Loan Agreement, dated October
      15, 2007, between Heilongjiang Shuaiyi New Energy Development Co., Ltd.
      and Daqing Shuaiyi Biotech Co., Ltd. (English Translation) [incorporated
      by reference to Exhibit 10.12 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.15
Form of Loan Agreement and Promissory Note,
      dated December 8, 2008. [incorporated by reference to Exhibit 10.13 to the
      Company's Current Report on Form 8-K filed on December 31, 2008].
10.16
Form of First Amendment to Loan
      Agreement and Promissory Note, dated February 12, 2009. [incorporated by
      reference to Exhibit 10.15 to the Company's Current Report on Form 8-K/A
      filed on February 23, 2009].
10.17
Form of Heilongjiang Shuaiyi New Energy
      Development Co., Ltd. Employment Agreement. (English Translation)
      [incorporated by reference to Exhibit 10.14 to the Company's Current Report on Form 8-K filed on
      December 31, 2008].
II-4
10.18
English Translation of
      Employment Agreement, dated August 18, 2009, between Heilongjiang Shuaiyi
      New Energy Development Co., Ltd. and Hongbing Hua [Incorporated by
      reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
      filed on August 21, 2009].
10.19
2009 Equity Incentive Plan [Incorporated by
      reference to Appendix A to the Company's Information Statement on Schedule
      14C filed on July 2, 2009].
10.20
Stock Option Agreement, dated
      January 1, 2010, by and between the Company and Daniel K. Lee
      [Incorporated by reference to Exhibit 10.1 to the Company's Current Report
      on Form 8-K filed on January 7, 2010].
10.21
Restricted Shares Grant Agreement, dated
      January 1, 2010, by and between the Company and Daniel K. Lee
      [Incorporated by reference to Exhibit 10.2 to the Company's Current Report
      on Form 8-K filed on January 7, 2010].
10.22
Employment Agreement, dated
      November 16, 2009, by and among the Company, Heilongjiang Shuaiyi New
      Energy Development Co., Ltd. and Daniel K. Lee [Incorporated by reference
      to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
      November 18, 2009].
21
Subsidiaries of the registrant*
23.1
Consent of AGCA, Inc.*
23.2
Consent of AGCA
    CPA Limited*
23.3
Consent of Holland & Hart, LLP (included in
      Exhibit 5)*
24
Power of Attorney (included on
      the signature page of this registration statement)
_______________
* Filed herewith.
Item 17. Undertakings
(A)
The undersigned Registrant hereby
  undertakes:
(1)
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a)
To
include any prospectus required by Section 10(a)(3) of the Securities Act;
(b)
To
reflect in the prospectus any facts or events arising after the effective date
of this Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(c)
To
include any additional or changed material information with respect to the plan
of distribution not previously disclosed in this Registration Statement;
(2)
That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to
be the initial
bona fide
offering thereof.
II-5
(3)
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4)
If the registrant is subject to
Rule 430C (§230.430C of this chapter), each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A (§230.430A of this chapter), shall be deemed to be part of
and included in the registration statement as of the date it is first used after
effectiveness.
Provided, however,
that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(B)
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Harbin, China, on the 28
th
day of January,
2010.
Nutrastar International Inc.
By
/s/ Lianyun
      Han
Lianyun Han, CEO and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature to this Registration Statement on
Form S-1 appears below hereby constitutes and appoints Lianyun Han and Daniel K.
Lee, and each or any of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective on filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, and all post-effective amendments
thereto, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or his substitute or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of
the Securities Act of 1933, this Registration Statement has been signed by the
following persons in the capacities indicated on January 28, 2010.
SIGNATURE
TITLE
/s/ Lianyun Han
Chief Executive Officer, President and Chairman
Lianyun Han
(Principal Executive Officer)
/s/ Daniel K. Lee
Chief Financial Officer and Treasurer
Daniel K. Lee
(Principal Financial Officer and Principal
      Accounting
Officer)
/s/ Hongbing Hua
Chief Marketing Officer
Hongbing Hua
/s/ Nana Jiang
Director
Nana Jiang
/s/ Chunming Zhang
Director
Chunming Zhang
/s/ John Jing Zhang
Director
John Jing Zhang
/s/ Xi Zhu
Director
Xi Zhu
EXHIBIT INDEX
Exhibit No.
Description
2.1
Share Exchange Agreement, dated
      December 23, 2008, among the Company, New Zealand WAYNE's New Resources
      Development Co., Ltd., Heilongjiang Shuaiyi New Energy Development Co.,
      Ltd., Daqing Shuaiyi Biotech Co., Ltd., Harbin Shuaiyi Green &
      Specialty Food Trading LLC and New Zealand WAYNE's Investments Holdings
      Co., Ltd. [Incorporated by reference to Exhibit 2.1 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
3.1
Amended and Restated Articles of Incorporation
      filed with the Nevada Secretary of State on May 19, 2009 [Incorporated by
      reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed
      on May 26, 2009].
3.2
Certificate of Amendment filed
      with the Nevada Secretary of State on January 11, 2010 [Incorporated by
      reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed
      on January 14, 2010].
4.1
Form of Series A Warrant [Incorporated by
      reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed
      on December 21, 2009].
4.2
Form of Series B Warrant
      [Incorporated by reference to Exhibit 4.2 to the Company's Current Report
      on Form 8-K filed on December 21, 2009].
5
Opinion of Holland & Hart
    LLP as to the legality of the shares.*
10.1
Form of Securities Purchase
      Agreement, dated December 17, 2009 [Incorporated by reference to Exhibit
      10.1 to the Company's Current Report on Form 8-K filed on December 21,
      2009].
10.2
Subscription Agreement, dated December 23,
      2008, between the Company and Allied China Investments, LLC. [Incorporated
      by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.3
Amendment No. 1 to Stock
      Purchase Agreement, dated December 23, 3008, by and
among the Company,
      Allied China Investments, LLC and Belmont Partners LLC.
[Incorporated
      by reference to Exhibit 10.2 to the Company's Current Report on Form
8-K filed on December 31, 2008].
10.4
Subscription Agreement, dated December 23,
      2008, between the Company and Tan Zhen Investment Limited. [incorporated
      by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.5
Escrow Agreement, dated
      December 23, by and among the Company, Tan Zhen Investment Limited and
      Sichenzia Ross Friedman Ference LLP, as escrow agent. [incorporated by reference to Exhibit 10.4 to
      the Company's Current Report on Form 8-K filed on December 31, 2008].
10.6
Real Property Purchase
      Agreement, dated October 22, 2007, between Daqing Shuaiyi Biotech Co.,
      Ltd. and Heilongjiang Shuaiyi Technology Development Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.5 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
10.7
Land Lease Agreement, dated January 10, 2008,
      between Heilongjiang Shuaiyi Technology Development Co., Ltd. and Daqing
      Shuaiyi Biotech Co., Ltd. (English Translation) [incorporated by reference
      to Exhibit 10.6 to the Company's Current Report on Form 8-K filed on
      December 31, 2008].
10.8
Lease Agreement, dated December
      28, 2005, between Liye Qian and Harbin Shuaiyi Green & Specialty Food
      Trading LLC. (English Translation) [incorporated by reference to Exhibit
      10.7 to the Company's Current Report on Form 8-K filed on December 31,
      2008].
10.9
Lease Agreement, dated April 23, 2008, between
      Harbin Jinhua Keji Qiye Fuhuaqi Co., Ltd. and Harbin Shuaiyi Green &
      Specialty Food Trading LLC. (English Translation) [incorporated by
      reference to Exhibit 10.8 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.10
Exclusive Licensing Agreement,
      dated April 10, 2006, between Runjiao Wang and Daqing Shuaiyi Biotech Co.,
      Ltd. (English Translation) [incorporated by reference to Exhibit 10.9 to
      the Company's Current Report on Form 8-K filed on December 31, 2008].
10.11
Equity Transfer Agreement, dated July 28, 2008,
      by and among Heilongjiang Shuaiyi New Energy Development Co., Ltd.,
      Lianyun Han, Lianxue Han, Lianju Han, Weihan Zhang, Yuehong Luan, Chunming
      Zhang, Xunjun Li, Nana Jiang, Fengxi Lang and New Zealand WAYNE'S New
      Resources Development Co., Ltd. (English Translation) [incorporated by
      reference to Exhibit 10.10 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.12
Form of Earn-In Agreement,
      dated September 12, 2008. [incorporated by reference to Exhibit 10.11 to
      the Company's Current Report on Form 8-K filed on December 31, 2008].
10.13
Form of First Amendment to Earn-In Agreement,
      dated February 12, 2009. [incorporated by reference to Exhibit 10.16 to
      the Company's Current Report on Form 8-K/A filed on February 23, 2009].
10.14
Loan Agreement, dated October
      15, 2007, between Heilongjiang Shuaiyi New Energy Development Co., Ltd.
      and Daqing Shuaiyi Biotech Co., Ltd. (English Translation) [incorporated
      by reference to Exhibit 10.12 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.15
Form of Loan Agreement and Promissory Note,
      dated December 8, 2008. [incorporated by reference to Exhibit 10.13 to the
      Company's Current Report on Form 8-K filed on December 31, 2008].
10.16
Form of First Amendment to Loan
      Agreement and Promissory Note, dated February 12, 2009. [incorporated by
      reference to Exhibit 10.15 to the Company's Current Report on Form 8-K/A
      filed on February 23, 2009].
10.17
Form of Heilongjiang Shuaiyi New Energy
      Development Co., Ltd. Employment Agreement. (English Translation)
      [incorporated by reference to Exhibit 10.14 to the Company's Current Report on Form 8-K filed on
      December 31, 2008].
10.18
English Translation of
      Employment Agreement, dated August 18, 2009, between Heilongjiang Shuaiyi
      New Energy Development Co., Ltd. and Hongbing Hua [Incorporated by
      reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
      filed on August 21, 2009].
10.19
2009 Equity Incentive Plan [Incorporated by
      reference to Appendix A to the Company's Information Statement on Schedule
      14C filed on July 2, 2009].
10.20
Stock Option Agreement, dated
      January 1, 2010, by and between the Company and Daniel K. Lee
      [Incorporated by reference to Exhibit 10.1 to the Company's Current Report
      on Form 8-K filed on January 7, 2010].
10.21
Restricted Shares Grant Agreement, dated
      January 1, 2010, by and between the Company and Daniel K. Lee
      [Incorporated by reference to Exhibit 10.2 to the Company's Current Report
      on Form 8-K filed on January 7, 2010].
10.22
Employment Agreement, dated
      November 16, 2009, by and among the Company, Heilongjiang Shuaiyi New
      Energy Development Co., Ltd. and Daniel K. Lee [Incorporated by reference
      to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
      November 18, 2009].
21
Subsidiaries of the registrant*
23.1
Consent of AGCA, Inc.*
23.2
Consent of AGCA
    CPA Limited*
23.3
Consent of Holland & Hart, LLP (included in
      Exhibit 5)*
24
Power of Attorney (included on
      the signature page of this registration statement)
* Filed herewith