UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~June~~September 30, 2010.

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO __________

COMMISSION FILE NUMBER: 333-150388

Rongfu Aquaculture, Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEVADA		98-0655634
(STATE OR OTHER JURISDICTION OF		(I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION

Dongdu Room 321, No. 475 Huanshidong Road

Gaungzhou City, People’s Republic of China 510075

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: 011-86-20-8762-1778

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

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes o No 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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

The number of shares of Common Stock of the Registrant, par value $.001 per share, outstanding on ~~June~~December 3022, 2010 was 21,286,789.

RONGFU AQUACULTURE, INC.

INDEX TO ~~JUNE~~SEPTEMBER 30, 2010 FORM 10-Q

		Page Number
Part I - Financial Information		3
Item 1 - Financial Statements		F-1
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009 (restated)		F-1
Consolidated Balance Sheets as of June 30, 2010 (unaudited) and December 31, 2009(Audited)		F-2
Consolidated Statements of Income for the Three Months and Nine Months ended September 30, 2010 and 2009 (unaudited)		F-2
Consolidated Statements of Income for the Three Months and Six Months ended June 30, 2010 and 2009 (unaudited)		F-3
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2010 and 2009 (unaudited)		F-3
Consolidated Statements of Cash Flows for the Three Months ended June 30, 2010 and 2009 (unaudited)		F-4
Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2010 and the Year Ended December 31, 2009		F-4
Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2010 and the Year Ended December 31, 2009		F-5
Notes to the Consolidated Financial Statements (unaudited)		F-5
Notes to the Consolidated Financial Statements (unaudited)		F-6-16
Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition		4
Item 4 - Controls and Procedures		1210
Part II - Other Information		1210
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		1210
Item 6 - Exhibits		1211
Signature Page		1312

PART I - FINANCIAL INFORMATION

FORWARD-LOOKING STATEMENTS

The discussions of the business and activities of Rongfu Aquaculture, Inc. (“we,” “us,” “our” or “the Company”) set forth in this Form 10-Q and in other past and future reports and announcements by the Company may contain forward-looking statements and assumptions regarding future activities and results of operations of the Company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plans," “potential," "projects," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend" or the negative of these words or other variations on these words or comparable terminology. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-Q generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in the most recent Form 10-K filed by the Company. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

We undertake no obligation to update forward-looking statements to reflect subsequent events, changed circumstances, or the occurrence of unanticipated events.

Item 1. Financial Statements

ACSBAcquavella, Chiarelli, Shuster, Berkower & Co., LLP

517 Route one	1 Penn Plaza
Iselin, New Jersey, 08830	36th Floor
732.855.9600	New York, NY 10119

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

Rongfu Aquaculture, Inc.

We have reviewed the accompanying balance sheet of Rongfu Aquaculture, Inc. (the “Company”) as of June 30, 2010, and the related statements of income, stockholders’ equity and comprehensive income, and cash flows for the three months and six-month period ended June 30, 2010. These financial statements are the responsibility of the company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2009 and the related consolidated statements of income, retained earnings and comprehensive income, and consolidated statement of cash flows for the year then ended; and in our report dated April 30, 2010, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2009, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Aquavella, Chiarelli, Shuster, Berkower & Co., LLP

Acquavella, Chiarelli, Shuster, Berkower & Co., LLP

Certified Public Accountants

New York, N.Y.

August 23 , 2010

F-1

RONGFU AQUACULTURE, INC

CONSOLIDATED BALANCE SHEETS

AS OF ~~JUNE~~SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

	6/30/2010			12/31/2009
	9/30/2010			12/31/2009
	(Unaudited)			(Audited)
	(unaudited)			(audited & restated)
ASSETS
Current Assets
Cash	$	76,~~125~~695,~~477~~287		$	3,194,248
Accounts receivable		21,~~043~~604,~~325~~553			236,374
Inventories		810,~~987~~905,~~628~~977			2,979,753
Due from shareholders		-			4,008,659
Other receivable		271,~~149~~321,356			21,208
Trade deposit		-			121,224
Prepaid expenses		~~679~~653,~~301~~372			230,247
Total Current Assets		1821,~~862~~180,~~880~~545			10,791,713
Fixed assets		~~905~~868,~~285~~448			405,147
Biological assets		~~366~~248,~~200~~811			432,808
Total Assets	$	2022,~~134~~297,~~365~~804		$	11,629,668
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	5,~~361~~036,~~607~~460		$	-
Other payable		~~264~~552,~~575~~475			2,743,960
Advance from clients		-			498,785
Short-term bank loan		-			380,273
Dividend payable		-			3,466,331
Income tax payable		~~251~~301,~~866~~419			-995,313
Derivative liability		89,~~575~~519,~~785~~051			-
Total Current liabilities		14,453,833			8,084,662
Total Current Liabilities		15,409,405			8,084,662
Long-term bank loan		-			1,170,070
Total liabilities		1415,~~453~~409,~~833~~405			9,254,732
Temporary equity:
Redeemable preferred stock, par value $0.001 per share, 2,768,721 issued at September 30, 2010 and 0 at December 31, 2009		7,700,000			-
Stockholders' Equity
Common stock, par value, $0.001 per share, 90,000,000 shares authorized, 21,286,789 and 20,810,713 shares issued and outstanding at June 30, 2010 and December 31, 2009		21,287			20,811
Common stock, par value, $0.001 per share, 90,000,000 shares authorized, 21,286,789 and 19,623,889 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively		21,287			19,624
Preferred stock, par value, $0.001 per share, 10,000,000 shares authorized, 2,768,721 shares issued and outstanding at June 30, 2010		2,769			-
Additional paid in capital		1,056,365			797,808
Additional paid in capital		8,561,235			796,621
Subscription receivables		-			-
Statutory reserve		1,076,310			1,051,089
Other comprehensive income		~~768~~1,~~203~~265,959			866,699
Retained earnings		(4,749,272	)		(360,284	)
Accumulated deficit		(4,231,522	)		(360,284	)
Total Stockholders' Equity		5(811,~~680,532~~601	)		2,374,936
Total Liabilities and Stockholders' Equity	$	2022,~~134~~297,~~365~~804		$	11,629,668

The accompanying notes are an integral part of these consolidated financial statements.

F-21

RONGFU, AQUACULTURE, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	Six Months Ended June 30,						Three Months Ended June 30,
	Nine Months Ended September 30,						Three Months Ended September 30,
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue, net	$	35,369,699		$	21,731,927		$	12,816,275		$	4,763,650
Revenue, net	$	22,553,424		$	16,968,277		$	12,629,897		$	7,561,849
Cost of goods sold		23,576,353			13,323,764			9,129,968			3,135,757
Cost of goods sold		14,446,385			10,188,007			7,726,590			3,921,262
Gross profit		11,793,346			8,408,163			3,686,307			1,627,893
Gross profit		8,107,039			6,780,270			4,903,307			3,640,587
Operating expenses:
Selling expenses		~~841~~1,~~731~~299,046			~~290~~491,~~081~~112			~~555~~457,~~799~~315			~~202~~201,~~490~~031
General and administrative expenses		~~747~~1,~~403~~956,142			1,~~075~~336,~~070~~945			~~360~~1,~~352~~016,378			~~413~~261,~~198~~875
Research and development cost		38104,~~643~~255			3556,~~142~~437			1865,~~807~~612			1621,~~307~~295
Total operating expenses		13,~~627~~359,~~777~~443			1,~~400~~884,~~293~~494			~~934~~1,~~958~~539,305			~~631~~484,~~995~~201
Net income (loss) from operations		6,479,262			5,379,977			3,968,349			3,008,592
Net income from operations		8,433,903			6,523,669			2,147,002			1,143,692
Other income (expenses)
Loss on Fair value of derivative liability		(56,~~307~~251,~~988~~254	)		-			(~~745~~943,~~740~~266	)		-
Interest income		610,~~614~~584			2035,~~840~~510			3,~~852~~970			814,~~993~~670
Interest expense		(3435,~~841~~678	)		(~~450~~87,436	)		(~~17,447~~837	)		(~~241~~86,986	)
Total other (expenses) income		(56,~~336~~276,~~215~~348	)		20(51,~~390~~926	)		(~~759~~940,~~335~~133	)		8(72,~~751~~316	)
Net income before income taxes		12,~~143~~157,~~047~~555			56,~~400~~471,~~367~~743			31,~~209~~206,~~014~~869			31,~~017~~071,~~343~~376
Income taxes		~~488~~790,~~584~~416			~~378~~446,~~905~~572			~~252~~301,~~098~~832			~~177~~67,~~378~~667
Net (loss) income		654,463			5,021,462			2,956,916			2,839,965
Net income		1,367,139			6,025,171			905,037			1,003,709
Deemed dividend from beneficial conversion feature of
Series A preferred stock		(4,374,579	)		-			-			-
Dividends paid or declared		(~~643~~838,~~651~~577	)		-			(78,477	)		-
Net income (loss) available to common shareholders	$	(43,~~363~~846,~~767~~017	)	$	56,~~021~~025,~~462~~171		$	2826,~~956,916~~560		$	21,~~839~~003,~~965~~709
Net income for common share
Earnings per share – Basic	$	(0.2119	)	$	0.2431		$	0.1404		$	0.1405
Earnings per share – Diluted	$	(0.2119	)	$	0.2431		$	0.1404		$	0.1405
Weighted average common shares outstanding
Basic		2120,~~286~~756,~~789~~854			2019,~~810~~623,~~713~~889			21,286,789			2019,~~810~~623,~~713~~889
Diluted		2120,~~286~~756,~~789~~854			2019,~~810~~623,~~713~~889			21,286,789			2019,~~810~~623,~~713~~889
Net income	$	~~654~~1,~~463~~367,139		$	56,~~021~~025,~~462~~171		$	2905,~~956,916~~037		$	21,~~839~~003,~~965~~709
Other comprehensive income (loss)		(98,496	)		(177,809	)		(95,045	)		(179,891	)
Other comprehensive income		399,260			18,092			497,756			195,901
Comprehensive income (loss)	$	555,967		$	4,843,653		$	2,861,871		$	2,660,074
Comprehensive income	$	1,766,399		$	6,043,263		$	1,402,793		$	1,199,610

The accompanying notes are an integral part of these consolidated financial statements.

F-32

RONGFU AQUACULTURE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~THREE~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2010 AND 2009

(UNAUDITED)

	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	~~654~~1,~~463~~367,139		$	56,~~021~~025,~~462~~171
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		5463,~~726~~818			5469,~~369~~050
Amortization of biological assets		~~231~~350,~~601~~084			~~204~~306,~~339~~613
Change in Derivative liability value		56,~~307~~251,~~988~~254			-
Professional fee in connection with the issuance of shares		192,361
(Increase) / decrease in assets:
Accounts receivables		(1,~~800~~350,~~409~~580	)		34,~~145~~319,~~234~~397
Inventories		(57,~~971~~791,~~204~~868	)		1(2,~~018~~598,~~118~~949	)
Prepaid expense and other receivables		(~~434~~4,~~732~~967,738	)		6774,~~534~~559
Trade deposit		~~121~~122,~~718~~525			-
Due from shareholder		4,~~024~~051,~~965~~681			(12,~~461~~120,~~298~~712	)
Increase / (decrease) in current liabilities:
Accounts payable		54,~~346~~989,~~962~~183			~~536~~1,~~363~~072,821
Other payable		(2848,~~499,717~~419	)		~~462~~444,~~675~~127
Advances from clients		(~~500~~504,~~814~~138	)		-507,756
Income taxes payable		(~~748~~707,~~185~~406	)		(52588,~~193~~817	)
Net cash provided by operating activities		32,~~787~~914,~~362~~734			87,~~996~~511,~~603~~016
CASH FLOWS FROM INVESTING ACTIVITIES
Purchased fixed assets		(~~554~~560,~~863~~985	)		(69,~~175~~205	)
Biological assets		(164,993	)		-
Purchased biological assets		(166,087	)		-
Net cash used by investing activities		(~~719~~727,~~856~~072	)		(69,~~175~~205	)
CASH FLOWS FROM FINANCING ACTIVITIES
Due to shareholder		-			(8,~~517~~520,~~615~~267	)
Borrowings (payment) of short-term loan, net		(381,870	)		730,649
Borrowings of short-term bank loan		734,268			643,171
Borrowings (payment) of long-term bank loan		(1,174,985	)		1,753,558
Payment of short-term bank loan		(1,114,541	)		-
Dividend paid		(4,110,591	)		(14,024,570	)
Borrowings of long-term bank loan		-			1,169,403
Payment of long-term bank loan		(1,170,070	)		-
Dividend paid		(4,305,517	)		(14,024,570	)
Proceeds from issuance of preferred stock		6,561,077			-
Net cash used by financing activities		893,631			(20,057,978	)
Net cash provided (used) by financing activities		705,217			(20,732,263	)
Effect of exchange rate changes on cash and cash equivalents		~~(29~~608,~~908)~~160			~~(553~~56,~~287~~062	)
Net change in cash and cash equivalents		3,~~931~~501,~~229~~039			(1113,~~683~~234,~~837~~390	)
Cash and cash equivalents, beginning balance		3,194,248			14,823,476
Cash and cash equivalents, ending balance	$	76,~~125~~695,~~477~~287		$	31,~~139~~589,~~639~~086
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Cash paid during the period for:
Income tax payments	$	1,~~236~~725,~~768~~765		$	~~981~~1,~~540~~236,816
Interest payments	$	3470,~~841~~519		$	~~450~~87,102

The accompanying notes are an integral part of these consolidated financial statements.

F-43

RONGFU AQUACULTURE, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2010 AND THE YEAR ENDED DECEMBER 31, 2009

(UNAUDITED)

					Additional			Other		~~Additional~~			~~Other~~			Total						~~Total~~
	Preferred Shares				Common Stock					Paid-in			Comprehensive			Statutory			Retained			Stockholders
	Common Stock				Paid-in			Comprehensive		Statutory			Accumulated			Stockholders
	Shares		Amount		~~Shares~~Capital			~~Amount~~Income		~~Capital~~Reserves			~~Income~~Deficit			~~Reserves~~Equity			~~Earnings~~			~~Equity~~
Balance December 31, 2009		-19,623,889	$	-19,624	$	20797,~~810,713~~808		$	20866,~~811~~699	$	~~796~~1,~~621~~051,089		$	~~866~~(360,~~699~~284	)	$	12,~~051~~374,~~089~~936		$	~~(360,284~~	)	$	~~2,374,936~~
Foreign currency translation adjustments									399,260					~~(98,496)~~			399,260						~~(98,496)~~
Issuance preferred Stock		2,768,721		2,769							3,390,511												3,393,280
Issuance of warrants						(3,267,797	)										(3,267,797	)
Stock Based Compensation – issued in conjunction with financing						476,076			476		(476	)											-
Syndication costs associated with preferred stock purchase agreement						(1,038,923	)										(1,038,923	)
Dividends Paid or Declared																				(643,651	)		(643,651	)
Stock based compensation –issued in conjunction with professional services rendered						191,174											191,174
Transferred to Statutory reserve																	25,221			(25,221	)		-
Stock based compensation –issued in conjunction with financing		1,662,900		1,663		927,872											929,535
Deemed dividend											4,374,579									(4,374,579	)		-
Syndication costs associated with financing						(928,348	)										(928,348	)
Income for the six months ended June 30,2010																				654,463			654,463
Dividends Paid or Declared														(838,577	)		(838,577	)
Balance June 30, 2010		2,768,721	$	2,769		21,286,789		$	21,287	$	8,561,235		$	768,203		$	1,076,310		$	(4,,749,272	)	$	5,680,532
Transferred to Statutory reserve											25,221			(25,221	)		-
Balance December 31, 2008		-	$	-		20,810,713		$	20,811	$	796,621		$	861,166		$	665,852		$	12,653,251		$	14,997,701
Deemed dividend						4,374,579								(4,374,579	)		-
Foreign currency translation adjustments														5,533									5,533
Income for the nine months ended September 30, 2009														1,367,139			1367,139
Transferred to Statutory reserve																	385,237			(385,237	)		-
Balance September 30, 2010		21,286,789	$	21,287	$	1,056,365		$	1,265,959	$	1,076,310		$	(4,231,522	)	$	(811,601	)
Dividend paid or declared																				(25,704,486	)		(25,704,486	)
Balance December 31, 2008		19,623,889	$	19,624	$	797,808		$	861,166	$	665,852		$	12,653,251		$	14,997,701
Income for the year ended December 31, 2009																				13,076,088			13,076,088
Foreign currency translation adjustments									5,533								5,533
Balance December 31, 2009		-	$	-		20,810,713		$	20,811	$	796,621		$	866,699		$	1,051,089		$	(360,284	)	$	2,374,936
Transferred to Statutory reserve											385,237			(385,237	)		-
Dividend paid or declared														(25,704,486	)		(25,704,486	)
Income for the year ended December 31, 2009														13,076,188			13,076,188
Balance December 31, 2009		19,623,889	$	19,624	$	797,808		$	866,699	$	1,051,089		$	(360,284	)	$	2,374,936

The accompanying notes are an integral part of these consolidated financial statements

F-54

RONGFU AQUACULTURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note 1 - ORGANIZATION

Rongfu Aquaculture, Inc., formerly named Granto, Inc (the “Company”) was incorporated in Nevada on February 29, 2008. On March 29, 2010, the Company entered into a Share Exchange Agreement with Rongfu Aquaculture, Inc. (“Rongfu”), certain stockholders and warrant holders of Rongfu (the “Rongfu Stockholders”) and a stockholder of Granto (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, on March 29, 2010, 9 Rongfu Stockholders transferred 100% of the outstanding shares of common stock and 100% of the warrants to purchase common stock of Rongfu held by them, in exchange for an aggregate of 1918,~~810~~623,~~713~~889 newly issued shares of our Common Stock held by them (the “Share Exchange Transaction”). In addition the shareholders received warrants to purchase an aggregate of 666,666 shares of our Common Stock. In connection with the closing of the Share Exchange Agreement, the former principal stockholder agreed to and did cancel 1,150,000 of the 1,200,000 shares of Granto, Inc. Common Stock held by her.

On March 29, 2010, the Company completed its merger with Rongfu in accordance with the ~~share~~Share Exchange Agreement. The Share Exchange Transaction is being accounted for as a reverse acquisition. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, the Company (the legal acquirer) is considered the accounting acquiree and Rongfu (the legal acquiree) is considered the accounting acquirer for accounting purposes. Subsequent to the Share Exchange Transaction, the financial statements of the combined entity will in substance be those of Rongfu. The assets, liabilities and historical operations prior to the share exchange transaction will be those of Rongfu. Subsequent to the date of the Share Exchange Transaction, Rongfu is deemed to be a continuation of the business of the Company. Therefore post -exchange financial statements will include the combined balance sheet of the Company and Rongfu, the historical operations of Rongfu and the operations of the Company and Rongfu from the closing date of the Share Exchange Transaction forward.

Rongfu was incorporated in Delaware on January 13, 2009. Flourishing Blessing (Hong Kong) Co., Ltd. (“Hong Kong Rongfu”) was incorporated on November 11, 2008. Pursuant to a Share Exchange Agreement, dated as of December 29, 2009, (the “December 2009 Agreement") all of the shareholders of Hong Kong Rongfu exchanged all of the outstanding shares of Hong Kong Rongfu for shares of common stock of Rongfu and Rongfu became the owner of 100% of the outstanding capital stock of Hong Kong Rongfu. Hong Kong Rongfu owns 100% of the capital stock of Guangzhou Flourishing Blessing Hansen Agriculture Technology Limited (“Guangzhou Flourishing”). Guangzhou Flourishing is a wholly foreign-owned enterprise, or “WFOE,” under the laws of the ~~PRC~~People’s Republic of China (“PRC”) by virtue of its status as a wholly-owned subsidiary of a non-PRC company, Hong Kong Rongfu. In connection with the closing of the December 2009 Agreement, Guangzhou Flourishing entered into and consummated a series of agreements (the "Contractual Agreements”),with Chen Zhisheng and Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. (“Nanhai Ke Da Heng Sheng”). Under the Contractual Agreements, Guangzhou Flourishing agreed to assume control of the operations and management of Nanhai Ke Da Heng Sheng in exchange for a management fee equal to Nanhai Ke Da Heng Sheng’s earnings before taxes. As a result, the business of Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Sheng Aquit Germchit Co., Ltd., a PRC corporation (“Hainan Ke Da Heng Sheng”) , 70% of the ~~outstanding~~ outstanding stock of which is owned by Nanhai Ke Da Heng Sheng, will be conducted by Guangzhou Flourishing. We anticipate that Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Sheng will continue to be the contracting parties under their customer contracts, bank loans and certain other assets until such time as those may be transferred to Guangzhou Flourishing. Nanhai Ke Da Heng ~~Sheng~~ Sheng was formed in the PRC on April 30, 2003 as a limited liability company (a company solely owned by a natural person). Hainan Ke Da Heng Sheng was formed in the PRC on August 6, 2007 as a limited liability company. Guangzhou Flourishing was incorporated in the PRC on January 9, 2009 as a ~~wholly owned foreign enterprise~~WFOE.

The Contractual Agreements completed in December 2009 provide that Guangzhou Flourishing has controlling interest in Nanhai Ke Da Heng Sheng under FASB Accounting Standards Codification “Consolidation of Variable Interest Entities”, an Interpretation of an Accounting Research Bulletin, which requires Guangzhou Flourishing to consolidate the financial statements of Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Shen and ultimately consolidate with its parent company, Rongfu Aquaculture, Inc.

The Company, through its subsidiaries, and Contractual Agreements, is engaged in integrated business of aquaculture including Tilapia brood stock, Tilapia fry, Tilapia farming, and marketing for Tilapia. It is specializing in the production of the Hengsheng Brand Nile Tilapia and the new licensed New Jifu Tilapia.F-5

In the opinion of the management of the Company, the accompanying consolidated interim financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at June 30, 2010 and the results of its operations for the six- month periods ended June 30, 2010 and 2009 and its cash flows for the six month periods June 30, 2010 and 2009. Actual results may differ from these estimates as a result of different assumptions or conditions.

F-6

RONGFU AQUACULTURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~ SEPTEMBER 30, 2010

(UNAUDITED)

Note 1 – ORGANIZATION –(CONTINUED)

In the opinion of the management of the Company, the accompanying consolidated interim financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at September 30, 2010 and the results of its operations for the nine and three month periods ended September 30, 2010 and 2009 and its cash flows for the nine month periods September 30, 2010 and 2009. Actual results may differ from these estimates as a result of different assumptions or conditions.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and represent the pro forma historical results of the consolidated group. The Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”) on July 1, 2009. For the ~~six months~~nine months ended September ~~June~~ 30, 2010, all reference for periods subsequent to January 1, 2010 is based on the Codification. The Company's functional currency is the Chinese Renminbi, however the accompanying consolidated financial statements have been translated and presented in United States Dollars.

Principles of Consolidation

The consolidated financial statements include the accounts of Rongfu ~~Aquaculture~~ Aquaculture, Inc. and its wholly owned subsidiaries, Hong Kong Rongfu, Guangzhou Flourishing, Nanhai Ke Da Heng Sheng, and Hainan Ke Da Heng Sheng (collectively referred to herein as the” Company”). All material inter-company accounts, transactions and profits have been eliminated in consolidation. The Company has adopted the Consolidation Topic of the FASB Accounting Standards Codification which requires a variable interest entity (“VIE”) to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns.

Translation Adjustment

As of ~~June~~September 30, 2010 and December 31, 2009, the accounts of the Company were maintained, and its financial statements were expressed, in Chinese Yuan Renminbi (“CNY”). Such financial statements were translated into U.S. Dollars (“USD”) in accordance with the Foreign Currency Matters Topic of the Codification, with the CNY as the functional currency. According to the Codification, all assets and liabilities were translated at the current exchange rate, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification, as a component of shareholders’ equity. Transaction gains and losses are reflected in the income statement.

Statement of Cash Flows

In accordance with the Statement of Cash Flows Topic of the Codification, cash flows from the Company’s operations are based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

~~Use of Estimates~~F-6

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Comprehensive Income

The Company follows the Comprehensive Income Topic of the Codification. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

Use of Estimates

F-7

RONGFU AQUACULTURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

Comprehensive Income

Risks and Uncertainties

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, by the general state of the PRC’s economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. ~~There~~ There were no contingencies of this type as of ~~June~~September 30, 2010 and December 31, 2009.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. There were no contingencies of this type as of ~~June~~September 30, 2010 and December 31, 2009.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

~~Accounts Receivable~~F-7

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. There were no allowances for doubtful accounts as of June 30, 2010 and December 31, 2009.

F-8

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounts Receivable

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or market~~, if lower~~. As of ~~June~~September 30, 2010 and December 31, 2009, inventories consist of of the following:

	6/30/2010		12/31/2009
	9/30/2010		12/31/2009
Raw materials	$	~~106~~20,~~687~~643	$	47,185
Work in process and finished goods		810,~~880~~885,~~941~~334		2,932,568
Total	$	8.10,~~987~~905,~~628~~977	$	2,979,753

Property, Plant & Equipment

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of:

Buildings	10-20 years
Fishing gear	5-10 years
Transportation equipment	5-10 years
Office equipment	3-5 years

~~As of June 30, 2010 and December 31, 2009, Property, Plant & Equipment consist of the following:~~F-8

	6/30/2010			12/31/2009
Buildings	$	213,538		$	73,631
Fishing gear		756,152			424,938
Transportation equipment		37,330			37,330
Office equipment		123,845			40,102
Construction in progress		-			-
Total		1,130,865			576,001
Accumulated depreciation		(225,580	)		(170,854	)
	$	905,285		$	405,147

RONGFU AQUACULTURE, INC

~~Depreciation~~NOTES ~~expense~~TO ~~for~~CONSOLIDATED ~~the~~FINANCIAL ~~six months ended June 30, 2010 and 2009 was $54,726 and $54,369, respectively.~~STATEMENTS

SEPTEMBER 30, 2010

(UNAUDITED)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

As of September 30, 2010 and December 31, 2009, Property, Plant & Equipment consist of the following:

	9/30/2010			12/31/2009
Buildings	$	214,466		$	73,631
Fishing gear		758,351			424,938
Transportation equipment		37,330			37,330
Office equipment		126,840			40,102
Total		1,136,987			576,001
Accumulated depreciation		(268,539	)		(170,854	)
	$	868,448		$	405,147

Depreciation expense for the nine months ended September 30, 2010 and 2009 was $63,818 and $69,050, respectively.

Long-Lived Assets

The Company adopted the Property, Plant and Equipment Topic of the Codification, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes previous accounting guidance, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of ~~June~~ September 30, 2010, there were no impairments of its long-lived assets.

Derivative Liability

The Company issued warrants in connection with the Share Exchange Agreement and Series A Preferred Stock Purchase Agreement dated March 29, 2010 (the “Stock Purchase Agreement”).

The Company determined that the warrants did not qualify for a scope exception under ASC 815 as they were determined to not be indexed to the Company’s stock as prescribed by ASC 815. The warrants, under ASC 815, were classified as derivative liability for the then relative fair market value of $3,267,797 and marked to market. For the nine months ended September 30, 2010, the Company recorded a loss on change in fair value of derivative liability of $6,251,254 to mark to market for the increase in fair value of the warrants through September 30, 2010. Under ASC 815, the warrants will be carried at fair value and adjusted at each reporting period.

F-9

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Derivative Liability

The Company issued warrants in connection with the Purchase Agreement dated March 29, 2010 with certain reset exercise price provisions.

As a result of the adoption of the Derivative and Hedging Topic of the FASB Accounting Standards Codification (“ASC 815”), the Company determined that the warrants did not qualify for a scope exception under ASC 815 as they were determined to not be indexed to the Company’s stock as prescribed by ASC 815. The warrants, under ASC 815, were classified as derivative liability for the then relative fair market value of $ 3,267,797 and marked to market. For the six months ended June 30, 2010, the Company recorded a loss on change in fair value of derivative liability of $5,307,988 to mark to market for the increase in fair value of the warrants through ended June 30, 2010. Under ASC 815, the warrants will be carried at fair value and adjusted at each reporting period.

Pursuant to a Share Exchange Agreement dated March 29, 2010, the Company issued 4,127,568 warrants to purchase an aggregate of 4,127,568 shares of our Common Stock to certain former warrantholders of Rongfu. The Company determined the fair value of the reset provisions at March 31, 2010 was $ 7,830,045. The fair value was determined using the Black Scholes Option Pricing Model based on the following assumptions: dividend yield: -0-%; volatility: 73.27%, risk free rate: 2.55%, expected term: 5 years.

Fair Value of Financial Instruments

~~The~~In ~~Financial~~accordance ~~Instrument~~with ~~Topic~~FASB ofASC ~~the~~820, ~~Codification~~fair ~~requires~~value ~~that~~is ~~the~~defined ~~Company disclose~~as ~~estimated~~the ~~fair~~price ~~values~~that ofwould ~~financial~~be received ~~instruments.~~to ~~The~~sell ~~carrying~~an ~~amounts reported~~asset inor ~~the~~paid ~~statements~~to oftransfer ~~financial~~a ~~position~~liability ~~for~~(i.e., ~~current~~the ~~assets and current~~“exit ~~liabilities~~price”) ~~qualifying~~in asan ~~financial~~orderly ~~instruments~~transaction ~~are~~between amarket ~~reasonable~~participants ~~estimate~~at ~~of fair~~the ~~value~~measurement date.

In determining fair value, the Company uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value.

As of September 30, 2010 and December 31, 2009, the derivative liabilities amounted to $9,519,051 and $0. In accordance with the accounting standards, the Company determined that the carrying value of these derivatives approximated the fair value using the level 1 inputs.

Revenue Recognition

The Company’s ~~revenue~~records ~~recognition~~revenues ~~policies~~for ~~are~~goods inshipped ~~compliance~~at ~~with~~ the ~~Revenue Recognition~~time ~~Topic~~ of ~~the Codification~~ shipment. For ~~Sales~~goods ~~revenue~~delivered isby ~~recognized at~~ the ~~date of~~Company ~~shipment~~ to ~~customers when~~ a ~~formal~~customer’s ~~arrangement exists~~site, ~~the price is fixed or~~ ~~determinable,~~revenues ~~the~~are ~~delivery~~recognized isat ~~completed,~~time ~~no other significant obligations~~ of ~~the Company exist and collectability is reasonably assured~~delivery. ~~Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.~~

The Company ~~has~~believes ~~three~~that ~~types~~recognizing of revenue ~~streams~~at ~~from~~these ~~its~~times ~~three~~is ~~line~~appropriate because the Company’s sales policies meet the four criteria of ~~business~~the SEC’s staff Accounting Bulletin No. 104, which are: (i) persuasive evidence that an ~~namely~~arrangement 1exists, (ii) ~~Fish~~service ~~breeding;~~has 2occurred, (iii) ~~Fish~~the ~~growing;~~seller’s 3price to the buyer is fixed and determinable and (iv) ~~Fish~~collection ~~trading~~is reasonably assured.

Fish breeding

The Company operates a breeding farm and sells fish fry to local farmers. The Company recognizes sales revenue at the date of shipment or delivery to customers. The Company presents revenues from such transactions in its statements of income.

Fish growing

The Company operates adult fish breeding farms and sells adult fish to fish food manufacturers. The Company recognizes sales revenue at the date of shipment or delivery to customers and presents revenues from such transactions in its statements of income.

Fish trading

The Company deals with local individual farmers. The Company recognizes sales revenue at the date of shipment or delivery to the manufacturer and records revenues from such transactions in its statements of income.

Research and development cost

Research and development costs are expensed in the period when they are incurred. During ~~six~~the nine months ended ~~June~~September 30, 2010 and 2009, research and development costs were $38104,~~643~~255 and $3556,~~142~~437, respectively. During the three months ended September 30, 2010 and 2009, research and development costs were $65,612 and $21,295, respectively.

Advertising

Advertising expense consists primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. Advertising expense for the nine months ended September 30, 2010 and 2009 was $34,537 and $41,106, respectively. Advertising expense for the three months ended September 30, 2010 and 2009 was $18,849 and $32,470, respectively.

F-10

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. Advertising expense for the six months ended June 30, 2010 and 2009 were $15,688 and $8,636, respectively.

Shipping and handling fees

The Company follows ASC 605-45, “Handling Costs, Shipping Costs”. The Company does not charge its customers for shipping and handling. The Company ~~classifies~~ classifies shipping and handling costs as part of general and administrative expense. Shipping and handling fees for the nine months ended September 30, 2010 and 2009 were $442,591 and $118,035, respectively. Shipping and handling fees for the three months ended September 30, 2010 and 2009 were $198,997 and $70,449, respectively.

Advances from Clients

The Company records deposits received by customers prior to the completion of the sale as deferred revenues and included as a component of advances from clients. At such time as the revenue cycle is complete, these monies will be recognized into revenues.

Income Taxes

The Company utilizes the accounting guidance, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. It is the Company’s intention to permanently reinvest earnings from activity with ~~china~~PRC. And thereby indefinitely postpone repatriation of these funds to the US. Accordingly, no domestic deferred income tax provision has been made ~~fro~~ for US income tax which could ~~result~~ result from paying dividend to the Company.

There were no deferred ~~tax~~taxes at ~~difference~~September ~~as of June~~ 30, 2010 and December 31, 2009.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, all are in China. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Note 3 –OTHER RECEIVABLES

Other receivables mainly consist of ~~cash~~prepayment ~~advances~~of fish toequipment ~~rent~~amounting ~~deposit~~to $1,194,030. As of ~~June~~September 30, 2010 and December 31, 2009, the other receivables excluding the prepayment of fish equipment were $27127,~~149~~326 and $21,208, respectively.

F-11

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note 4 – BIOLOGICAL ASSETS

As of September 30, 2010 and December 31, 2009, Biological assets at cost consist of the following:

	9/30/2010			12/31/2009
Carp	$	28,101		$	20,562
Tilapia		959,561			959,561
Yellow bone fish		55,385			-
California bass		15,999			-
Snakeheads		265,368			178,204
Total		1,324,414			1,158,327
Accumulated amortization		(1,075,603	)		(725,519	)
	$	248,811		$	432,808

Amortization expense for the nine months ended September 30, 2010 and 2009 was $ 350,084 and $ 306,613 respectively.

Biological assets are amortized using the straight-line method over their estimated period of benefit, ranging from three to five years. Management evaluate the recoverability of biological assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that any changes exists. All of the Company’s biological assets are subject to amortization with estimated lives of:

Carp	5 years
Tilapia	3 years
Snakeheads	3 years
California bass	3 years
Yellow bone fish	3 years

As of June 30, 2010 and December 31, 2009, Biological assets at cost consist of the following:

	6/30/2010			12/31/2009
Carp	$	28,052		$	20,562
Tilapia		959,561			959,561
Yellow bone fish		55,020			-
California bass		15,894			-
Snakeheads		264,793			178,204
Total		1,323,320			1,158,327
Accumulated amortization		(957,120	)		(725,519	)
	$	366,200		$	432,808

Amortization expense for the six months ended June 30, 2010 and 2009 was $ 231,601 and $ 204,339 respectively.

Note 5 – RELATED PARTIES

One of the Company’s vendors is a related party. As of and for the ~~six~~nine months ended ~~June~~September 30, 2010, ~~the~~such vendor accounted for approximately 2019% of the Company’s purchases and 38% 31of accounts payable. As of and for the nine months ended September 30, 2009, such vendor accounted for approximately 53% of the Company’s purchases and 87% of accounts payable.

For the ~~six~~nine months ended ~~June~~September 30, 2010, the Company collected all amounts previously due from the shareholder.

Note 6 – DUE FROM/TO SHAREHOLDER

As of ~~June~~September 30, 2010, due from shareholder was $0.

During the fourth quarter of 2009, the Company loaned an aggregate of RMB 21,900,000 ($3,201,343 translated at $1=RMB 6.8372) to a shareholder. The shareholder invested the entire proceeds of the loan in the construction of Foshan Nanhai Guanyao Processing Industrial Park, which has a total area of 108,000 square meters with the construction area of 85,000 square meters. The loan bears interest and may be paid off by deducting the shareholder’s allocation of shareholders’ dividends or other means. After the construction has been completed, the Company has a first option to rent Foshan Nanhai Guanyao Processing Industrial Park on terms to be determined. This amount is included in the Due from shareholders of $4,008,659 as of December 31, 2009. During the ~~six~~nine months ended ~~June~~September 30, 2010 this loan was repaid.

No interest was levied from the related transaction. The facilities are constructed in progress and third parties have rented part of the facilities. The Company has not rented the facilities yet.

Note 7 – CONCENTRATIONS

As of ~~June~~ September 30, 2010, ~~one~~three ~~customer~~customers accounted for 2365% of accounts receivable. ~~For~~As ~~the six months ended June 30, 2010, the Company had three vendors who accounted for 66%~~ of ~~total~~September ~~purchases. For the three moths ended June~~ 30, 2009, ~~Two vendors accounted for 78% of total purchase and one is related party vendor accounted for 69% of total purchase. As of December 31, 2009,~~ two customers ~~accounted~~ ~~for 20% of accounts receivable. For the six months ended June 30, 2009, the Company had two vendors who~~ accounted for 5999% of ~~total purchases and~~ ~~one related party vendor who accounted for 49%. At June 30, 2010, 78% of~~ accounts ~~payable were due to related parties~~receivable.

For the nine months ended September 30, 2010, the Company had three vendors who accounted for 56% of total purchases. As of December 31, 2009, two customers accounted for 20% of accounts receivable. For the nine months ended September 30, 2009, the Company had two vendors who accounted for 66% of total purchases and one related party vendor who accounted for 60%. For the three months ended September 30, 2009, the Company had two vendors who accounted for 39% of total purchases and one related party vendor who accounted for 16%. At September 30, 2010, 87% of accounts payable was due to related parties. For the three months ended September 30, 2009, the Company had two vendors who accounted for 77% of total purchases and one related party vendor who accounted for 70% of total purchases.

F-12

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note 8 – COMPENSATED ABSENCES

Regulation 45 of the local labor law of ~~the People’s Republic of China (“~~PRC”) entitles employees to annual vacation leave after 1 year of service. In general, all leave must be utilized annually, with proper notification. Any unutilized leave is cancelled. The management estimated that there is insignificant unutilized leave as at September 30, 2010 and September 30, 2009.

Note 9 – COMMON STOCK

On March 29, 2010, the Company entered into the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, on March 29, 2010, 9 Rongfu Stockholders transferred 100% of the outstanding shares of common stock and 100% of the warrants to purchase common stock of Rongfu held by them, in exchange for an aggregate of 18,623,889 newly issued shares of our Common Stock and warrants to purchase an aggregate of 666,666 shares of our Common Stock. In connection with the closing of the Share Exchange Agreement, the former principal stockholder agreed to and did cancel 1,150,000 of the 1,200,000 shares of Rongfu Aquaculture, Inc. Common Stock held by her.

Note 10 – SERIES A CONVERTIBLE PREFERRED STOCK

On March 29, 2010, the Company entered into the Purchase Agreement with eighteen investors. The Company authorized and issued to Investors $7,700,000, of the Company’s convertible, redeemable Series A Preferred Stock, $0.001 par value per share (the “Series A Stock”) at a price of $2.78 per share. The shares are convertible into shares of the Company’s common stock, par value $0.001 per share. In connection with the Purchase Agreement the Company incurred offering costs of $1,038,923, which are subtracted from the total proceeds and against additional paid in capital. The Company has agreed to pay liquidated damages if the Registration Statement is not filed or not declared effective by SEC.

Pursuant to the Purchase Agreement the holders of Series A Stock also received 3,460,902 5 year warrants to purchase common shares. The warrants have an exercise price of $3.47 for 1,730,451 warrants and $4.17 for the remaining 1,730,451 warrants.

Assuming a valuation of $3.10 per share and the conversion of the Series A Stock into 4,221,389 shares of common stock at an effective conversion price of approximately $1.52 per share which is obtained by dividing the amount to be allocated to the BCF by the 2,768,721 common shares, pro forma net income per common share would be $(0.34).

The Company measured and recognized an aggregate of $3,267,797 of the fair value of warrants to additional paid in capital upon issuance of these warrants. The terms of the warrants provide for an adjustment to the exercise price of these warrants if the company closes on the sale or issuance of common stock at a price which is less than the exercise price then in effect for these warrants. Pursuant to EITF No. 07-05 on March 29, 2010, the Company determined that the warrants did not qualify for a scope exception under SFAS No. 133 as they were determined to not be indexed to the Company’s stock as prescribed by EITF No. 07-05. On March 29, 2010, the warrants were reclassified from equity to derivative liability for the then fair market value and marked to market (see Note 2 Derivative Liability).

						Aggregate
			Exercise		Remaining	Intrinsic
	Total		Price		Life	Value
Outstanding, December 31, 2009		-
Granted in 2010		4,127,568	$	2.44-4.17	4.75 years
Exercised in 2010
Outstanding, March 31, 2010		4,127,568

F-13

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note 1110 -– ~~INCOME~~SERIES ~~TAXES~~A CONVERTIBLE PREFERRED STOCK AND WARRANTS

On March 29, 2010, the Company entered into the Stock Purchase Agreement with eighteen investors. The Company authorized and issued to Investors $7,700,000, of the Company’s convertible, redeemable Series A Preferred Stock, $0.001 par value per share (the “Series A Stock”) at a price of $2.78 per share (the “Series A Issue Price”). The shares are convertible into shares of the Company’s common stock, par value $0.001 per share. In connection with the Stock Purchase Agreement the Company incurred offering costs of $1,038,923, which are subtracted from the total proceeds and recorded in additional paid in capital.

The Series A Stock, in preference to the holders of common stock, shall be entitled to receive, when and as declared by the Board of Directors out of funds that are legally available therefore, cumulative dividends at the rate of six percent (6%) per annum of the original Series A Issue Price on each outstanding of Series A Preferred payable semi-annually on each February 28 and August 31. Payment of these dividends shall be made, at the Company’s option, in cash or shares of common stock. Each holder of the Series A Stock shall be entitled to one vote for each whole share of common stock into which such shares of Series A Stock could be converted in accordance with the agreement.

The Company has agreed to pay liquidated damages to its warrant holders if the Registration Statement is not filed by May 13, 2010 and/or not declared effective by the SEC on or before October 25, 2010. The liquidated damages are equal to 1% of the purchase price of the purchased shares owned by investors. The maximum aggregate liquidated damages payable to the investors under this Agreement shall be 6% of the aggregated purchase price paid by the investors pursuant to this Purchase Agreement. The Company must pay the liquidated damages in cash. Liquidated damages of $207,900 have been accrued as a component of other payables.

The Company measured and recognized an aggregate of $3,267,797 of the fair value of warrants to additional paid in capital upon issuance of these warrants. The terms of the warrants provide for an adjustment to the exercise price of these warrants if the company closes on the sale or issuance of common stock at a price which is less than the exercise price then in effect for these warrants. The Company determined that the warrants did not qualify for a scope exception under SFAS No. 133 as they were determined to not be indexed to the Company’s stock. On March 29, 2010, the warrants were classified as a derivative liability for the then fair market value and marked to market.

						Aggregate
			Exercise		Remaining	Intrinsic
	Total		Price		Life	Value

Outstanding, December 31, 2009		-
Granted in 2010
- in connection with exchange agreement		666,666	$	2.44-2.93	4.5 years
- in connection with Series A preferred		3,460,902	$	3.47-4.17	4.5 years
Exercised in 2010
Outstanding, September 30, 2010		4,127,568

Note 11-DERIVATIVE FINANCIAL INSTRUMENTS

The balance sheet caption derivative liabilities consist of warrants to purchase 4,127,568 shares of the Company’s common stock, issued to consultants and investor relations in connection with the merger agreements and in connection with the Stock Purchase Agreement. These derivative financial instruments are indexed to an aggregate of 2,768,721 and 0 shares of the Company’s common stock as of September 30, 2010 and December 31, 2009, respectively, and are carried at fair value. The following tabular presentations sets forth information about the derivative instruments for the periods September 30, 2010 and December 31, 2009:

Derivative income (expense)	Nine Months Ended September 30, 2010			Three Months Ended September 30, 2010

Warrant derivative	$	(6,251,054	)	$	(943,266	)

Liabilities		September 30, 2010			December 31, 2009
Warrant derivative			9,519,051		0-

Freestanding derivative instruments, consisting of warrants are valued using the Black-Scholes-Merton valuation methodology because that model embodies all of the relevant assumptions that address the features underlying these instruments. Significant assumptions used in the Black Scholes models included: conversion or strike prices ranging from $2.44-$4.17; volatility 73.27% based upon forward terms of instruments; terms-remaining life of 4.5 years ; and a risk free rate ranging from 1.79%-2.5%.

Note 12 - INCOME TAXES

The Company operates in more than one jurisdiction with complex regulatory environments subject to different interpretations by the taxpayer and the respective governmental taxing authorities, we evaluate our tax positions and establish liabilities, if required. For uncertain tax position which may be challenged by local tax authorities and may not be fully sustained despite our belief that the underlying tax positions maybe be fully supportable. At this time the Company is not able to make a reasonable estimate of the impact on the effective tax rate related these items which could be challenged.

Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) through December 31, 2007 is at a statutory rate of 33%, which is comprised of 30% national income tax and 3% local income tax. As of January 1, 2008, the EIT is at a statutory rate of 25%. The Company is an agriculture enterprise and under PRC Income Tax Laws, it is entitled to an exemption for 2006. Starting from January 1, 2008, it is entitled to have new PRC tax policy for the agriculture enterprise. The Company’s income come from three parts including fish breeding, fish cultivation and selling adult fish. For income from fish breeding, it is entitled to an exemption. For income from fish cultivation, EIT is a discount rate of 12.5%. For income from selling adult fish, EIT is a rate of 25%.

The following is a reconciliation of income tax expense:

June 30, 2010	International		Total
Current	$	488,584	$	488,584
June 30, 2009	International		Total
Current	$	378,950	$	378,950

Note 12– COMMITMENTS & CONTINGENCIES

The Company leases facilities under operating leases, which expire on different dates. It pays for on an annual basis and accrues for throughout the year. For the six months ended June 30, 2010 and 2009, rent expense was $ 165,166 and $ 302,190. Future payments under these leases are as follows as of June 30:

2011	$	52,339
2012	$	52,339
2013	$	52,339
2014	$	18,903
2015	$	13,035
Thereafter	$	31,256
Total	$	220,211

F-14

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note ~~13–~~12 - ~~EARNINGS~~INCOME ~~PER~~TAXES ~~SHARE~~– (CONTINUED)

InPursuant ~~accordance~~to ~~with~~the ~~FASB~~PRC ~~ASC~~Income ~~Topic~~Tax ~~260-1-50~~Laws, ~~“Earnings~~the ~~per~~Enterprise ~~Share~~Income Tax (“EIT”,) ~~and~~is ~~SEC~~at ~~Staff~~a statutory ~~Accounting~~rate ~~Bulletin~~of No25%. ~~98,~~The ~~basic~~Company ~~net~~is ~~income~~an oragriculture ~~loss~~enterprise ~~per~~and ~~common~~under ~~share~~PRC isIncome Tax ~~computed~~Laws, byit ~~dividing~~is ~~net~~entitled ~~income~~to orhave ~~loss~~new ~~for~~PRC ~~the~~tax ~~period~~policy byfor the ~~weighted~~agriculture ~~- average~~enterprise. ~~number~~The ofCompany’s ~~common~~derived ~~shares~~from ~~outstanding~~three areas ~~during~~including ~~the~~fish ~~period. Under FASB ASC 260-10-50~~breeding, ~~diluted~~fish cultivation ~~income~~and orselling ~~loss~~adult ~~per~~fish. ~~share~~For isincome ~~computed~~from byfish ~~dividing~~breeding, ~~net~~it is ~~income~~entitled orto ~~loss~~an ~~for~~exemption. ~~the~~For ~~period~~income byfrom ~~the~~fish ~~weighted~~cultivation, -EIT ~~average~~is ~~number~~a discount rate of ~~common~~12.5%. ~~and common~~For ~~equivalent~~income ~~shares,~~from ~~such~~selling asadult ~~stock options~~fish, ~~warrants~~EIT ~~and~~is ~~convertible securities~~a ~~outstanding~~rate ~~during the period~~of 25%.

The following ~~table~~is ~~sets~~a ~~forth~~reconciliation ~~the computation~~ of ~~basic~~income ~~and~~tax ~~diluted earnings per share of common stock~~expense:

	Six months ended June 30,
September 30, 2010	International			Total
	2010			2009
Current	$	790,416		$	790,416
Basic earnings from continuing operations per share:
September 30, 2009	International			Total
Numerator:
Current	$	446,572		$	446,572
Income from operations used in computing basic earnings per share	$	(4,466,576	)	$	5,021,462
Income from operations applicable to common shareholders	$	(4,466,577	)	$	5,021,462
Denominator:
Weighted average common shares outstanding		21,286,789			20,810,713
Basic earnings per share from continuing operations	$	(0.21	)	$	0.24
Diluted earnings (losses) per share from operations:
Numerator:
Income from operations used in computing diluted earnings per share	$	(4,446,576	)	$	5,021,462
Income (loss) from operations applicable to common shareholders	$	(4,446,576	)	$	5,021,462
Denominator:
Weighted average common shares outstanding		21,286,789			20.810,713
Weighted average effect of dilutive securities:
Stock options and warrants		-			-
Shares used in computing diluted net income per share		21,286,789			20,810,713
Diluted earnings per share from operations	$	(0.21	)	$	0.24

Note 14 – STATUTORY RESERVE

	Nine Months Ended September 30,						Three Months Ended September 30,
	2010			2009			2010			2009
Reconciliation of Effective tax rate

Statutory tax rate		25	%		25	%		25	%		25	%
Non deductibility of permanent items		26	%		0	%		9	%		0	%
Tax benefits from discounts and exemption		(18	)%		(18	)%		(20	)%		(54	)%
Others		4	%		0	%		11	%		35	%
Effective tax rate		37	%		7	%		25	%		6	%

~~In accordance~~If ~~with~~ the Company ~~laws~~were ~~and~~subject ~~regulations~~to of the ~~PRC,~~standard a25% ~~wholly-owned Foreign Invested Enterprises income~~EIT, ~~after~~it ~~the~~would ~~payment~~have ofincurred ~~the PRC income taxes~~$1, ~~shall be~~587,300 ~~allocated to the statutory surplus reserves~~ and ~~statutory public welfare fund. Prior to January~~ $1,193,111 ~~2006 the proportion~~ of ~~allocation~~income ~~for reserve was 10 percent of the profit after~~ tax toexpense ~~the~~for ~~surplus reserve fund and additional 5-10 percent to~~ the ~~public~~nine ~~affair~~months ~~fund.~~ended ~~The~~September ~~public welfare fund reserve was limited to 50~~30, ~~percent~~2010 ofand ~~the registered capital. Effective January 1~~2009, ~~2006, there is now only one fund requirement~~respectively. The ~~reserve~~standard ~~should be 10 percent of~~ income ~~after~~ tax, ~~not to~~rate ~~exceed~~would ~~50 percent of registered capital. Statutory Reserve funds are~~have ~~restricted~~caused ~~for set off against losses, expansion of production and operation or increase in register capital of~~ the ~~respective~~Company ~~company. Statutory public welfare fund is restricted~~ to ~~the~~incur ~~capital~~an ~~expenditures~~additional ~~for~~expense ~~the collective welfare~~ of ~~employees~~ $0.08 ~~These reserves~~and ~~are not transferable to the Company in the form of cash dividends, loans or advances~~$0.06 ~~These~~per ~~reserves are therefore not available~~share for ~~distribution~~the ~~except~~nine inmonths ~~liquidation.~~ended AsSeptember ~~of June~~ 30, 2010 and ~~December 31,~~ 2009, ~~the Company had allocated $1,076,310 and $1,051,089, to these~~ ~~non-distributable reserve funds~~respectively.

If the Company were subject to the standard 25% EIT, it would have incurred $422,316 and $577,110 of income tax expense for the three months ended September 30, 2010 and 2009, respectively. The standard income tax rate would have caused the Company to incur an additional expense of $0.02 and $0.03 per share for the three months ended September 30, 2010 and 2009, respectively.

Note 13– COMMITMENTS & CONTINGENCIES

The Company leases facilities under operating leases, which expire on different dates. It pays for on an annual basis and accrues for throughout the year. For the nine months ended September 30, 2010 and 2009, rent expense was $ 232,379 and $ 315,059. Future payments under these leases are as follows as of September 30:

2011	$	382,899
2012	$	365,660
2013	$	334,234
2014	$	268,287
2015	$	111,825
Thereafter	$	439,246
Total	$	1,902,151

F-15

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2010

(UNAUDITED)

Note ~~15-~~14– ~~OTHER~~EARNINGS ~~COMPREHENSIVE~~PER ~~INCOME~~SHARE

~~Balances~~In ofaccordance ~~related~~with ~~after~~FASB ASC Topic 260-~~tax~~1-50, ~~components~~“Earnings ~~comprising~~per ~~accumulated~~Share”, ~~other~~and ~~comprehensive~~SEC Staff ~~income~~Accounting Bulletin No. 98, ~~included~~basic innet ~~stockholders’~~income ~~equity,~~or atloss ~~June~~per 30common share is computed by dividing net income or loss for the period by the weighted - average number of common shares outstanding during the period. Under FASB ASC 260-10-50, ~~2010~~diluted income or loss per share is computed by dividing net income or loss for the period by the weighted - average number of common and common ~~December~~equivalent 31shares, ~~2009,~~ ~~are~~such as ~~follows:~~stock options, warrants and convertible securities outstanding during the period.

	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income
Balance at December 31, 2008	$	861,166	$	861,166
Change for 2009		5,533		5,533
Balance at December 31, 2009	$	866,699	$	866,699
Change for six months ended 6/30/2010		(98,496)		(98,496)
Balance at June 30, 2010	$	768,203		768,203

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

Note 16- SUBSEQUENT EVENTS

	Nine Months Ended September 30,					Three Months Ended September 30,
	2010			2009		2010		2009
Basic and diluted earnings per share:
Numerator:
(Loss)/Income used in computing	$	(3,846,017	)	$	6,025,171	$	826,560	$	1,003,709
Denominator:
Weighted average common shares outstanding		20,756,854			19,623,889		21,286,789		19,623,889
Basic and diluted earnings per share	$	(0.19	)	$	0.31	$	0.04	$	0.05

~~For the~~Note six months ended June 30, 2010, the Company has evaluated subsequent events for potential recognition and disclosure through the date of the financial statement issuance. Based upon this evaluation management has concluded that none existed as of15 ~~June~~– ~~30,~~STATUTORY ~~2010.~~RESERVE

In accordance with the laws and regulations of the PRC, a WFOE’s income, after the payment of the PRC income taxes, shall be allocated to the statutory surplus reserves and statutory public welfare fund. Prior to January 1, 2006 the proportion of allocation for reserve was 10 percent of the profit after tax to the surplus reserve fund and additional 5-10 percent to the public affair fund. The public welfare fund reserve was limited to 50 percent of the registered capital. Effective January 1, 2006, there is now only one fund requirement. The reserve should be 10 percent of income after tax, not to exceed 50 percent of registered capital. Statutory Reserve funds are restricted for set off against losses, expansion of production and operation or increase in register capital of the respective company. Statutory public welfare fund is restricted to the capital expenditures for the collective welfare of employees. These reserves are not transferable to the Company in the form of cash dividends, loans or advances. These reserves are therefore not available for distribution except in liquidation. As of September 30, 2010 and December 31, 2009, the Company had allocated $1,076,310 and $1,051,089, to these non-distributable reserve funds.

F-16

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(UNAUDITED)

Note 16- OTHER COMPREHENSIVE INCOME

Balances of related after-tax components comprising accumulated other comprehensive income, included in stockholders’ equity, at September 30, 2010 and December 31, 2009, are as follows:

	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income
Balance at December 31, 2008	$	861,166	$	861,166
Change for 2009		5,533		5,533
Balance at December 31, 2009	$	866,699	$	866,699
Change for nine months ended 9/30/2010		399,260		399,260
Balance at September 30, 2010	$	1,265,959		1,265,959

Note 17- RESTATEMENT

The accompanying consolidated balance sheet and statement of stockholders’ equity as of, and for the year ended, December 31, , 2009 have been restated for the following matter:

The number of shares of the Company’s common stock outstanding at December 31, 2009 was overstated in such financial statements.

Therefore, we have restated the financial statements to correct this error. The net effect of this reclassification is as follows:

A decrease in the Company’s common stock by $1,187 from $20,811 to $19,624 and an increase of additional paid in capital by the same amount.

Note 18- SUBSEQUENT EVENTS

For the nine months ended September 30, 2010, the Company has evaluated subsequent events for potential recognition and disclosure through the date of issuance of these financial statements.. Based upon this evaluation management has concluded that no subsequent events requiring recognition or disclosure existed.

F-17

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

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes of Rongfu Aquaculture, Inc.. appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements.

Overview

The Company is engaged in commercial freshwater aquaculture in the PRC. It sells fish and fish fry and also acts as a freshwater fish dealer (generating trading profits from the purchase of fish from third party farmers and the immediate sale of such fish to wholesalers).

During the fiscal year ended December 31, 2009 (“fiscal 2009”) the Company sold more than 27,000 tons of adult fish to frozen fish processors and wholesalers in Guangdong Province and Hainan Province, PRC and sold approximately 360 million fry to distributors, which in turn sold such fry to other farmers to cultivate.

Approximately 74.0% of the Company’s revenues for fiscal 2009 were from the sale of adult fish farmed by the Company, approximately 13.7% of the Company’s 2009 revenues were from the re-sale of fish purchased by the Company from farmers and approximately 12.3% of the Company’s 2009 revenues were generated from the sale of fish fry. Approximately 67.9% of the Company’s net income for fiscal 2009 was from the cultivation and sale of adult fish, approximately 30.3% of the Company’s 2009 net income were from the breeding, incubation and sale of fish fry and approximately 1.8% of the Company’s 2009 net income was profit from the Company’s trading of freshwater adult fish. According to China Agriculture Magazine, the Company is currently the largest seller of tilapia fry in the PRC and the Company believes that it is also one of the three largest sellers of adult tilapia in the PRC.

The Company operates 13 adult fish breeding farms, covering a total area of 8,249 mu Three of the Company’s farms are located in Hainan Province, two in the town of Wenchang and one in Nanling. The other 10 farms are located in Guangdong Province in the towns or villages of Nanhai, Qinyuan, Taishan, Yangdong and Gaoyao. 9 of the farms consist of a series of man-made ponds. Each pond is outfitted with one or more oxygen aeration machines which float on the surface and one or more feeding machines which provide food to the fish twice per day. The aeration machines provide oxygen to the fish and enable the natural removal of fish wastes so that the water does not become toxic for the fish.

4 of the Company’s farms are each comprised of a single lake created by damming a river. Oxygen aeration equipment is not needed since the lakes have a much larger area than the ponds dug by the Company. The land on which the farms are located is leased by the Company from the village under leases for terms of 4 to 30 years.

In addition to its adult fish breeding farms, the Company operates a breeding farm in Wenchang, Hainan Province in which tilapia fry are produced from brood stock.

At its facilities in Nanhai (at which the Company’s fish clinic is also located) and Wenchang, the Company also has constructed and maintains concrete tanks where the Company incubates tilapia. The Company also incubates snakehead and crucian carp fry in its tank in Nanhai. After the incubation period the Company sells approximately 95% of the fry to distributors.

Approximately 45.9% of the Company’s revenues from the sale of Company grown adult fish in fiscal 2009 were from the sale of tilapia, approximately 21.2% was from the sale of grass carp, approximately 9.6% was from the sale of snakehead, approximately 8.3% was from the sale of bighead and the balance of the Company’s revenues from the sale of adult fish during fiscal 2009 were from sales of other varieties of freshwater fish, including catfish, bream, black carp and crucian carp.4

~~Approximately~~Comparison ~~77.6%, 15.9% and 6.5%~~ of ~~the~~three ~~Company’s~~months ~~revenues~~ended ~~during~~September ~~fiscal 2009 from sales of fish fry were from the sale of tilapia~~30, ~~snakehead~~2010 and ~~crucian~~September ~~carp fry~~30, ~~respectively.~~ ~~The Company does not incubate fry of the other adult fish that it cultivates. Rather it purchases the fry for such fish from distributors.~~2009

InThe ~~conjunction~~following ~~with~~table ~~Professor~~presents ~~Sifa Li and his team from Shanghai Fisheries University, during~~ the ~~period~~Company’s ~~from~~consolidated ~~1994~~net tosales ~~2006~~for ~~the Company~~its ~~developed~~lines ~~a strain~~ of business ~~Nile~~for ~~tilapia~~the ~~called~~three ~~“New~~months ~~Jifu”~~ended ~~which~~September ~~has~~30, ~~received the~~2010 ~~approval~~ and ~~recommendation~~three ~~the~~months ~~PRC Ministry of Agriculture. The Company~~ended ~~currently~~September ~~produces approximately 17~~30,~~000~~ ~~tons of tilapia per year~~2009, ~~approximately 60% of which is of the New Jifu variety and 40% of which is oreochromis tilapia.~~respectively:

The Company sells approximately 90% of its tilapia to the owners of 28 processing plants in Guangdong and Hainan Provinces. The processors generally require that the tilapia be of a standard weight of .75 kiligrams. (Because of such weight requirement, the Company generally sells most of its tilapia in the fourth quarter since the growing season of approximately 6 months commences in March of each year.) The processors freeze the tilapia and sell the frozen product for distribution domestically in China and internationally. The balance of the Company’s tilapia, as well as all of the other fish the Company sells, is sold under the Company’s Hengshen brand name to fish brokers located in wholesale markets in Guangdong Province, Hainan Province, Fujian, Xinjiang Province etc. which in turn market the fresh fish nationwide in China though other wholesalers or at retail.

Three Months Ended September 30, 2010 and 2009					%
	2010		2009		Change

Farm growing	$	7,112,859	$	2,230,948		219	%

Breeding	$	1.107.114	$	837,051		32	%

Trading	$	4,596,302	$	1,695,651		171	%

Consolidated	$	12,816,275	$	4,763,650		169	%

Revenue for the three months ended September 30, 2010 were $12,816,275, an increase of $8,052,625 or 169%, when compared to the same period in 2009. Such increase was attributed to the increase in sales of the trading business of adult fish by $2.9 million, particularly snakehead which contributed an increasing proportion of revenues of the trading business (60%) for the current quarter, and the increase in farm growing of adult fish by $4.9 million attributable to the increase in farm growing of snakehead compared to the same period of 2009. The opening in May 2010 of our logistics center greatly facilitated the distribution of snakehead to Guangzhou Province and other regions in the PRC. For the three months ended September 30, 2010, sales of fish fry increased $270,063 compared to the same period of the prior year, due to sales of fry of our two new fish – yellow catfish and California perch.

Cost of goods sold for the three months ended September 30, 2010 were $9,129,968, an increase of $5,994,211 or 191%, when compared to the same sales period of the prior year, which consisted of an increase of $3,380,015 for breeding adult fish , an increase of $2,563,000 for the trading business, and a slight increase of $51,196 for breeding fish fry. The percentage increase in cost of goods sold is higher than that of the percentage increase in revenue mainly because the revenues of the farm growing segment, with relatively higher costs of sales increased proportionately more than revenues of the breeding segment.

Gross profit for the three months ended September 30, 2010 was $3,686,307, an increase of $2,058,414 or 126%, when compared to the same period in 2009. The increase in gross profit is comprised of an increase of $1,501,897 for breeding adult fish, an increase of $337,650 for the Company’s trading business and an increase of $218,867 for breeding fish fry. The percentage increase in gross profit for the three months ended September 30, 2010 over the three months ended September 30, 2009 is lower than the percentage increase in revenues for the same periods due to higher costs of goods sold in the three months ended September 30, 2010 as a result of changes in the product mix.

Selling, general and administrative expenses for the three months ended September 30, 2010 were $1,473,963, an increase of $1,010,787 or 218%, when compared to the same period in 2009, mainly attributable to the increase in selling expenses of $256,284 relating to the increase in sales and the increase in general and administrative expenses of $754,503 mainly due to an increase in professional fees associated with being a public company, expenses associated with the expansion of our business and the accrual for liquidated damages to certain investors who hold registration rights as a result of the failure to have a registration statement related to the resale of our common stock underlying the Series A Preferred Stock and warrants held by such investors declared effective by October 25, 2010.

Research and development expenses for the three months ended September 30, 2010 were $65,612, an increase of $44,317 or 208%, when compared with $21,295 in the same period in 2009.

Income from operations for the three months ended September 30, 2010 was $2,147,002, an increase of $1,003,310 or 88%, when compared to the same period in 2009. The main reason for the increase in income from operations was the increase in revenues, offset by the increase in selling, general and administrative expenses.

Interest income for the three months ended September 30, 2010 was $3,970, a decrease of $10,700 or 73%, when compared to the same period in 2009, primarily because the Company used a part of its interest earning funds to pay dividends and income tax in the fourth quarter in 2009, which decreased the Company’s interest income as a consequence. Interest expense for the three months ended September 30, 2010 was $837, a decrease of $86,149 due to the repayment of the Company’s short term bank loans, when compared to the same period in 2009.

Income taxes for the three months ended September 30, 2010 was $301,832, an increase of $234,165, or 346%, when compared to the same period in 2009. In 2010 less proportion of fry was sold and fry was tax exempt while farmed fish was subject to a 12.5% income tax. Trading revenue from grown fish was taxed at a rate of 25%. In 2010 more revenue was contributed by farming and trading and therefore the income taxes were higher than that of 2009.

The Company recorded a loss on fair value of derivative liability of $943,266 for the three months ended September 30, 2010.

~~Comparison~~Net ofincome for the three months ended ~~June~~September 30, 2010 ~~and~~was ~~June~~$905,037 as compared to net income of $1,003,709 for the three months ended September 30, 2009 due to the increase in revenue offset by the increase in selling, general and administrative expenses and the non-cash item of loss on fair value of derivative liability of $943,266 in the third quarter of fiscal year 2010. On March 29, 2010, the Company completed a private placement of its preferred stock and five year warrants to purchase an aggregate of 4,127,268 shares of common stock. The warrants are required to be recorded as a derivative instrument liability, carried at fair value and marked-to-market at the end of each period, with changes in the fair value each period charged or credited to net income on the income statement.

~~The~~Comparison ~~following table presents the Company’s consolidated net sales for its lines~~ of ~~business~~ ~~for~~nine ~~the three~~ months ended ~~June~~September 30, 2010 and ~~three~~September ~~months ended June~~ 30, 2009~~, respectively:~~

Three Months Ended June 30, 2010 and 2009					%
	2010		2009		Change
Farm growing	$	6,803,184	$	4,114,201		65	%
Breeding	$	2,799,043	$	2,462,782		14	%
Trading	$	3,027,670	$	984,866		207	%
Consolidated	$	12,629,897	$	7,561,849		67	%

The following table presents the Company’s consolidated net sales for its lines of business for the nine months ended September 30, 2010 and nine months ended September 30, 2009, respectively:

Net sales for the three months ended June 30, 2010 were $12,629,897, an increase of $5,068,048 or 67%, when compared to the same period in 2009. Such increase was mainly attributed to the increase in sales of the trading business of adult fish, particularly snakehead which increased $2.1 million, and the farm growing of adult fish, particularly black fish, which increased $2.7 million compared to the same period of 2009 .For the three months ended June 30, 2010, the sales of fish fry increased $336,260 compared to the same period of the prior year.


Nine Months Ended September 30, 2010 and 2009					%
	2010		2009		Change

Farm growing	$	21,128,289	$	13,407,185		58	%

Breeding	$	5,094,679	$	4,369,794		17	%

Trading	$	9,146,731	$	3,954,949		131	%

Consolidated	$	35,369,699	$	21,731,927		63	%

~~Cost of~~Revenue ~~goods sold~~ for the ~~three~~nine months ended ~~June~~September 30, 2010 were $735,~~726~~369,~~590~~699, an increase of of $313,~~805~~637,~~328~~772 or 9763%, when compared to the same ~~sales~~ period ofin ~~the~~2009. ~~prior~~Such ~~year,~~increase was ~~which~~mainly ~~consisted~~attributed ofto anthe increase in sales of adult fish purchased by farmers, which increased $25,~~202~~191,~~850~~782, ~~for~~and ~~breeding~~the sales of adult fish ~~and~~from ~~an increase~~farm ofgrowing, which increased $17,~~813~~721,~~881~~705 ~~for~~compared to the ~~trading~~same ~~business~~period of 2009 following the opening in May, ~~offset~~2010 byof aour ~~decrease~~logistics center which facilitated the distribution of snakehead to Guangzhou Province and other regions in the PRC. For the nine months ended September 30, 2010, sales of fish fry increased $31724,~~359~~885 compared to the same period of the prior year, due to sales of fry of ~~for~~our ~~breeding~~two new fish ~~fry~~– yellow catfish and California perch.

~~Gross~~Cost of ~~profit~~goods sold for the ~~three~~nine months ended ~~June~~September 30, 2010 ~~was~~were $423,~~903~~576,~~307~~353, an increase of $110,~~262~~252,~~720~~589 or 3577%, when compared to the same sales period inof ~~2009.~~the prior ~~The~~year, ~~increase~~which ~~in gross~~consisted ~~profit comprised~~ of an increase of $~~666~~5,~~177~~551,304 for breeding adult fish, an increase of $~~228~~4,~~924~~595,380 for ~~the Company’s~~ trading business, and an increase of of $~~367~~105,~~619~~905 for breeding fish fry. The ~~reason~~percentage ~~for~~increase ~~the~~in ~~increase~~cost of ~~gross~~goods ~~profit~~sold is ~~for~~higher than that of the ~~three~~percentage ~~months~~increase ~~ended~~in ~~June~~revenue ~~30,~~mainly ~~2010~~because ~~was~~the revenues of the ~~increase~~farm ingrowing segment, with relatively higher costs of sales, increased proportionately more than revenues of the breeding segment.

~~Selling,~~Gross ~~general~~profit ~~and administrative expenses~~ for the ~~three~~nine months ended ~~June~~September 30, 2010 ~~were~~ was $~~916~~11,~~151~~793,346, an increase of $~~300~~3,~~463~~385,183 or 4940%, when compared to the same period in 2009,. ~~mainly~~The ~~attributed~~increase toin gross ~~the~~profit is ~~increase~~comprised of ~~selling~~an ~~expenses~~increase of $~~353~~2,~~309 relating~~169,801 tofor ~~the~~breeding adult fish, an increase inof ~~sales~~$596,402 ~~and~~for the ~~increase~~Company’s intrading ~~general~~business, and ~~administrative~~an ~~expenses~~increase of $76618,~~962~~980 ~~mainly~~for ~~due~~breeding tofish fry. The percentage increase in ~~professional~~gross profit ~~fees~~for ~~associated~~the ~~with~~nine months ended September 30, 2010 over the nine months ended September 30, 2009 is lower than the ~~public~~percentage ~~company~~increase in ~~second~~revenues ~~quarter~~for the same periods due to higher costs of goods sold in ~~fiscal~~the ~~year~~nine months ended September 30, 2010 as a result of changes in the product mix.

~~Research~~Selling, general and ~~development~~administrative expenses for the ~~three~~nine months ended ~~June~~September 30, 2010 were $183,~~807~~255, 188, an increase of $21,~~500~~427,131 or 1578%, when compared ~~with~~to the same period in 2009. The increase was mainly attributed to the increase of selling expenses of $16807,~~307~~934 infor the ~~same~~expansion ~~period~~of our business and the increase in general and administrative expenses by $619,196, mainly due to increases in ~~2009~~professional fees associated with our being a public company, the expenses associated with the expansion of our business and the accrual for liquidated damages to certain investors who hold registration rights as a result of the failure to have a registration statement related to the resale of our common stock underlying the Series A Preferred Stock and warrants held by such investors declared effective by October 25, 2010.

Income from operations for the ~~three~~nine months ended ~~June~~September 30, 2010 was $38,~~968~~433,~~349~~903, an increase of $~~959~~1,~~757~~910,234 or 3229%, when compared to the same period in 2009. The ~~main~~ ~~reason~~increase ~~for~~was attributable to the increase in ~~income~~gross ~~from~~profit ~~operations~~of ~~was~~$3,385,183 due to the ~~increase~~expansion in sales of adult fish, ~~breeding~~fish fry and ~~fish~~trading ~~fry~~business, offset by the increase in selling, general and administrative expenses by $1,427,131.

Interest income for the three months ended June 30, 2010 was $3,852, a decrease of $5,141 or 57%, when compared to the same period in 2009, primarily because the Company used a part of its interest earning funds to pay dividends and income tax in the fourth quarter in 2009, which decreased the Company’s interest income as a consequence. Interest expense for the three months ended June 30, 2010 was $17,447, an increase of $17,656 due to the increase in the Company’s short term bank loans, when compared to the same period in 2009.

~~Income~~Interest ~~taxes~~income for the ~~three~~nine months ended ~~June~~September 30, 2010 was $~~252~~10,~~098~~584, ana ~~increase~~decrease of $7424,~~720,~~926 or 4270%, when compared to the same period in 2009~~. In~~, ~~2010 more~~primarily ~~fry~~because ~~was~~the Company ~~sold~~used ~~and~~a ~~fry~~part ~~was~~of ~~tax~~its ~~exempt~~interest ~~while~~earning ~~farmed~~funds ~~fish~~to ~~was~~pay ~~subject~~dividends toand aincome ~~12.5%~~tax ~~income~~of ~~tax.~~the ~~Trading~~fourth ~~revenue~~quarter ~~from~~in ~~grown~~2009, ~~fish~~which ~~was~~decreased ~~taxed~~the atCompany’s ainterest ~~rate~~income as ofa ~~25%~~consequence. Interest Inexpense for the nine months ended ~~2010~~September ~~more~~30, ~~revenue~~2010 was ~~contributed~~$35,678, bya ~~farming~~decrease ~~and~~of ~~trading~~$51,758 ~~and~~or ~~therefore~~59% due to the ~~income~~repayment ~~taxes~~of ~~were~~the ~~higher~~Company’s ~~than~~short ~~that~~term ofbank loans, when compared to the same period in 2009.

~~The~~Income ~~Company~~taxes ~~recorded~~for athe ~~loss~~nine onmonths ~~fair~~ended ~~value~~September of30, ~~derivative~~2010 ~~liability~~were of $790,416, an increase of ~~745~~$343,~~740 for~~844, or 77%, when compared to the ~~three~~same ~~months~~period ~~ended~~in ~~June~~2009. In 302010 less ,proportion of fry was sold and fry was tax exempt while farmed fish was subject to a 12.5% income tax. Trading revenue from grown fish was taxed at a rate of 25%. In 2010 more revenue was contributed by farming and trading and therefore the income taxes were higher than that of 2009.

~~Net~~The ~~income~~Company ~~for~~recorded ~~the~~a ~~three months ended June 30, 2010 was $2,956,916 as compared to net income of $2,839,965 for the three months ended June 30, 2009 mainly due to the non-cash item of~~ loss on fair value of derivative liability of $~~745~~6,~~740~~251,254 infor the ~~second~~nine ~~quarter~~months inended ~~fiscal~~September ~~year~~30, 2010.

~~Comparison~~Net ofincome ~~six~~for the nine months ended ~~June~~September 30, 2010 ~~and~~was ~~June~~$1,498,039 as compared to net income of $6,025,171 for the nine months ended September 30, 2009 due to the increase in revenue offset by the increase in selling, general and administrative expenses and the non-cash item of loss on fair value of derivative liability of $6,251,254 in the first three quarters in fiscal year 2010 and the professional fee in connection with the services rendered in reverse merger for the issuance of shares in the first quarter in 2010. On March 29, 2010, the Company completed a private placement of its preferred stock and five year warrants to purchase an aggregate of 4,127,268 shares of common stock. The warrants are required to be recorded as a derivative instrument liability, carried at fair value and marked-to-market at the end of each period, with changes in the fair value each period charged or credited to net income on the income statement.

~~The~~During ~~following~~the ~~table~~nine ~~presents~~months ~~the~~ended ~~Company’s~~September ~~consolidated~~30, ~~net~~2010, ~~sales~~total ~~for~~assets ~~its~~increased ~~lines~~by of$10,668,136, ~~business~~or ~~for~~92%, ~~the~~from ~~six~~$11,629,668 ~~months~~at ~~ended~~December ~~June~~31, 302009 to $22,297,804 at September 30, 2010. The ~~and~~majority ~~six~~of ~~months~~the ~~ended~~increase ~~June~~was 30in cash, accounts receivable, ~~2009~~advance payment and prepayment, ~~respectively:~~and inventories, which was partially offset by a decrease in amount due from shareholders.

Six Months Ended June 30, 2010 and 2009					%
	2010		2009		Change
Farm growing	$	14,015,430	$	11,176,237		25	%
Breeding	$	3,987,566	$	3,532,743		13	%
Trading	$	4,550,428	$	2,259,297		101	%
Consolidated	$	22,553,424	$	16,968,277		33	%

During the nine months ended September 30, 2010, cash increased by $3,501,039, or 110%, to $6,695,287 as compared to $3,194,248 at December 31, 2009. This is mainly attributed to the funding from investors of net proceeds amounting to $6,561,077 in second quarter this year, offset by the increase in inventories, payment of dividends to shareholders in 2009.

~~Net sales~~At ~~for~~September ~~the~~30, ~~six~~2010, ~~months~~the ~~ended~~accounts ~~June~~receivable ~~30,~~balance ~~2010~~increased ~~were~~by $221,~~553~~368,~~424~~179, ~~an increase of $5,585,147~~ or 33 579%, ~~when~~from ~~compared to~~ the ~~same~~balance ~~period~~at inDecember 31, 2009. The ~~Such~~ increase ~~was mainly~~is ~~attributed~~due to the increase in ~~sales~~revenue ofin ~~adult~~the ~~fish~~nine ~~purchased~~months byended ~~farmers, which~~September ~~increased $2~~30,~~291,131,~~ ~~and~~2010. ~~the~~In ~~sales of adult fish~~addition, ~~which increased~~we ~~$2,839,193~~have ~~compared~~granted toour ~~the~~customers ~~same~~a ~~period~~longer ofcredit ~~2009~~period ~~.For~~as ~~the six months ended~~a ~~June~~strategy ~~30,~~to ~~2010,~~increase ~~the sales of fish fry increased~~our ~~$454,822~~market ~~compared to the same period of the prior year~~share.

~~Cost of~~At ~~goods~~September ~~sold~~30, ~~for~~2010, the ~~six~~other ~~months~~receivables ~~ended~~increased ~~June~~by ~~30, 2010 were~~ $141,~~446~~300,~~385~~148, ~~an increase of $4,258,378~~ or 426,130%, from ~~when compared to~~ the ~~same~~balance ~~sales~~at ~~period~~December ~~of the prior year~~31, ~~which~~ ~~consisted~~2009. ofThe an increase ofis ~~$2,171,290~~mainly ~~for~~due ~~breeding~~to ~~adult~~the ~~fish, an~~advance ~~increase~~payment of $21,~~032~~194,~~380~~000 for ~~trading business, and an increase of $54,708 for breeding~~ fish ~~fry~~ nets.

~~Gross~~At ~~profit~~September ~~for the six months ended June~~ 30, 2010 ~~was $8~~,~~107,039,~~ there anwere ~~increase~~no ~~of $1,326,769~~amounts ordue ~~20%~~from shareholders, ~~when~~ as compared to ~~the~~due ~~same~~from ~~period~~shareholders ~~in 2009. The increase in gross profit comprised~~ of ~~an increase of~~ $~~667~~4,~~903 for breeding adult fish~~008, an659 ~~increase~~at ofDecember ~~$258~~31,~~751~~ ~~for~~2009. ~~the~~This ~~Company’s trading business, and an increase of~~is ~~$400,115~~attributed ~~for~~to ~~breeding fish fry. The reason for~~ the ~~increase~~repayment offrom ~~gross~~shareholders ~~profit~~during ~~for~~ the ~~six~~first ~~months~~quarter ~~ended June 30,~~ of 2010 ~~was the increase in sales~~.

~~Selling,~~The ~~general~~Company’s ~~and~~inventory ~~administrative~~at September ~~expenses for the six months ended June~~ 30, 2010 ~~were~~ was $110,~~589~~905,~~134~~977, an increase of $~~223~~7,~~983~~926,224, or 16266%, ~~when~~ compared to ~~the~~inventory ~~same~~at ~~period~~December ~~in 2009~~31, 2009. Inventories mainly ~~attributed~~consists toof ~~the~~adult ~~increase~~tilapia, ofsnakehead, ~~selling~~crucian ~~expenses~~carp ofand ~~$551,650~~other ~~for expansion~~varieties of freshwater ~~business~~fish. The ~~increase~~main inreason ~~selling~~of ~~expenses~~the ~~was~~increase ~~offset~~of byinventory is the Company aincreased ~~decrease~~its breeding capacity in ~~general~~the ~~and~~nine ~~administrative~~months ~~expenses~~ended bySeptember ~~$327~~30,~~667~~ 2010.

~~Income~~At ~~from~~September ~~operations for the six months ended June~~ 30, 2010 ~~was~~fixed assets were $6868,~~479~~448,~~262,~~ ~~an increase~~mainly ofconsisting $1of aerators,~~099,285~~ orfeeding ~~20%,~~machine ~~when~~and ~~compared~~other toequipments ~~the~~used ~~same period~~ in ~~2009.~~fish ~~The~~farms, representing ~~main~~an ~~reason for the~~ increase inof ~~income~~$463,301, ~~from~~or ~~operations~~114%, ~~was~~compared ~~the~~to ~~increase~~fixed inassets ~~sales of~~at ~~adult~~December ~~fish and fish fry~~31, 2009.

~~Interest~~At ~~income~~September ~~for the six months ended June~~ 30, 2010 ~~was~~biological assets were $6248,~~614~~811, a decrease of $14183,~~226~~997, or 6843%, ~~when~~ compared to ~~the~~biological ~~same~~assets ~~period~~at inDecember ~~2009~~31, ~~primarily~~2009. ~~because~~The ~~the~~decrease ~~Company~~in ~~used~~biological aassets ~~part~~was ofdue ~~its interest earning funds~~ to ~~pay dividends and income tax of~~ the ~~fourth~~ ~~quarter~~amortization ~~in 2009, which decreased the Company’s interest income as a consequence. Interest expense~~ for the ~~six~~nine months ~~ended~~in ~~June 30,~~ 2010, ~~was~~offset ~~$34,841,~~by anthe ~~increase~~procurement of ~~$34,841~~certain ~~due~~breeding tofish ~~the~~during ~~increase in~~ the 2010. Biological ~~Company’s~~assets ~~short term~~consist ~~bank~~of ~~loans~~tilapia, ~~when~~snakehead, ~~compared~~crucian tocarp, yellow ~~the~~catfish ~~same~~and ~~period~~black ~~in 2009~~bass.

~~Income~~At ~~taxes~~September ~~for the six months ended June~~ 30, 2010 ~~were~~accounts ~~$488,584,~~payable anwere ~~increase of~~ $~~109~~5,~~679~~036, ~~or 29%~~460, ~~when~~as compared to ~~the~~$0 at December ~~same~~31, ~~period in~~ 2009. In ~~2010 more~~The ~~fry~~increase ~~was~~in ~~sold~~accounts ~~and~~payable ~~fry~~ was ~~tax~~due ~~exempt~~to ~~while~~the ~~farmed~~procurement of fish ~~was~~food ~~subject~~used toin ~~a 12.5% income tax. Trading revenue from grown~~ fish ~~was~~farm ~~taxed at a rate of 25%. In 2010 more revenue was contributed by farming~~ and ~~trading~~fish ~~and~~fry ~~therefore~~breeding ~~the income~~mainly ~~taxes~~from ~~were higher than that of 2009~~related parties.

~~The~~At ~~Company~~September ~~recorded~~30, 2010 other payables were $552,475, a ~~loss~~decrease onof ~~fair~~$2,743,960, ~~value~~or 80%, compared to other payables at December 31, 2009. The main item included in other payables is personal income tax payable, and the high personal income tax payable was due to the dividend payable in the fiscal year ended December 31, 2009, which was paid in the first quarter of ~~derivative~~2010. ~~liability~~On the other hand, at September 30, 2010, there is an accrual of $5207,~~307,988~~900 for the liquidated damages to warrant holders for the ~~six~~Registration ~~months~~Statement ~~ended~~not ~~June~~declared 30effective by October 25, 2010.

~~Net~~At ~~income~~September ~~for the six months ended June~~ 30, 2010, there was ~~$654~~no advance from clients,~~463~~ as compared to ~~net~~the ~~income~~advance from clients of $5498,~~021,462~~785 ~~for~~at ~~the~~December ~~six months ended June 30~~31, 2009. ~~The~~Because ~~$4,366,999~~goods were ~~difference~~distributed isto ~~attributable~~clients toin the ~~loss~~first quarter of $52010,~~307,988~~ onthere ~~fair~~was ~~value~~no ofadvance ~~derivative liability offset by the improvement in net income~~ from ~~operations in the six~~ ~~months~~clients ~~ended~~as ~~June~~of September 30, 2010.

~~During~~At ~~the six months ended June~~ September 30, 2010, ~~total~~there ~~assets~~was ~~increased~~no bybank $8loan,~~504,697,~~ ~~or 73%,~~as ~~from~~compared ~~$11,629,668~~to atcurrent ~~December~~portion of ~~31,~~bank ~~2009~~loan toof $20380,~~134,365~~273 at ~~June~~December 3031, ~~2010~~ 2009. The ~~majority~~loan ~~of the increase~~ was infully ~~cash, accounts receivable~~repaid ~~and~~prior to ~~inventories~~September 30, ~~which was partially offset by a decrease in amount due from shareholders~~2010.

~~During~~At ~~the~~September ~~six months ended June~~ 30, 2010, ~~cash~~there ~~increased~~was byno ~~$3,931,229,~~dividend ~~or 123%~~payable, ~~to $7,125,477~~ as compared to a dividend payable of $3,~~194~~466,~~248~~331 asat of December 31, 2009. ~~This~~since ~~is mainly attributed to~~ the ~~funding~~dividend ~~from~~was ~~investors~~fully ofpaid ~~net proceeds amounting to $6,561,077~~ in ~~second quarter this year, offset by~~ the ~~increase~~nine months inended ~~inventories~~September 30, ~~payment of dividends to shareholders in 2009~~2010.

At ~~June~~ September 30, 2010, ~~the~~income ~~accounts~~tax ~~receivable~~payable ~~balance~~was ~~increased~~$301,419, bya decrease of $1693,~~806~~894,~~951,~~ or ~~764~~ 70%, ~~from the~~compared ~~balance~~to atincome tax payable at December 31, 2009. ~~because~~This ~~there~~is ~~were~~mainly because ~~advances~~the ~~from~~fourth ~~clients~~quarter inis the ~~fish~~ ~~farming~~peak ~~segment~~season ~~that~~of ~~reduced~~sales normally, and therefore the ~~accounts~~income ~~receivable~~tax for the ~~fiscal year~~ nine months ended ~~December~~September 3130,~~2009,~~ ~~while~~2010 ~~there~~is ~~was~~lower nothan ~~advance from~~the ~~clients~~income tax for the ~~six~~whole ~~months~~2009 ~~ended~~fiscal ~~June 30, 2010~~year.

At June 30, 2010, there were no amounts due from shareholders, as compared to due from shareholders of $4,008,659 as of December 31, 2009. This is attributed to the repayment from shareholders during the first quarter of 2010.

The Company’s inventory as of June 30, 2010 was $8,987,628, an increase of $6,007,875, or 202%, compared to inventory at December 31, 2009. Inventories mainly consists of adult tilapia, snakehead, crucian carp and other varieties of freshwater fish. The main reason of the increase of inventory is the Company increased its breeding capacity in the six months ended June 30, 2010.

At June 30, 2010 fixed assets was $905,285, mainly consisting of aerators, feeding machine and other equipments used in fish farms, representing an increase of $500,138, or 123%, compared to fixed assets as of December 31, 2009.

At June 30, 2010 biological assets was $366,200, a decrease of $66,608, or 15%, compared to biological assets as of December 31, 2009. The increase in biological assets was due to the amortization for the six months in 2010, offset by the procurement of certain breeding fish during the 2010. Biological assets consist of tilapia, snakehead, crucian carp, yellow catfish and black bass.

At June 30, 2010 accounts payable were $5,361,607, as compared to $0 as of December 31, 2009. The increase in accounts payable was due to the procurement of fish food used in fish farm and fish fry breeding.

At June 30, 2010 other payables were $264,575, a decrease of $2,479,385, or 90%, compared to other payables as of December 31, 2009. The main item included in other payables is personal income tax payable, and the high personal income tax payable was due to the dividend payable in the fiscal year ended December 31, 2009, which was paid in the first quarter of 2010.

At June 30, 2010, there was no advance from clients, as compared to the advance from clients of $498,785 as of December 31, 2009. Because goods were distributed to clients in the first quarter of 2010, there was no advance from clients as of March 31, 2010.

At June 30, 2010, there was no bank loan, as compared to current portion of bank loan of $380,273 as of December 31, 2009. The loan was fully repaid in the first half year ended June 30, 2010.

At June 30, 2010, there was no dividend payable, as compared to a dividend payable of $3,466,331 as of December 31, 2009 since the dividend was fully paid in the six months ended June 30, 2010.

At June 30, 2010 income tax payable was $251,866, a decrease of $743,447, or 75%, compared to income tax payable as of December 31, 2009. This is mainly because the fourth quarter is the peak season of sales normally, and therefore the income tax for the six months ended June 30, 2010 is lower than the income tax for the whole 2009 fiscal year.

Liquidity and Capital Resources

The Company has typically financed its operations and expansion from cash flows from operations and loans from its shareholders and banks. The Company consummated a reverse merger transaction and raised approximately $7.7 million in gross proceeds in a private placement financing on March 29, 2010.

Nanhai Ke Da Heng Sheng has entered into two credit line agreements with Foshan Nanhai Allied Rural Credit Union Danzhao Credit Association, ~~one~~ with a credit ~~line~~lines of ~~RMB~~ 5RMB 7,000,000 (approximately $~~735~~ 1,~~000~~044,605 based on the conversion rate as of ~~June~~ September 30, 2010) and ~~the other with a credit line of~~ RMB 145,~~800~~000,000 (approximately $2746,~~175,600~~146 based on the conversion rate as of ~~June~~September 30, 2010), respectively. The two credit lines are secured by real estate owned by the sister-in-law of Chen ~~Zhishen~~Zhisheng, our Chairman of the Board. AsThe ofagreements ~~March~~were ~~29,~~entered ~~2010,~~into anon ~~aggregate principal~~January ~~amount of RMB 9~~14,~~400,000~~ of2009 ~~loans~~and ~~were~~January ~~outstanding~~13, ~~under~~2009, ~~the~~respectively, for two-year ~~credit~~terms ~~lines. The~~expiring ~~outstanding loans are all due~~ in January 2011. Outstanding loans under the two credit lines bear interest at a rate of 5.4% per year. Interest is payable monthly. As of September 30, 2010, there were no outstanding loans payable

Critical Accounting Policies and Estimates

Management's discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. See note 32 to our consolidated financial statements, "Summary of Significant Accounting Policies." Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe that the following reflect the more critical accounting policies that currently affect our financial condition and results of operations.

Principles of Consolidation

The consolidated financial statements include the accounts of Rongfu Aquaculture, Inc (formerly, Granto, Inc.) and its wholly owned subsidiaries, Flourishing HK, the WOFE, Nanhai Ke Da Heng Sheng, and Hainan Ke Da Heng Sheng (collectively referred to herein as the” Company”). All material inter-company accounts, transactions and profits have been eliminated in consolidation. The Company has adopted the Consolidation Topic of the FASB Accounting Standards Codification which requires a variable interest entity (“VIE”) to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns.

Use of Estimates

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or market~~, if lower~~.

Derivative Liability

The Company issued warrants in connection with the Purchase Agreement dated March 29, 2010 with certain reset exercise price provisions.

Adoption of the Derivative and Hedging Topic of the FASB Accounting Standards Codification (“ASC 815”), the Company determined that the warrants did not qualify for a scope exception under ASC 815 as they were determined to not be indexed to the Company’s stock as prescribed by ASC 815. The warrants, under ASC 815, were classified as derivative liability for the then relative fair market value of $ 3,267,797 and marked to market. For the nine months ended September 30, 2010, the Company recorded a loss on change in fair value of derivative liability of $6,251,254 to mark to market for the increase in fair value of the warrants through ended September 30, 2010. Under ASC 815, the warrants will be carried at fair value and adjusted at each reporting period.

Fair Value of Financial Instruments

The Financial Instrument Topic of the Codification requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with the Revenue Recognition Topic of the Codification. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Income Taxes

It is the Company’s intention to permanently reinvest earnings from activity with China and thereby indefinitely postpone repatriation of these funds to the U.S. Accordingly, no domestic deferred income tax provision has been made for U.S. income tax which could result from paying dividends to the Company.

At September 30, 2010, there were permanent tax differences relating to stock based compensation in conjunction with professional services of $191,141 and the loss on change in fair value of derivative liability of $6,251,254 to mark to market for the increase in fair value of the warrants through ended September 30, 2010.

Concentration of Credit Risk

Revenue Recognition

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

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Item 3. Quantitative and Qualitative Disclosure About Market Risk

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company’s management, with participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) means controls and other procedures of the Company that are ~~designed~~ designed to ensure that information required to be disclosed by a company in reports, such as this report, that it files, or submits under the Exchange Act is is recorded, processed, summarized and reported, within the time periods ~~specified~~ specified in the U.S. Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls ~~and~~ and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the ~~company~~Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, management concluded that, as of September 30, 2010, the Company’s disclosure controls and procedures were not effective at that reasonable assurance level ~~as of June 30, 2010,~~ to satisfy the objectives for which they are intended.

Changes in Internal Control over Financial Reporting

~~There~~On March ~~have~~29, ~~not~~2010 ~~been~~the ~~any~~Company ~~changes~~completed inthe ~~our~~acquisition ~~internal~~of ~~control~~Rongfu ~~over~~Aquaculture, ~~financial reporting (as~~Inc. ~~such~~(“Rongfu”) ~~term~~pursuant isto ~~defined~~a inshare ~~Rules~~exchange ~~13a-15(f)~~agreement. ~~under~~The ~~the~~acquisition ~~Exchange~~was ~~Act) during our most~~accounted ~~recently~~for ~~completed~~as ~~fiscal~~a ~~quarter~~recapitalization ~~which~~effected isby ~~the~~a ~~subject~~share ofexchange. ~~this~~Rongfu ~~report~~is ~~that~~considered ~~have~~the ~~materially~~acquirer ~~affected,~~for oraccounting ~~are~~and ~~reasonably~~financial ~~likely~~reporting purposes. Prior to ~~materially~~the acquisition ~~affect,~~the ~~our~~Company ~~internal control~~was ~~over~~a ~~financial~~shell ~~reporting~~company.

During the preparation of our financial statements for the quarter ended September 30, 2010, we determined that there existed deficiencies in controls relating to the following and that it was necessary for the Company to restate to its previously issued financial statements for the fiscal years ended December 31, 2008 and December 31, 2009 and the quarters ended March 31, 2009 and March 31, 2010 and June 30, 2009 and June 30, 2010 for the following reasons.

1. The number of shares of the Company’s common stock outstanding as of December 31, 2008 and December 31, 2009 and the weighted average common shares outstanding for the years ended December 31, 2009 and December 31, 2008 and for the quarters ended March 31, 2009, June 30, 2009, March 31, 2010 and June 30, 2010 were overstated in such financial statements and earnings per share for the fiscal years ended December 31, 2009 and December 31, 2008 and for the quarters ended March 31, 2009, June 30, 2009, March 31, 2010 and June 30, 2010 were understated in such financial statements.

2. The value attributed to shares of the Company’s common stock which were issued for prior services on March 29, 2010 should have been expensed in the Company’s income statements for the quarter ended March 31, 2010 and for the six months ended June 30, 2010.

3. $7,700,000 of Preferred Stock included under Stockholders’ Equity on the Company’s balance sheets as of March 31, 2010 and June 30, 2010 should be reclassified as Temporary Equity.

We have further concluded that such deficiencies represented material weaknesse. As a result, we concluded that the Company’s internal controls over financial reporting were not effective at September 30, 2010.

The Company is in the process of enhancing its financial reporting by implementation of stronger internal controls through the recruitment of high caliber personnel with strong financial reporting backgrounds and the establishment of effective checking and reviewing procedures. In 2011 we plan to enrich the accounting knowledge of all of our financial and accountting personnel by holding training to increase the awareness and use of controls and transparency by all staff and by redesigning document flows and establishing strong control points.

PART II - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company did not sell any of its equity securities during the three months ended ~~June~~ September 30, 2010.

Item 6. Exhibits

(a)

Exhibits

31.1 - Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 - Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 - Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 - Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.

	RONGFU AQUACULTURE, INC.
Date: August 23, 2010	BY:	/s/ Kelvin Chan
Date: December 22, 2010	BY:	/s/ Kelvin Chan
		Kelvin Chan
		Chief Executive Officer
Date: August 23, 2010	BY:	/s/ Keith Hor
Date: December 22, 2010	BY:	/s/ Keith Hor
		Keith Hor
		Chief Financial Officer

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INDEX TO EXHIBITS

EXHIBIT NUMBER		DESCRIPTION
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Filing Compare · Rongfu Aquaculture, Inc.