As filed with the Securities and Exchange Commission on March 22, 2011

Registration No. 333-168073

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 8
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

ZHENG HUI INDUSTRY CORPORATION

(Exact name of registrant as specified in its charter)


Nevada	2015	80-0334470
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Daokou Industry Park, Yingli Town
Shouguang, Shandong
P.R. China, 262717
Telephone: 86-536-5401658

(Address, including zip code, and telephone number including area code,
of registrant’s principal executive offices)

CSC Services of Nevada, Inc.
502 East John Street
Carson City, Nevada 89706
Telephone: (888) 690 2882

(Name, address, including zip code, and telephone number including area
code, of agent for service)

Copies to:


Steven Schuster, Esq. David W. Sass, Esq. Qian Hu, Esq. McLaughlin & Stern LLP 260 Madison Avenue New York, New York 10016 Telephone (212) 448-1100 Facsimile (800) 203-1556		Louis A. Bevilacqua, Esq. Joseph R. Tiano, Esq. Jeffrey B. Grill, Esq. Pillsbury Winthrop Shaw Pittman LLP 2300 N Street, NW Washington, DC 20037 Telephone (202) 663-8000 Facsimile (202) 663-8007

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 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
	(Do not check if a smaller reporting company)

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CALCULATION OF REGISTRATION FEE


Title of Each Class of Securities to Be Registered	Amount to be Registered		Proposed Maximum Offering Price Per Share		Proposed Maximum Aggregate Offering Price		Amount of Registration Fee
Common stock, $0.001 par value per share⁽¹⁾		2,029,412	$	9.00	$	18,264,708⁽³⁾	$	2,121
Underwriters’ warrants to purchase common stock⁽²⁾		n/a				n/a		n/a
Common stock, $0.001 par value per share issuable upon exercise of the underwriters’ warrants⁽²⁾		202,941	$	14.85	$	3,013,674⁽²⁾	$	350	⁽²⁾
Total		2,232,353			$	21,278,382	$	2,471	⁽⁴⁾

(1)

In accordance with Rule 416(a), the registrant is also registering hereunder an indeterminate number of additional shares of common stock that may be issued and resold pursuant to stock splits, stock dividends, anti-dilution provisions, including the anti-dilution provisions under the underwriters’ warrants, and similar transactions.

(2)

The registrant has agreed to issue to each of the underwriters a warrant to purchase a number of shares of common stock equal to 10% of the total number of shares of common stock sold in the offering. The warrants will be exercisable at a price equal to 165% of the public offering price in connection with the offering. The registration fee was calculated in accordance with Rule 457(g) under the Securities Act. In accordance with Rule 457(g) under the Securities Act, because the shares of the registrant’s common stock underlying the underwriters’ warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby.

(3)

Includes shares of common stock issuable upon exercise of the underwriters’ over-allotment. Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).

(4)

Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.


PRELIMINARY PROSPECTUS		SUBJECT TO COMPLETION		March 22, 2011

[GRAPHIC MISSING]

ZHENG HUI INDUSTRY CORPORATION

1,764,706 Shares of Common Stock

This is an initial public offering of shares of common stock, $.001 par value per share, of Zheng Hui Industry Corporation, a Nevada corporation. We are offering 1,764,706 shares of our common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $8.00 and $9.00 per share. We have applied to have our common stock listed on the NASDAQ Capital Market under the symbol “ZHIC.”

Investing in our common stock involves a high degree of risk. See the section entitled “Risk Factors” beginning on page 12.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


	Per Share	Total
Initial public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to us	$	$

We have granted to the underwriters an option to purchase up to 264,706 additional shares of our common stock to cover over-allotments, if any, at the initial public offering price, less underwriting discounts and commissions, within 45 days from the date of this prospectus. We have also granted to the underwriters warrants to purchase up to an aggregate of 202,941 shares of our common stock as additional compensation. See “Underwriting” for more information.

The underwriters expect to deliver shares of our common stock to purchasers on or about , 2011.


Rodman & Renshaw, LLC		Newbridge Securities Corporation

The date of this prospectus is , 2011

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Processing Plant		Processing Plant


Ducklings


Headquarters		Hatchery

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	Page
PROSPECTUS SUMMARY		1
RISK FACTORS		12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		31
USE OF PROCEEDS		32
DETERMINATION OF OFFERING PRICE		33
DIVIDEND POLICY		34
CAPITALIZATION		35
DILUTION		36
EXCHANGE RATE INFORMATION		37
SELECTED FINANCIAL AND OPERATING DATA		38
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS		41
INDUSTRY OVERVIEW		53
BUSINESS		55
OUR HISTORY AND CORPORATE STRUCTURE		72
MANAGEMENT		75
EXECUTIVE COMPENSATION		82
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		85
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		86
DESCRIPTION OF CAPITAL STOCK		87
SHARES ELIGIBLE FOR FUTURE SALE		89
TAXATION		90
UNDERWRITING		94
LEGAL MATTERS		99
EXPERTS		99
WHERE YOU CAN FIND MORE INFORMATION		99
INDEX TO COMBINED FINANCIAL STATEMENTS		F-1

You should rely only on information contained in this prospectus or in any free writing prospectus that we may provide to you. We have not, and the underwriters have not, authorized anyone to provide you with additional information or information different from what is contained in this prospectus or in any free writing prospectus that we may provide to you. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. The information in this prospectus may only be accurate as of the date on the front of this prospectus regardless of time of delivery of this prospectus or any sale of our securities.

Dealer Prospectus Delivery Obligation

Until , 2011 (the 25th day after the date of this prospectus), all dealers that effect transactions in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

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PROSPECTUS SUMMARY

This summary highlights selected information appearing elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. You should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety before investing in our securities, especially the risks of investing in our securities, which we discuss later in “Risk Factors,” and our consolidated financial statements and related notes included elsewhere in this prospectus. Unless the context requires otherwise, the words the “Company,” “Zheng Hui,” “we,” “us” and “our” refer to Zheng Hui Industry Corporation, our subsidiaries and Weifang Jinzheng Poultry Co. Ltd. This prospectus assumes the over-allotment has not been exercised, unless otherwise indicated. Unless otherwise indicated, all amounts in this prospectus are reflected in the legal currency of the United States, which may be referred to as “U.S. dollars,” “USD” or “$.”

Overview

We are engaged in hatching “Cherry Valley” duck and producing, processing, marketing and distributing frozen processed duck, duck feed and other duck-related products in the People’s Republic of China (the “PRC” or “China”). We sell frozen duck, in whole or cut-up form, to wholesalers, food processing companies and distributors in fifteen Chinese provinces, including the cities of Beijing, Shanghai, Tianjin, and Chongqing. Our objective is to establish ourselves as a leading producer and distributor of “Cherry Valley” ducks in the PRC.

Through years of experience and operation, we believe that we have developed a highly effective vertically-integrated supply chain that we describe as a “Company-Base-Farmer” business model. Under our model, we raise breeder ducks and hatch ducklings in our own facilities and then sell ducklings to our network of approximately 400 contracted farmers. We repurchase the adult commercial ducks that meet our criteria from our contracted farmers, then process, freeze, and store the ducks and duck products in our own facilities. To assist in the ducks’ growth, we also produce and sell duck feed to our contracted farmers through feed brokers.

Although the raw material cost of the duck feed can be volatile for a duck raising company, by leveraging our relationships with our suppliers, contracted farmers and customers and our vertically-integrated model, we have generated substantial revenue and simultaneously reduced the volatility.

Year Ended December 31,

2010
USD

2009
USD

2008
USD

Net revenue

44,329,478

36,757,703

33,354,535

Cost of sales

35,365,121

29,299,988

26,501,070

Gross profit

8,964,357

7,457,715

6,853,465

Gross profit ratio

20.2

20.3

20.6

Net income

5,298,762

4,730,350

4,083,502

In addition, our operating model transfers most of the risk involved in the duck production process to our farmers and feed brokers, therefore insulating us from over-production and missed market opportunities. We generally limit the term of our sales contracts to 30 days. In order to avoid over-production, we maintain inventory of frozen duck products at a low level and base our production and sales to farmers of ducklings upon the quantity of contracts or sales orders we receive. In addition, due to the short 30-day operating cycle, we can easily adjust our production based on market demand, preferences and other fluctuations and variables.

Our major product is frozen, lean-meat “Cherry Valley” duck, which was developed from the traditional Peking or Beijing ducks by Cherry Valley Farm, a United Kingdom (“UK”) company. Our product is the third generation of Cherry Valley species introduced from the UK, which we purchase from their authorized distributor in China. According to the China Animal Agriculture Association, Cherry Valley ducks have the following general characteristics relative to other ducks: (1) higher growth rate; (2) higher conversion rate of feed, that is, with the same amount of feed, the duck will provide more meat; (3) higher rate of lean meat; (4) stronger disease immunity; and (5) greater ability to be cultivated in different geographical regions. Also, Cherry Valley ducks have less fat content. According to a report from January 2010 in the Meat Trade News Daily in the UK, a traditional Peking duck will have a fat level in excess of 35%, whereas a Cherry Valley duck will have a fat level of less than 27%.

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We have an abundant supply of breeder ducks and the ability to process approximately 25,000 ducks a day. In addition to revenues generated from the sale of processed duck products, we also generate revenues from the sales of ducklings and duck feed to our contracted farmers and duck feathers to a domestic feather processing manufacturer in China. One of our main growth strategies is to expand our production capacity of processed duck by either acquiring or constructing an additional facility. Such additional facility will have additional cold storage, slaughter facilities, feather-removing workshops, processing plants, a warehouse, and other buildings and workspaces necessary to grow our business. By acquiring or constructing an additional facility, we expect to increase our capacity from approximately 25,000 ducks per day to approximately 80,000 ducks per day. In addition to the increase of our duck production capacity, we also expect to increase the production of our ducklings, duck feed and duck feathers. Specifically, we expect to increase the number of breeder ducks raised in our breeder duck farm from 50,000 heads to 100,000 heads annually which would lay on average 80,000 eggs per day, purchase approximately 120 additional sets of hatchery machines to increase our duckling hatching capacity from 8.5 million heads to 20 million heads annually, and build an additional feed production facility to increase our feed production capacity from approximately 50,000 tons to 80,000 tons annually. As we process more ducks, we expect our feather production output to also increase. Further, as we expand, we intend to hire additional personnel for sales, feed production, processing production, feather production, hatching, breeding and administrative functions.

In order to maintain quality control and ensure compliance with applicable government regulations, we supervise and direct the use of veterinary medicine and vaccines to our contracted farmers. We also have established and maintained standards so that our production facilities for the process of raising ducks and duckling hatching, producing duck feed, commercial duck processing, feather removal, partition processing, refrigeration, and storage technologies meet all government regulations. We believe that these measures help us produce, what we believe to be, high quality ducks and duck products.

Industry Background

The national output of poultry meats amounted to approximately 7.9 million tons in the first half of 2008 with ducks accounting for approximately 1.2 million tons and a growth rate of 8.2%, compared to the same period in the previous year, according to China’s Ministry of Agriculture and as published by the China Animal Agriculture Association. In 2009, the number of ducks on hand was 1,096 million and the number of ducks sold from farm was 3,520 million (including 2,060 million Cherry Valley ducks). The number of ducks on hand in China in 2009 accounted for 67.3% of the total amount in the world. The number of ducks slaughtered in China in 2009 accounted for 74.7% of the total amount in the world.

China is the largest duck producer in the world and has the largest stock of domestic ducks in the world with approximately 70% of the duck population worldwide. According to statistics from the Food and Agriculture Organization of the United Nations, or the FAO, duck meat production totaled 2.66 million tons in 2009 up from 1.95 million tons in 2004. This represented a growth rate of 36.3%, which was higher than the rate of growth in the production of pork, chicken and beef meat. Over the same 5-year period, pork meat production grew by 12.1% (from 44.5 million tons to 49.9 million tons), chicken meat production grew by 20.7% (from 9.5 million tons to 11.4 million tons), and beef meat (including buffalo) grew by 14.2% (from 5.6 million tons to 6.4 million tons). According to statistics from the FAO, the breeding stock of duck worldwide was 1,046 million in 2005, among which Asia had 931 million breeding stock, accounting for 89% of the world total. In Asia, raising ducks for meat is mainly practiced in countries like China, Vietnam, Thailand, Indonesia and India, with China raising the most ducks among all Asian countries.

Our Competitive Strengths

We believe that the following competitive advantages have contributed to our competitive position in the duck industry:

•

Location: Our production facilities are located on 115,211 square meters in Shouguang City, Shandong Province, China. We believe Shandong Province is well situated logistically for distribution to all the main areas of duck consumption in China — Central, Beijing, Tianjin, Northeast, Northwest and the Yangtze River delta zone. Shandong Province has historically had a moderate climate and has ample land for growth. In addition, we have access to abundant supplies of corn and other feed ingredients locally, which lowers the cost for our feed production.

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Furthermore, approximately 9,000 to 10,000 experienced poultry-raising farmers are located in the Shouguang metropolitan area in 2010, the same region as our facilities, according to data provided by Shouguang City Husbandry Bureau. Moreover, our operation is located in the transportation hub of Shandong Province, providing our customers across China with easy access to our facilities, thus, we believe significantly reducing the cost of transportation and logistics.

•

Vertically-Integrated Business Model: Our industrial chain is a vertically-integrated business model that integrates feed producing, hatchery, farming, slaughtering, cutting and processing, and wholesaling high volume duck production. Our company has built a breeder farm with 50,000 breeder ducks providing eggs for the hatchery of ducklings, a feed production facility producing feed for breeders and meat ducks, a hatchery facility providing 25,000 ducklings daily, a processing factory, and a long-term relationship with approximately 400 farmer families. The facilities arrangement and the vertically-integrated operation model have resulted in cost advantages while also mitigating the price volatility of our raw material supply-feed and ducklings.

•

Cost: Our vertically-integrated business model has reduced the volatility of the costs of our raw materials, feed and ducklings. We also implemented a cost control strategy throughout the process, such as operating our facilities during the time of the day when electricity cost is the lowest. In addition, abundant access to our local supplies of corn and other feed ingredients assures the low cost for our feed production, which is a substantial cost component for our final frozen duck products.

•

Farmer Network: We have a broad base network of approximately 400 contracted farmers. This network allows us to scale our production in a very efficient manner. All contracts for production with farmers are 30 days, which allows our capacity to remain flexible.

•

Reputation: We have received eight industry awards or certifications in response to our contributions to the economic development in the Shandong Province, the development of duck product processing and the creation of job opportunities in the Shandong Province. We believe these awards have helped us enhance our reputation in the poultry and duck production industry among suppliers, customers, farmers, banks, and relevant government authorities in the geographic areas of China where we operate. These awards and certifications include: the Shandong Agricultural Industry Award for the key and leading enterprise (awarded by the Shandong provincial government in August 2005); the award for the Agricultural Industrial High-Integrity Service Enterprise (awarded by the Weifang Agricultural Bureau in September 2005); and the contribution award for the leading agricultural enterprise (awarded by the Weifang municipal government in February 2006). These awards and certifications were given to us based on our industry performance and for meeting certain criteria set by different local area governments. While we did not undertake any competitive process in order to receive these awards or certifications, we believe these awards and certifications are only given to select companies in the agricultural and poultry industry that meet certain performance and other criteria.

•

Long-Term Relationships with Key Customers and Diversified Customer Base: We believe we have established strong business relationships with several key customers. Among our long-term customers, those with whom we have been doing business for at least five to eight years, Yurun Group, which is listed on the Hong Kong Stock Market, purchased nearly 6.5% of our duck production in 2010 making them our biggest customer of frozen duck products. Furthermore, our top ten long-term customers, including Yurun Group, purchased frozen duck products, in the aggregate, approximately 16.8% of our total sales in 2010. Given the lack of high concentration of sales to our largest customers, we are not overly dependent on any one customer.

•

Epidemic Prevention and Quality Control: We supervise the operation of our base farm and undertake various measures in order to maintain quality control and prevent the spread of disease. Among other things, we monitor the sanitation at the hatcheries, the quality and purity of our feed ingredients and feed, the health of our breeder flocks and ducklings, the conditions of our facilities and the quality of our finished products. We conduct on-site quality control activities at each of the processing plants and the prepared-duck plant. Our technician team visits farmers on a regular basis,

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supervising and providing assistance in the use of veterinary medicine vaccines by our contracted farmers. Contracted farmers are required to sanitize and clean their duck habitats completely between rounds of raising ducks. In addition, we have adopted various measures to assure the quality of the ducks we repurchase from the farmers, including providing our farmers with our on-site hatched ducklings, self-produced feed, technical support throughout the duck raising period, and the supervision and direction regarding the use of veterinary medicine.

Our Growth Strategies

Our primary objectives are to capitalize on current market opportunities and build on our competitive strengths to enhance our position as a leader in the duck industry by:

•

Enhance Sales and Marketing: We expect to focus on channels through food processors and distributors while seeking opportunities to enter the rural markets of Shanghai and Nanjing. We intend to explore new selling channels such as supermarkets and groceries. We plan to expand our sales and marketing team and develop a network of distributors and we also intend to hire additional sales staff in order to strengthen our existing relationships with food processors and develop new relationships, including with supermarkets and grocery stores both locally and in selected national markets in China. Meanwhile, we will also look to enter into agreements with distributors active in the rural markets of Shanghai and Nanjing to distribute our products there.

•

Expand Geographic Presence: We intend to expand the sales of our frozen duck products geographically. We continue to focus on our markets including those in the Shanghai and Nanjing areas. By establishing and strengthening business relationships with food processing customers, supermarkets, restaurants, and the individual distributors in these areas and expanding our market share in the rural areas of these markets, we believe we will be able to increase our sales. In addition, we plan to strengthen our sales and marketing efforts by expanding our sales team.

•

Expand Production Capacity: We intend to expand our production capacity of frozen ducks from the current daily capacity of processing 25,000 heads to 80,000 heads through the related expansion of our feed production facility, hatchery, and breeder farm. Specifically, we expect to increase our breeder duck purchase from 50,000 heads to 100,000 heads and maintain that level, purchase approximately 120 sets of hatchery machines to increase our duckling production capacity from 8.5 million heads to 20 million heads annually, and build an additional feed production facility to increase our feed production capacity from 50,000 tons to 80,000 tons annually. We also intend to hire additional personnel for sales, feed production, processing production, feather production, hatchery, breeder farm, and administrative functions.

•

Strengthen Our Farmer Network: To strengthen our farmer network, we intend to help existing farmers expand their production and to continue adding additional contracted farmers. Specifically, we intend to help existing farmers reduce the cost of raising ducks by providing them additional technical support to assure a high survival rate, and offering duckling delivery services and commercial adult duck pick up services. We intend to offer competitive prices for such services, which we believe will allow our contracted farmers to be more profitable. In addition, as we expand our production capacity, we believe we could easily find available farmers within Shandong Province to work with.

•

Increase Our Customer Base: By strengthening our relationships with key customers and diversifying our customer base, we plan to increase our product share in the market in which we operate. We intend to attract more customers by providing a diversified product mix and adding new varieties of the Bai Tiao products and duck part products.

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Market Opportunity

•

Compared to traditional Peking ducks, Cherry Valley ducks are leaner with less fat content according to the China Animal Agricultural Society and, based on the 206 million Cherry Valley ducks sold from farms in China in 2009 and our increased revenues during the past two years, have become popular. We expect this popularity to drive market demand for Cherry Valley ducks in China.

•

According to the CIA World Factbook, China’s population is estimated to have grown by approximately 0.7% in 2009 and is expected to grow further in future years. We expect the duck consumption to increase with this population growth.

Our Risks and Challenges

An investment in our common stock involves a high degree of risk, including risks related to us, the industries in which we operate, the PRC, the ownership of our common stock and this offering, such as:

•

our dependence on the continued growth of the duck industry in China;

•

the loss of any key employee, including members of our senior management team;

•

increased competition in the duck industry;

•

events beyond our control, such as an outbreak of disease in flocks or the adoption by government agencies of more stringent regulations, could materially and adversely affect our operations; and

•

currency conversion and exchange rate volatility could adversely affect our financial condition.

See “Risk Factors” beginning on page 12 for a more detailed description of these and other risks related to an investment in our common stock.

Corporate Information

We were incorporated in the State of Oregon on January 22, 2009, and we changed our domicile to the State of Nevada on May 21, 2010. We conduct our operations principally through our wholly-owned subsidiary, Beijing CHENGMUJINMING Technology Service Co., LTD. (“Beijing CMJM”), a wholly foreign-owned enterprise incorporated under the laws of the PRC on March 23, 2010. Through a series of agreements (the “VIE Agreements”), Beijing CMJM has exclusive control over the business of Weifang Jinzheng Poultry Co., Ltd. (“Jinzheng”), a company organized under the laws of the PRC in 2002. In accordance with the VIE Agreements, Beijing CMJM has the right to control substantially all revenues obtained by Jinzheng. Pursuant to this contractual arrangement, Jinzheng is considered our variable interest entity (“VIE”) for accounting purposes. See “Our Corporate Structure” below in this prospectus Summary and “Our History and Corporate Structure — Contractual Arrangements with Jinzheng and Jinzheng Stockholders” in this prospectus for a description of the VIE Agreements among Beijing CMJM and Jinzheng and its stockholders (“Jinzheng Stockholders”).

Our principal executive offices are located at Daokou Industry Park, Yingli Town, Shouguang, Shandong Province, China. The telephone number at our principal executive offices is 536-5401658. The registered office of Beijing CMJM is located at 1704F1 17th floor, Tsing Wun Contemporary Building, Mantingfangyuan Housing Estate, Qingyunli, Haidian District, Beijing, China. Our registered office in Nevada is located at CSC Services of Nevada, Inc., 502 East John Street, Carson City, Nevada 89706. Investors should submit any inquiries to the address and telephone number of our principal executive offices in China set forth above. Our website is located at http://www.jinzhenggroup.com. The information contained on our website is not a part of this prospectus and is not incorporated herein by reference.

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Our Corporate Structure

We operate our business in China through Jinzheng, a PRC limited liability company, wholly owned by Jinzheng Stockholders including our Chief Executive Officer, Junfeng Shan, and three other shareholders, Yan Wang, Li Qian and Yufen Zhang, all of whom are PRC citizens. Jinzheng holds the licenses and approvals necessary to breed, produce and distribute ducks and other poultry meats in China. Pursuant to our VIE Agreements with Jinzheng and Jinzheng Stockholders, we provide consulting and management services to Jinzheng. We have exclusive control over Jinzheng’s daily operations and financial affairs and the authority to appoint its senior executives and approve all matters requiring shareholder approval. The VIE Agreements are in effect for a term of ten years starting from March 25, 2010 and can be renewed for additional ten-year terms upon notice by Beijing CMJM, our wholly-owned subsidiary. As a result of these contractual arrangements, we are the primary beneficiary of Jinzheng. Accordingly, we have consolidated Jinzheng’s financial results, assets and liabilities in our financial statements since the execution of the VIE Agreements.

For a description of these contractual arrangements, see “Our History and Corporate Structure — Contractual Arrangements with Jinzheng and Jinzheng Stockholders.” Please also see the risk factors set forth under “Risk Factors — Risks Related to Our Corporate Structure” on page 17 for a detailed description of the risks related to our corporate structure.

The following diagram illustrates our current corporate structure and the place of formation, ownership interest and affiliation of Beijing CMJM and Jinzheng as of the date of this prospectus.

[GRAPHIC MISSING]

Junfeng Shan, the sole shareholder of Zheng Hui Holding Limited (BVI Co1), also directly owns 89.85% of the capital stock of Jinzheng, while Yufen Zhang, Yan Wang and Li Qian own in aggregate the balance of the capital stock of Jinzheng. The same three individuals also are the sole shareholders for each of the BVI Co2, BVI Co3 and BVI Co4, respectively, as described in the diagram above.

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The Offering

Common stock offered by us

1,764,706 shares

2,029,412 shares if the underwriters exercise their over-allotment option in full and 2,232,353 shares if the underwriters also exercise their warrants to purchase additional shares for cash pursuant to their warrants issued in this offering.

Common stock outstanding before this offering

2,030,457 shares

Common stock to be outstanding after this offering

3,795,163 shares (assuming the underwriters will not exercise their option to purchase up to 264,706 additional shares of our common stock to cover over-allotments)

Anticipated Offering
price

$8.00 to $9.00 per share

Use of proceeds

We estimate that our net proceeds from this offering will be approximately $13,300,000 (based on an assumed initial public offering price of $8.50 per share, which is the mid-point of the range set forth on the cover page of this prospectus and assuming no exercise of the underwriters’ over-allotment option) after deducting underwriting discounts and commissions, the underwriters corporate finance fee and expenses related to the offering. We intend to use approximately $10 million to $11 million for the acquisition or construction of a new factory, including processing and cold storage facilities and related equipment. In addition, we intend to use approximately $2 million to expand our current facilities, which amount may be increased to up to $3 million if the underwriters’ over-allotment option is exercised. The remaining amount, will be retained in the United States and used for general corporate purposes including the payment of dividend of $0.17 per share declared by our Board of Directors..

The amounts and timing of our actual expenditures will depend on numerous factors, including the status of our development efforts, sales and marketing activities and the amount of cash generated or used by our operations. We may find it necessary or advisable to use portions of the proceeds for other purposes, and we will have broad discretion in the application of the net proceeds. Pending these uses, the proceeds will be invested in short-term, investment grade, interest-bearing securities.

See “Use of Proceeds” on page 32 and “Dividend Policy” on page 34 for more information.

Over-allotment option

In connection with this offering, the underwriters have been granted an over-allotment option, exercisable in full or in part, to purchase up to an aggregate of 264,706 shares of our common stock at the initial public offering price, less underwriting discounts and commissions, within 45 days from the date of this prospectus.

Underwriters’ warrants

In connection with this offering, the underwriters have each been issued a warrant to purchase up to an aggregate of 176,471 shares of our common stock (202,941 shares if the over-allotment option is exercised in full) at $ per share (a price equal to 165% of the public offering price).

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Dividends

Our Board of Directors has declared an annual dividend of $0.17 per share (based upon an initial offering price of $8.50 per share) payable from the proceeds from the offering for three years after the offering. The dividend will be paid annually to shareholders of record, with the first dividend payable on July 14, 2011 to shareholders of record on June 30, 2011. The existing holders of our common stocks have agreed to waive their right to dividends during this period. However, if the existing shareholders transfer their shares of common stock after the termination of their respective lock-up periods, the transferees shall also be entitled to dividends at the rate of $0.17 per share. In addition, should we issue additional shares of common stock to persons other than the current shareholders during the three year period commencing June 30, 2011, the holders of such newly issued shares of common stock on the applicable record date will also be entitled to such dividends. See “Dividend Policy” on page 34 for more information.

Lock-up

We and each of our directors, officers and one 5% stockholder, Zheng Hui Holding Limited, have agreed, subject to certain exceptions, not to, including not announce an intention to, for a period of 12 months from the date of this prospectus sell, transfer or otherwise dispose of any shares of our common stock without the prior written consent of the underwriters. In addition, each of the other shareholders of the Company has agreed to a similar restriction for a period of six months. See “Underwriting.”

Risk factors

Investing in these securities involves a high degree of risk. As an investor you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the “Risk Factors” section beginning on page 12.

Listing

We have applied to have our common stock listed on the NASDAQ Capital Market (“NASDAQ”) under the symbol “ZHIC.”

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Summary Financial and Operating Data

The following summary of our consolidated and combined statement of income data for the years ended December 31, 2010 and 2009 and the summary of the consolidate and combined balance sheet data as of December 31, 2010 and 2009 are derived from our audited consolidated and combined financial statements and related notes thereto included elsewhere in this prospectus. The following summary of our combined statement of income data for the year ended December 31, 2008 and the summary of the combined balance sheet data as of December 31, 2008 all derived from our audited combined financial statements and related notes thereto not included in this prospectus. The audited consolidated and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and have been audited by EFP Rotenberg, LLP, an independent registered public accounting firm. We have prepared our unaudited consolidated interim financial statements on the same basis as our audited consolidated combined financial statements and have included all adjustments, consisting of normal and recurring adjustments that we consider necessary to present fairly our financial position and results of operations for our unaudited period.

The consolidated and combined financial statements are reported in U.S. dollar amounts. This data should be read in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited combined and unaudited consolidated financial statements and the related notes included elsewhere in this prospectus.

The balance sheet data as of December 31, 2010 is presented:

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on an actual basis; and

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on an as adjusted basis to reflect (i) our sale of common stock in this offering at an assumed initial public offering price of $8.50 per share (the mid-point of the range set forth on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses.


	Year Ended December 31,
	2010 USD			2009 USD			2008 USD
Net revenue		44,329,478			36,757,703			33,354,535
Cost of sales		35,365,121			29,299,988			26,501,070
Gross profit		8,964,357			7,457,715			6,853,465
Total operating expenses		(1,864,883	)		(1,120,479	)		(1,376,941	)
Income from operations		7,099,474			6,337,236			5,476,524
Total other income		(3,050	)		23,190			65,090
Net income before provision for income taxes		7,096,424			6,360,426			5,541,614
Provision for income taxes		1,797,662			1,630,076			1,458,112
Net income		5,298,762			4,730,350			4,083,502
Net income attributable to stockholders		5,298,762			3,915,595			3,266,802
Other comprehensive income attributable to stockholders		650,418			16,617			341,457
Total comprehensive income attributable to stockholders		5,949,180			3,932,212			3,608,259
Basic and diluted earnings per common share to stockholders		2.62			1.96			1.63
Basic and diluted weighted average common shares outstanding		2,024,112			2,000,000			2,000,000

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	As of December 31,				As of December 31,
	2010				2009		2008
	As Adjusted⁽¹⁾ USD		USD		USD		USD
Consolidated Balance Sheet Data
Cash and cash equivalents		8,267,169		21,567,169		2,543,095		1,720,357
Total assets		24,598,916		37,898,916		18,770,229		15,616,076
Total liabilities		4,513,175		4,513,175		5,014,169		6,617,739
Total Zheng Hui Industry Corporation stockholders’ equity		20,085,740		33,385,740		13,756,060		7,199,069
Non controlling interest in VIE		—		—		—		1,799,268
Total equity		20,085,740		33,385,740		13,756,060		8,998,337

(1)

Does not give effect to the estimated use of proceeds. See “Use of Proceeds.”

The table below sets forth additional financial data for each of the periods indicated that we believe is important to an understanding of our operations.


	Year Ended December 31,
	2010 USD		2009 USD		2008 USD
Other data
EBITDA⁽¹⁾		7,759,983		6,987,651		6,261,206
Adjusted EBITDA⁽²⁾		7,763,033		6,964,461		6,196,116
Capital expenditures		329,594		4,235,306		743,995

(1)

EBITDA is defined as net income before net interest expense, income tax expense, depreciation and amortization. EBITDA is a financial measure that is not calculated in accordance with generally accepted accounting principles, or GAAP. EBITDA should not be considered as an alternative to net income (loss), operating income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP. We prepare EBITDA to eliminate the impact of items that we do not consider indicative of our core operating performance. We encourage you to evaluate these adjustments and the reasons we consider them appropriate.

We believe EBITDA is useful to investors in evaluating our operating performance because:

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securities analysts use EBITDA as a supplemental measure to evaluate the overall operating performance of companies and we anticipate that our investor and analyst presentations after we are public will include EBITDA; and

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we believe that the elimination of certain non-cash, non-operating or non-recurring items enables a more consistent measurement of period to period performance of our operations, as well as a comparison of our operating performance to companies in our industry.

Our management uses EBITDA:

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as a measure of operating performance;

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for planning purposes, including the preparation of our annual operating budget;

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to allocate resources to enhance the financial performance of our business;

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to evaluate the effectiveness of our business strategies; and

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in communications with our Board of Directors concerning our financial performance.

Although EBITDA is frequently used by investors and securities analysts in their evaluations of companies, EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP. Some of these limitations are:

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EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or other contractual commitments;

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EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

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EBITDA does not reflect interest expense or interest income;

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EBITDA does not reflect cash requirements for income taxes;

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although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for these replacements; and

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other companies in our industry may calculate EBITDA or similarly titled measures differently than we do, limiting its usefulness as a comparative measure.

(2)

Adjusted EBITDA represents EBITDA adjusted for non-operating income or expense. Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate Adjusted EBITDA or similarly titled measures in the same manner as we do. We use Adjusted EBITDA to evaluate our operating results without the additional variations caused by non-operating income or expense, which is non-recurring.

The following table includes a reconciliation of our Net Income to our EBITDA and Adjusted EBITDA for each of the periods indicated:


	Year Ended December 31,
	2010 USD			2009 USD		2008 USD
Net income		5,298,762			4,730,350		4,083,502
Depreciation and amortization		524,149			425,594		323,971
Provision for income taxes		1,797,662			1,630,076		1,458,112
Interest expenses		139,410			201,631		395,621
EBITDA		7,759,983			6,987,651		6,261,206
Other income/(expense)		(3,050	)		23,190		65,090
Adjusted EBITDA		7,763,033			6,964,461		6,196,116

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RISK FACTORS

Investing in our common stock involves a high degree of risk. Before making an investment in our common stock, you should carefully consider the following risks, as well as the other information contained in this prospectus. You should pay particular attention to the fact that we conduct all of our operations in China and are governed by a legal and regulatory environment that in some respects differs significantly from the environment that may prevail in the U.S. and other countries. The risks described below are those which we believe are currently the material risks we face. Any of the risk factors described below could materially adversely affect our business, prospects, financial condition, cash flows and results of operations. As a result, the trading price of our common stock could decline and you may lose part or all of your investment.

Industry cyclicality can affect our earnings, especially due to fluctuations in commodity prices of feed ingredients and duck meat.

Profitability in the duck industry is materially affected by the commodity prices of feed ingredients, duck meat and alternative proteins. These prices are determined by supply and demand factors and supply and demand factors with respect to feed ingredients, duck meat and alternative proteins may not correlate. As a result, the duck industry is subject to wide fluctuations. It is very difficult to predict when these cycles will occur. All we can safely predict is that they do and will occur.

Various factors can affect the supply of corn and soybean meal, which are the primary ingredients of the feed we use. In particular, global weather patterns, the global level of supply inventories and demand for feed ingredients, currency fluctuations and the agricultural and energy policies of the United States and foreign governments all affect the supply of feed ingredients. Weather patterns often change agricultural conditions in an unpredictable manner. A sudden and significant change in weather patterns could affect supplies of feed ingredients, as well as our ability to obtain feed ingredients, grow duck meat or deliver products. More recently, demand for corn from ethanol producers has resulted in sharply higher costs for corn and other grains. Increases in the prices of feed ingredients will result in increases in raw material costs and operating costs. Because our duck meat prices are related to the commodity prices of duck meats, we typically are not able to increase our product prices to offset these increased grain costs. We periodically enter into contracts in the fall, when corn is more abundant and prices are relatively lower to purchase additional supplies, which are stored for future use to manage our feed ingredient costs. This practice reduces but does not eliminate the risk of increased operating costs from commodity price increases.

Outbreaks of avian disease, such as avian influenza, or the perception that outbreaks may occur, can significantly restrict our ability to conduct our operations.

We take reasonable precautions to ensure that our flocks are healthy and that our processing plants and other facilities operate in a sanitary and environmentally sound manner. Nevertheless, events beyond our control, such as the outbreak of avian disease, even if it does not affect our flocks, could significantly restrict our ability to conduct our operations or our sales. An outbreak of disease could result in governmental restrictions on the sales of fresh and frozen duck meat, including our fresh and frozen duck meat products, or other products to or from our suppliers, facilities or customers, or require us to destroy one or more of our flocks. This could result in the cancellation of orders by our customers and create adverse publicity that may have a material adverse effect on our business, reputation and prospects. In addition, worldwide fears about avian disease, such as avian influenza, or AI, have, in the past, depressed demand for fresh duck meat, which adversely impacted our sales. Since all the commercial ducks that we purchase are raised by our approximately 400 contracted farmers within a radius of 10 kilometers of our processing facility, the risk of disease or other disruptions to our business operations from a local outbreak is enhanced.

In recent years there has been substantial publicity regarding a highly pathogenic Asian strain of AI, known as H5N1, which has affected Asia since 2002 and which has been found in Europe, the Middle East and Africa. It is widely believed that this strain of AI is spread by migratory birds, such as ducks and geese. There have also been some cases where this strain of AI is believed to have passed from birds to humans as humans came into contact with live birds that were infected with the disease.

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Competition in the duck industry with other duck companies, especially companies with greater resources, may make us unable to compete successfully in this industry, which could adversely affect our business.

The duck industry is highly competitive. Some of our competitors have greater financial and marketing resources than we have.

In general, the competitive factors in China’s duck industry include:

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price;

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product quality;

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brand identification;

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breadth of product line; and

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customer service.

Competitive factors vary by major markets. In the foodservice market, where we principally operate, competition is based on consistent quality, product development, service and price. Our success depends in part on our ability to manage costs and be efficient in the highly competitive duck industry.

We conduct substantially all of our operations through Jinzheng, and our performance will depend upon the performance of Jinzheng.

We have no operations independent of those of Jinzheng. As a result, we are dependent upon the performance of Jinzheng and will be subject to the financial, business and other factors affecting Jinzheng as well as general economic and financial conditions. As substantially all of our operations are conducted through Jinzheng, we are dependent on the cash flow of Jinzheng to meet our obligations.

Since virtually all of our assets are held by Jinzheng, the claims of our shareholders will be structurally subordinate to all existing and future liabilities and obligations, and trade payables of Jinzheng. In the event of a bankruptcy, liquidation or reorganization our assets and those of our subsidiaries will be available to satisfy the rights of our shareholders only after all of Jinzheng’s liabilities and obligations have been paid in full.

Due to our growth in recent years, our past results may not be indicative of our future performance so evaluating our business and prospects may be difficult.

Our business has grown and evolved rapidly in recent years as demonstrated by our growth in revenues from $36,793,495 in 2009 to $44,404,378 in 2010, representing a 20.7% growth rate. We may not be able to achieve similar growth in future periods. Therefore, our historical operating results may not provide a meaningful basis for evaluating our business, financial performance and prospects in the future. Moreover, our ability to achieve satisfactory operating results at higher production and sales volumes is unproven. You should not rely on our past results or our historical rate of growth as an indication of our future performance.

Our revenues are all generated in China, and our business will be harmed if demand in China decreases.

Historically, all of our revenues have been derived from customers in China. If demand for our processed duck decreases in China or if we are unable to generate international sales, our revenue and net income would also decline.

Inclement weather, such as excessive heat or storms, could hurt our flocks, which could in turn have a material adverse effect on our results of operations.

Extreme weather in the region where we operate, such as excessive heat, hurricanes or other storms, could impair the health or growth of our flocks or interfere with our hatching, production or shipping operations due to power outages, fuel shortages, damage to infrastructure, or disruption of shipping channels, among other things. Any of these factors could materially and adversely affect our results of operations.

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We may not be able to effectively control and manage our growth.

If our business and markets grow and develop it may be necessary for us to finance and manage expansion in an orderly fashion. In addition, we may face challenges in managing expanding product offerings. Such circumstances will increase demands on our existing management and facilities. Failure to manage this growth and expansion could interrupt or adversely affect our operations and cause production backlogs, longer product development time frames and administrative inefficiencies.

Shortages or disruptions in the availability of raw materials could have a material adverse effect on our business.

We expect that raw materials of corn and soybean meal will continue to account for a significant portion of our cost of goods sold in the future. The prices of raw materials fluctuate because of general economic conditions, global supply and demand and other factors causing monthly variations in the costs of our raw materials purchases. These macro-economic factors, together with labor and other business interruptions experienced by certain suppliers, have contributed to periodic shortages in the supply of raw materials, and such shortages may increase in the future. If we are unable to procure adequate supplies of raw material to meet our future production needs and customer demand, shortages could result in a material loss of customers and revenues and adversely impact our results of operations. In addition, supply shortages or disruptions or the loss of suppliers may cause us to procure our raw materials from less cost effective sources and may have a material adverse effect on our business, revenues and results of operations.

We depend on the availability of, and good relations with, our contracted farmer family growers.

We contract with approximately 400 independent farmer families in China for the grow-out of our day-old ducklings. Our operations depend on the availability of labor and contracted farmers and maintaining good relations with these persons. If we do not attract and maintain contracts with our contracted farmers, our production operations could be negatively impacted.

We depend on a few suppliers for a significant portion of our principal raw materials and we do not have any long-term supply contracts, which makes us susceptible to increased operating costs, production delays or shortages and quality control risks. Interruptions of production at our key suppliers may affect our results of operations and financial performance.

We rely on a limited number of suppliers for most of the raw materials we use. Our major raw materials include breeder ducks, soybean meal and corn, of which the latter two are the major raw materials of our duck feed products. We purchase breeder ducks from one supplier, Weifang Legang Food Co., Ltd. We later purchase soybean meal from two suppliers, China Oil & Foodstuff (Weifang) Co., Ltd and Weifang Haihua Zhenxing Oil & Foodstuff Co., Ltd., with each supplier accounting for 4.9% and 4.2% of our total purchases of raw materials in 2010, respectively. In addition, we purchase corn from eight individuals, in aggregate, accounting for 19.4% of our total purchases of raw materials in 2010. We do not have long-term or volume purchase agreements in excess of one year with most of our suppliers. Such dependence on a limited number of suppliers involves risks, including limited control over the price, timely delivery and quality of the materials supplied. Interruptions or shortages of supplies from our key suppliers of raw materials could disrupt production or impact our ability to increase production and sales. Identifying and accessing alternative sources may increase our costs. Interruptions at our key suppliers could negatively impact our results of operations, financial performance and the price of our common stock.

Increases in raw materials prices may increase credit and default risk with respect to our customers.

Increases in the price of our products, as raw material prices rise, may place additional demands on the working capital and liquidity needs of our customers. Accordingly, our customers’ cash flow may be negatively impacted which may have an adverse affect on the timing and amount of payment on our accounts receivable, which would in turn, negatively affect our results of operations.

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If our duck products become contaminated, we may be subject to product liability claims and product recalls.

Duck products may be subject to contamination by disease-producing organisms, or pathogens, such as Listeria monocytogenes, Salmonella and generic E. coli. These pathogens are generally found in the environment and, as a result, there is a risk that they, as a result of food processing, could be present in our processed duck products. These pathogens can also be introduced as a result of improper handling by our customers, consumers or third parties after we have shipped the products. We control these risks through careful processing and testing of our finished product, but we cannot entirely eliminate them. We have little, if any, control over proper handling in different stages of production process. Nevertheless, we may be blamed for contamination caused by improper handling of or tampering with our products by our contracted farmers, customers, consumers or third parties. Any publicity regarding product contamination or resulting illness or death could adversely affect us even if we did not cause the contamination and could have a material adverse effect on our business, reputation and future prospects. We could be required to recall our products if they are contaminated or damaged and product liability claims could be asserted against us. We currently do not have product liability insurance to cover any damages that may be awarded pursuant to any such liability claims.

We are exposed to risks relating to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate.

Our business operations entail a number of risks, including risks relating to product liability claims, product recalls, property damage and injuries to persons. We currently do not maintain insurance with respect to these risks, including product liability and recall insurance, property insurance, workers compensation insurance and general liability insurance. Such insurance may be expensive and difficult to obtain in the future. We cannot assure you that we will obtain such insurance or, if obtained, we can maintain on reasonable terms sufficient coverage to protect us against losses due to any of these events.

Since there is no assurance that we will complete the acquisition or construction of a new facility, we may not be able to expand our production capacity as planned and our business and prospects would be adversely affected if we fail to do so.

We plan to expand our current production capacity from processing 25,000 heads to 80,000 heads per day. To realize this goal, we intend to acquire or construct a new factory that includes processing and storage facilities and related equipment. We have explored opportunities to acquire additional facilities and we have also purchased the land use rights necessary to build a facility if necessary. Although we believe that we would have sufficient funds to complete one of these two options with the proceeds from this offering and cash generated from our operations, there is no assurance that we will be able to complete either one of the options successfully if additional funds are needed. If we fail to complete one of the options, we will be unable to increase our production capacity as planned, which would adversely affect our business and prospects. Further our goal of production capacity expansion would not be realized as we have planned, and our business growth would be adversely affected as a result.

Our business would be adversely affected if we expand by acquiring other businesses or by building new processing plants, but fail to successfully integrate the acquired business or run a new plant efficiently.

We regularly evaluate expansion opportunities such as acquiring other businesses or building new processing plants. Significant expansion involves risks such as additional debt, integrating the acquired business or new plant into our operations and attracting and retaining growers. In evaluating expansion opportunities, we carefully consider the effect that financing the opportunity will have on our financial condition. Successful expansion depends on our ability to integrate the acquired business or efficiently run the new plant. If we are unable to do this, expansion could adversely affect our operations, financial results and prospects.

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Current and future governmental regulations or changes in the enforcement of existing laws may materially affect our business.

The duck industry is subject to various governmental regulations relating to the processing, packaging, storage, distribution, advertising, labeling, quality and safety of food products. Unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may materially affect our business or operations in the future. Our failure to comply with applicable laws and regulations could subject us to administrative penalties and civil remedies, including fines, injunctions and recalls of our products. Our operations are also subject to extensive and increasingly stringent environmental regulations, which pertain to the discharge of materials into the environment and the handling and disposition of wastes. Failure to comply with these regulations can have serious consequences, including civil and administrative penalties and negative publicity.

We may be affected by global climate change or by legal, regulatory, or market responses to such change.

The growing political and scientific sentiment is that increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere are influencing global weather patterns. Changing weather patterns, along with the increased frequency or duration of extreme weather conditions, could impact the availability or increase the cost of key raw materials that we use to produce our products. Additionally, the sale of our products can be impacted by weather conditions.

Concern over climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting greenhouse gas, or GHG, emissions. For example, proposals that would impose mandatory requirements on GHG emissions continue to be considered by policy makers in the territories that we operate. Laws enacted that directly or indirectly affect our production, distribution, packaging, cost of raw materials, fuel, ingredients, and water could all impact our business and financial results.

Potential environmental liability could have a material adverse effect on our operations and financial condition.

As a manufacturer, we are subject to various Chinese environmental laws and regulations on air emission, waste water discharge, solid wastes and noise discharge. Although we believe that our operations are in substantial compliance with current environmental laws and regulations, we may not be able to comply with these regulations at all times as the Chinese environmental legal regime is evolving and becoming more stringent. Therefore, if the Chinese government imposes more stringent regulations in the future, we may have to incur additional and potentially substantial costs and expenses in order to comply with new regulations, which may negatively affect our results of operations. Further, no assurance can be given that all potential environmental liabilities have been identified or properly quantified or that any prior owner, operator, or tenant has not created an environmental condition unknown to us. If we fail to comply with any of the present or future environmental regulations in any material aspects, we may suffer from negative publicity and be subject to claims for damages that may require us to pay substantial fines or have our operations suspended or even be forced to cease operations.

We rely on key personnel in order to grow our business.

We depend substantially on the leadership of Mr. Junfeng Shan, our chairman and chief executive officer, who is integral to our ability to continue to grow our business and has established relationships within the industries in which we operate. If Mr. Junfeng Shan or any of our other key personnel was to leave us, our growth strategy might be hindered, which could limit our ability to increase revenue. In addition, we face competition for attracting skilled personnel. If we fail to attract and retain qualified personnel to meet current and future needs, this could slow our ability to grow our business, decrease our market share and have a material adverse effect on our business, results of operations and financial condition.

We may need additional financing, which may not be available on satisfactory terms or at all.

Our capital requirements may be accelerated as a result of many factors, including timing of development activities, underestimates of budget items, unanticipated expenses or capital expenditures, future product opportunities with collaborators, future licensing opportunities and future business combinations.

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Consequently, we may need to seek additional debt or equity financing, which may not be available on favorable terms, if at all, and may be dilutive to our stockholders.

We may seek to raise additional capital through public or private equity offerings, debt financings or additional corporate collaboration and licensing arrangements. To the extent that we raise additional capital by issuing equity securities, our stockholders may experience dilution. To the extent that we raise additional capital by issuing debt securities, we may incur substantial interest obligations, may be required to pledge assets as security for the debt and may be constrained by restrictive financial and/or operational covenants. Debt financing would also be superior to our stockholders’ interest in bankruptcy or liquidation. To the extent we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or product candidates, or grant licenses on unfavorable terms.

Our contractual arrangements with Jinzheng and its shareholders may not be as effective in providing control over these entities as direct ownership.

We have no equity ownership interest in Jinzheng and rely on the contractual arrangements of the VIE Agreements to control and operate Jinzheng. These contractual arrangements may not be as effective in providing control over Jinzheng as direct ownership. For example, Jinzheng could fail to take actions required for our business or fail to pay dividends to Beijing CMJM despite its contractual obligation to do so. If Jinzheng fails to perform its obligation under the VIE Agreements, we may have to rely on legal remedies under PRC law, which may not be effective. In addition, we cannot assure you that Jinzheng Stockholders will always act in our best interests.

Our contractual arrangements with Jinzheng may result in adverse tax consequences to us.

As a result of our corporate structure and contractual arrangements between Beijing CMJM and Jinzheng, Beijing CMJM is effectively subject to the 5% PRC business tax on revenues derived from Jinzheng pursuant to the VIE Agreements. Beijing CMJM is subject to the business tax, while Jinzheng, as a manufacturer, instead of a service provider, is not subject to the business tax. Moreover, we would be subject to adverse tax consequences if the PRC tax authorities were to determine that the VIE Agreements between Beijing CMJM and Jinzheng were not on an arm’s length basis and therefore constitute a favorable transfer pricing. As a result, the PRC tax authorities could request that we adjust its taxable income upward for PRC tax purposes. Such a pricing adjustment could adversely affect us by:

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increasing Jinzheng’s tax expenses without reducing Beijing CMJM’s tax expenses, which could subject Jinzheng to late payment fees and other penalties for under-payment of taxes; and/or

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resulting in Beijing CMJM’s loss of its preferential tax treatment.

The principal shareholder of Jinzheng has potential conflicts of interest with us, which may adversely affect our business.

Junfeng Shan, our chairman and chief executive officer, is also the principal shareholder of Jinzheng. Conflicts of interests between his duties to our company and Jinzheng may arise. As Mr. Junfeng Shan is a director and executive officer of our company, he has a duty of loyalty and care to us under Nevada State law when there are any potential conflicts of interests between our company and Jinzheng. Additionally, Mr. Junfeng Shan has executed an irrevocable power of attorney to appoint the individual designated by us to be his attorney-in-fact to vote on his behalf on all Jinzheng matters requiring shareholder approval. We cannot assure, however, that when conflicts of interest arise, Mr. Junfeng Shan will act completely in our interests or that conflicts of interests will be resolved in our favor. In addition Mr. Junfeng Shan could violate his employment agreement with us or his legal duties by diverting business opportunities from us to others. In addition, Mr. Junfeng Shan may be able to cause the VIE Agreements to be performed, amended or terminated in a manner adverse to us by, among other things, failing to remit payments to us on a timely basis or operating Jinzheng so as to cause harm to our business. If we cannot resolve any conflicts of interest between us and Mr. Junfeng Shan, we would have to rely on legal proceedings, which could result in the disruption of our business.

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PRC laws and regulations governing our businesses and the validity of certain of our contractual arrangements are uncertain. If we are found to be in violation of such PRC laws and regulations, our business may be negatively affected.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of Beijing CMJM’s contractual arrangements with Jinzheng.

However, there are substantial uncertainties regarding the interpretation, application and enforcement of current PRC laws and regulations and the PRC government may determine that the contractual arrangements were designed to circumvent the applicable PRC laws and regulations. Accordingly, we cannot assure you that our contractual arrangements with Jinzheng and the Jinzheng Stockholders will be enforceable, which may make it difficult to exert effective control over Jinzheng. Further, we may be subject to sanctions, including fines, and could be required to restructure our business and operations or cease to provide certain services or products. If any of the foregoing occurs, our ability to conduct our business may be negatively affected and our financial conditions, results of operations and prospects could be materially and adversely impacted.

Risks Associated With Doing Business In China

There are substantial risks associated with doing business in China, as set forth in the following risk factors.

Our operations and assets in China are subject to significant political and economic uncertainties.

Changes in PRC laws and regulations, or their interpretations, or the imposition of confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, results of operations and financial condition. Under our current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

We derive a substantial portion of our sales from China and a slowdown or other adverse developments in the PRC economy may materially and adversely affect our customers, demand for our services and our business.

Substantially all of our sales are generated in China. We anticipate that sales of our products in China will continue to represent a substantial proportion of our total sales in the near future. Although the PRC economy has grown significantly in recent years, we cannot assure you that such growth will continue. The industry in which we are involved is growing in the PRC, but we do not know how sensitive we are to a slowdown in economic growth or other adverse changes in the PRC economy which may affect demand for our products. A slowdown in overall economic growth, an economic downturn or recession or other adverse economic developments in the PRC may materially reduce the demand for our products and materially and adversely affect our business.

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Currency fluctuations and restrictions on currency exchange may adversely affect our business, including limiting our ability to convert Chinese Renminbi, or RMB, into foreign currencies and, if the RMB were to decline in value, reducing our revenue in U.S. dollar terms.

The exchange rate of the RMB is currently managed by the Chinese government. On July 21, 2005, the People’s Bank of China, or the People’s Bank, with the authorization of the State Council of the PRC, announced that the RMB exchange rate would no longer be pegged to the U.S. Dollar and would float based on market supply and demand with reference to a basket of currencies. According to public reports, the governor of the People’s Bank has stated that the basket is composed mainly of the U.S. Dollar, the European Union Euro, the Japanese Yen and the South Korean Won. Also considered, but playing smaller roles, are the currencies of Singapore, the United Kingdom, Malaysia, Russia, Australia, Canada and Thailand. The weight of each currency within the basket has not been announced.

The initial adjustment of the RMB exchange rate was an approximate 2% revaluation from an exchange rate of 8.28 RMB per U.S. Dollar to 8.11 RMB per U.S. Dollar. The People’s Bank also announced that the daily trading price of the U.S. Dollar against the RMB in the inter-bank foreign exchange market would be allowed to float within a band of 0.3% around the central parity published by the People’s Bank, while the trading prices of the non-U.S. Dollar currencies against the RMB would be allowed to move within a certain band announced by the People’s Bank. The People’s Bank has stated that it will make adjustments of the RMB exchange rate band when necessary according to market developments as well as the economic and financial situation. In a later announcement published on May 18, 2007, the band was extended to 0.5%. Since July 2008, the RMB has traded at 6.83 RMB per U.S. Dollar. Recent reports indicate an upward revaluation in the value of the RMB against the U.S. Dollar may be allowed. The People’s Bank announced on June 19, 2010 its intention to allow the RMB to move more freely against the basket of currencies, which increases the possibility of sharp fluctuations in the value of the RMB in the near future and thus the unpredictability associated with the RMB exchange rate.

Despite this change in their exchange rate regime, the Chinese government continues to manage the valuation of the RMB. The value of our common stock will be indirectly affected by the foreign exchange rate between the U.S. dollar and the RMB. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars, as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.

The income statements of our operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our international operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions results in increased revenue, operating expenses and net income for our international operations. We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars in consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign subsidiaries’ financial statements into U.S. dollars will lead to a translation gain or loss, which is recorded as a component of other comprehensive income. In addition, we have certain assets and liabilities that are denominated in currencies other than the relevant entity’s functional currency. Changes in the functional currency value of these assets and liabilities create fluctuations that will lead to a transaction gain or loss.

Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.

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The application of PRC regulations relating to the overseas listing of PRC domestic companies is uncertain, and we may be subject to penalties for failing to request approval of the PRC authorities prior to listing our shares in the U.S.

On August 8, 2006, six PRC government agencies, namely, the Ministry of Commerce, or MOFCOM, the State Administration for Industry and Commerce, or SAIC, the China Securities Regulatory Commission, or CSRC, the State Administration of Foreign Exchange, or SAFE, the State Assets Supervision and Administration Commission, or SASAC, and the State Administration for Taxation, or SAT, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “New M&A Rules”), which became effective on September 8, 2006. The New M&A Rules purport, among other things, to require offshore “special purpose vehicles,” that are (1) formed for the purpose of overseas listing of the equity interests of PRC companies via acquisition and (2) are controlled directly or indirectly by PRC companies and/or PRC individuals, to obtain the approval of the CSRC prior to the listing and trading of their securities on overseas stock exchanges. Based on our understanding of current PRC Laws and as advised by our PRC counsel, (i) Beijing CMJM was incorporated by a foreign owned enterprise, and there was no acquisition of the equity or assets of a “PRC domestic company” as such term is defined under the New M&A Rules and (ii) no provision in the New M&A Rules clearly classifies the contractual arrangements between Beijing CMJM and Jinzheng as a type of transaction falling within the New M&A Rules. Therefore, we were and are not required to obtain the approval of CSRC under the New M&A Rules in connection with this offering.

However, there are substantial uncertainties regarding the interpretation, application and enforcement of the New M&A Rules and CSRC has yet to promulgate any written provisions or formally declare or state whether the overseas listing of a PRC-related company structured similar to ours is subject to the approval of CSRC. Any violation of these rules could result in fines and other penalties on our operations in China, restrictions or limitations on remitting dividends outside of China, and other forms of sanctions that may cause a material and adverse effect to our business, operations and financial conditions.

The new mergers and acquisitions regulations also established additional procedures and requirements that are expected to make merger and acquisition activities by foreign investors more time-consuming and complex, including requirements in some instances that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise that owns well-known trademarks or China’s traditional brands. We may grow our business in part by acquiring other businesses. Complying with the requirements of the new mergers and acquisitions regulations in completing this type of transactions could be time-consuming, and any required approval processes, including CSRC approval, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

Recent PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders or our PRC subsidiaries to penalties, limit our ability to distribute capital to our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute funds to us, or otherwise adversely affect us.

The SAFE issued a public notice in October 2005, or the SAFE Circular No. 75, requiring PRC residents to register with the local SAFE branch before establishing or controlling any company outside of China for the purpose of capital financing with assets or equities of PRC companies, referred to in the SAFE Circular No. 75 as SPVs. PRC residents who are shareholders of SPVs established before November 1, 2005 were required to register with the local SAFE branch before March 31, 2006. Further, PRC residents are required to file amendments to their registrations with the local SAFE branch if their SPVs undergo a material event involving changes in capital, such as changes in share capital, mergers and acquisitions, share transfers or exchanges, spin-off transactions or long-term equity or debt investments. Our current PRC resident shareholders have made the registration successfully. However, any failure by shareholders of our ordinary shares to amend their registration or the failure of future shareholders of our company who are PRC residents to comply with the registration procedures set forth in the SAFE Circular No. 75 could subject such beneficial owners and our PRC subsidiaries to fines and legal sanctions. See “Business — Government Regulation — Foreign Exchange Regulation.”

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Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject our PRC stock incentive plan participants or us to fines and other legal or administrative sanctions.

In December 2006, the People’s Bank promulgated Administrative Measures for Individual Foreign Exchange, or the Individual Foreign Exchange Rules, setting forth the requirements for foreign exchange transactions by PRC individuals under either the current account or the capital account. In January 2007, SAFE issued Implementing Rules for the Individual Foreign Exchange Rules, which, among other things, specified approval requirements for certain capital account transactions such as a PRC citizen’s participation in the employee stock ownership plans or stock option plans of an overseas publicly-listed company. On March 28, 2007, SAFE promulgated the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Holding Plan or Stock Option Plan of Overseas-Listed Company, or “Circular 78.” Under Circular 78, PRC citizens who are granted stock options by an overseas publicly-listed company are required, through a PRC agent or PRC subsidiary of such overseas publicly-listed company, to register with SAFE and complete certain other procedures. We and our PRC citizen employees, who maybe granted share options, or PRC optionees, will be subject to these regulations when our company becomes an overseas publicly-listed company. If we or our PRC optionees fail to comply with these regulations, we or our PRC optionees may be subject to fines and legal sanctions. However, as these rules were only recently promulgated, it is currently unclear as to how they will be interpreted and implemented.

Because our principal assets are located outside of the United States and with the exception of one director, our directors and all our officers reside outside of the United States, it may be difficult for you to enforce your rights based on the United States Federal securities laws against us and our officers and directors in the United States or to enforce judgments of United States courts against us or them in the PRC.

With the exception of one director, all of our officers and directors reside outside of the United States. In addition, our operating subsidiaries are located in the PRC and all of their assets are located outside of the United States. China does not have a treaty with United States providing for the reciprocal recognition and enforcement of judgments of courts. It may therefore be difficult for investors in the United States to enforce their legal rights based on the civil liability provisions of the United States federal securities laws against us in the courts of either the United States or the PRC and, even if civil judgments are obtained in courts of the United States, to enforce such judgments in PRC courts. Further, it is unclear if extradition treaties now in effect between the United States and the PRC would permit effective enforcement against us or our officers and directors of criminal penalties, under the United States federal securities laws or otherwise.

We may have limited legal recourse under PRC law if disputes arise under our contracts with third parties.

The Chinese government has enacted some laws and regulations dealing with matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and regulations is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. If our new business ventures are unsuccessful, or other adverse circumstances arise from these transactions, we will face the risk that the parties to these ventures may seek ways to terminate the transactions, or, may hinder or prevent us from accessing important information regarding the financial and business operations of these acquired companies. The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the Chinese government, and forces unrelated to the legal merits of a particular matter or dispute may influence their determination. Any rights we may have to specific performance, or to seek an injunction under PRC law, in either of these cases, are severely limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations. Although legislation in China over the past 30 years has significantly improved the protection afforded to various forms of foreign investment and contractual arrangements, these laws, regulations and legal requirements are relatively new and their interpretation and enforcement involve uncertainties, which could limit the legal protection available to us, and foreign investors, including you. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital and could have a material adverse impact on our operations.

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We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our business.

We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We have operations, agreements with third parties and make sales in China, which may experience corruption. Our activities in China create the risk of unauthorized payments or offers of payments by our employees, consultants, sales agents or distributors because these parties are not always subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

We face uncertainty from the Circular on Strengthening the Administration of Enterprise Income Tax on Non-resident Enterprises’ Share Transfer (“Circular 698”) released in December 2009 by China’s State Administration of Taxation, or the SAT, effective as of January 1, 2008.

Pursuant to the Circular on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises (“Circular 698”) issued by the SAT on December 10, 2009, where a foreign investor transfers the equity interests of a PRC resident enterprise indirectly via disposing of the equity interests of an overseas holding company (an “Indirect Transfer”) and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor shall report such Indirect Transfer to the competent tax authority of the PRC resident enterprise. The PRC tax authority will examine the true nature of the Indirect Transfer, and if the tax authority considers that the foreign investor has adopted an abusive arrangement in order to avoid PRC tax, they will disregard the existence of the overseas holding company and re-characterize the Indirect Transfer and as a result, gains derived from such Indirect Transfer may be subject to PRC withholding tax at the rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the competent tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

Since Circular 698 became effective on January 1, 2008, we cannot assure you that our reorganization will not be subject to examination by PRC tax authorities or that any direct or indirect transfer of our equity interests in our PRC subsidiaries via our overseas holding companies will not be subject to a withholding tax of 10%.

Changes in foreign exchange regulations in the PRC may affect our ability to pay future dividends in foreign currency or conduct other foreign exchange business.

We receive substantially all of our revenues in RMB, which is currently not a freely convertible currency. The restrictions on currency exchanges may limit our ability to use revenues generated in RMB to make dividends or other payments in United States dollars. The PRC government strictly regulates conversion of RMB into foreign currencies. Over the years, foreign exchange regulations in the PRC have significantly reduced the government’s control over routine foreign exchange transactions under current accounts. In the PRC, SAFE regulates the conversion of the RMB into foreign currencies. Pursuant to applicable PRC laws and regulations, foreign invested enterprises incorporated in the PRC are required to apply for “Foreign Exchange Registration Certificates.” Currently, conversion within the scope of the “current account” (e.g. remittance of foreign currencies for payment of dividends, etc.) can be effected without requiring the approval of SAFE. However, conversion of currency in the “capital account” (e.g. for capital items such as direct investments, loans, securities, etc.) still requires the approval of SAFE. In addition, failure to obtain approval from SAFE for currency conversion on the capital account may adversely impact our capital expenditure plans and our ability to expand in accordance with our desired objectives.

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The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining foreign currency, we may be unable to pay dividends or meet obligations that may be incurred in the future that require payment in foreign currency.

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

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

Future inflation in China may inhibit our ability to conduct business in China. In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our products rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may have an adverse effect on profitability. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.

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

The PRC historically has been deficient in Western style management and financial reporting concepts and practices, as well as in modern banking, and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees familiar with these concepts, practices and systems to work in the PRC. As a result of these factors, and especially given that we expect to be a publicly listed company in the U.S. and subject to regulation as such, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. We may have difficulty establishing adequate management, legal and financial controls in the PRC. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and other applicable laws, rules and regulations. This may result in significant deficiencies or material weaknesses in our internal controls, which could impact the reliability of our financial statements and prevent us from complying with rules and regulations of the Securities and Exchange Commission (the “SEC”) and the requirements of Sarbanes-Oxley. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our business and the public announcement of such deficiencies could adversely impact our stock price.

It may be difficult to protect and enforce our intellectual property rights under PRC law.

Intellectual property rights in China are still developing, and there are uncertainties involved in the protection and the enforcement of such rights. While we are not currently dependent on our intellectual property rights, we still need to pay special attention to protecting our intellectual property and trade secrets. Failure to adequately protect our intellectual property rights could lead to losses, including a potential loss of a competitive advantage that cannot be compensated through a damages award.

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Under PRC law, we are required to obtain permits and business licenses, and our failure to do so would adversely impact our ability to conduct business in China.

We hold various permits, business licenses, and approvals authorizing our operations and activities, which are subject to periodic review and reassessment by the Chinese authorities. Standards of compliance necessary to pass such reviews change from time to time and differ from jurisdiction to jurisdiction, leading to a degree of uncertainty. If renewals, or new permits, business licenses or approvals required in connection with existing or new facilities or activities, are not granted or are delayed, or if existing permits, business licenses or approvals are revoked or substantially modified, we will suffer a material adverse effect. If new standards are applied to renewals or new applications, it could prove costly to us to meet any new level of compliance.

New labor laws in the PRC may adversely affect our results of operations.

On June 29, 2007, the PRC government promulgated a new labor law, namely, the Labor Contract Law of the PRC, or the New Labor Contract Law, which became effective on January 1, 2008. The New Labor Contract Law imposes stricter obligations on employers. Under the New Labor Contract Law, an employer is obligated to execute written labor contracts with all of its employees, otherwise an employee without a written labor contract will be entitled to claim double monthly salary from the employer. Certain of our employees hired on a temporary basis were hired without execution of a written labor contract. Should such an employee file a valid claim, there can be no assurance that we will not be required to make additional payments under the New Labor Contract Law, which would adversely affect our results of operations.

The New Labor Contract Law also imposes tougher procedural requirements related to a reduction in workforce and requires certain terminations to be based upon seniority and not merit. In the event we decide to significantly change or decrease our workforce, the New Labor Contract Law could adversely affect our ability to enact such changes in a timely and cost-effective manner that is most advantageous to our business, which may materially and adversely affect our financial condition and results of operations.

Our failure to fully comply with PRC labor laws exposes us to potential liability.

Companies operating in China must comply with a variety of labor laws, including certain social insurance, housing fund and other staff welfare-oriented payment obligations. There exist uncertainties as to the interpretation, implementation and enforcement of such obligations. If relevant governmental authorities determine that we have not complied fully with such obligations, we may be in violation of applicable PRC labor laws and we cannot assure you that PRC governmental authorities will not impose penalties on us for any failure to comply. In addition, in the event that any current or former employee files a complaint with relevant governmental authorities, we may be subject to making up such staff-welfare oriented obligations as well as paying administrative fines. Our failure to comply with PRC labor laws could expose us to potential liability.

If our land use rights are revoked, we would have no operational capabilities.

Under Chinese law, land is owned by the state or rural collective economic organizations. The state issues to tenants the rights to use property. Use rights can be revoked and the tenants forced to vacate at any time when redevelopment of the land is in the public interest. The public interest rationale is interpreted quite broadly and the process of land appropriation may be less than transparent. Jinzheng relies heavily on these land use rights for its operations, and the loss of such rights would have a material adverse effect on our company.

Because we may not be able to obtain business insurance in the PRC, we may not be protected from risks that are customarily covered by insurance in the United States.

Business insurance is not readily available in the PRC. To the extent that we suffer a loss of a type which would normally be covered by insurance in the United States, such as product liability and general liability insurance, we would incur significant expenses in both defending any action and in paying any claims that result from a settlement or judgment.

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We are subject to the environmental protection law of China.

Our manufacturing process may produce by-products such as effluent, gases and noise, which are harmful to the environment. We are subject to multiple laws governing environmental protection, such as “The Law on Environmental Protection of the PRC” and “The Law on Prevention of Effluent Pollution of the PRC,” as well as standards set by the relevant governmental authorities determining the classification of different wastes and proper disposal. Not obeying the laws and regulations and not paying the pollution discharge fees on time may result in fines or penalties on us and adversely affect our business and results of operations.

China is experiencing substantial problems with environmental pollution. Accordingly, it is likely that the national, provincial and local governmental agencies will adopt stricter pollution controls. There can be no assurance that future changes in environmental laws and regulations will not impose costly compliance requirements on us or otherwise subject us to future liabilities. Our profitability may be adversely affected if additional or modified environmental control regulations are imposed upon us.

Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could adversely affect our operations.

A renewed outbreak of SARS or another widespread public health problem in the PRC, where all of our revenue is derived, could have an adverse effect on our operations. Our operations may be impacted by a number of health-related factors, including quarantines or closures of some of our offices that could leave us without many employees to conduct our business which would materially and adversely affect our operations and financial condition.

No market currently exists for our common stock, and we cannot assure you that an active trading market will develop for our common stock.

Prior to this offering, there has been no public market for shares of our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on the NASDAQ or otherwise, or how liquid that market might become. If an active market does not develop, you may have difficulty selling any shares of our common stock that you purchase in this initial public offering. The initial public offering price for the shares of our common stock will be determined by negotiations between us and the representatives of the underwriters, and may not be indicative of prices that will prevail in the open market following this offering. Therefore, you may be unable to resell your shares of our common stock at a price that is attractive to you, if at all.

The market price for our common stock may be subject to wide fluctuations and our common stock may trade below the initial public offering price.

The initial public offering price of our common stock will be determined by negotiations between us and representatives of the underwriters based on numerous factors. See “Determination of Offering Price” and “Underwriting.” This price may not be indicative of the market price of our common stock after this offering. We cannot assure you that you will be able to resell your common stock at or above the initial public offering price or our net asset value. The securities of a number of Chinese companies and companies with substantial operations in China have also experienced wide fluctuations subsequent to their initial public offerings, including trading at prices substantially below the initial public offering prices. Among the factors that could affect the price of our common stock are risk factors:

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announcements of competitive developments, by our competitors;

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regulatory developments of our industry affecting us, our customers or our competitors;

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actual or anticipated fluctuations in our quarterly operating results;

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failure of our quarterly financial and operating results to meet market expectations or failure to meet our previously announced guidance, if any;

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changes in financial estimates by securities research analysts;

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changes in the economic performance or market valuations of our competitors;

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Additions or departures of our executive officers and other key personnel;

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announcements regarding intellectual property litigation (or potential litigation) involving us or any of our directors and officers;

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Fluctuations in the exchange rates between the U.S. dollar and the RMB; and

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release or expiration of the underwriters’ post-offering lock-up or other transfer restrictions on our outstanding common stock.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular industries or companies. For example, recently the capital and credit markets experienced substantial volatility and disruption, developing into a global financial and economic crisis. As a result, stock prices of a broad range of companies worldwide, whether or not they are related to the financial services industry, had declined and fluctuated significantly. These market fluctuations may also have a material adverse effect on the market price of our securities.

Restrictions under Nevada law may limit our ability to pay dividends

Under Nevada law, dividends may not be paid if, after giving effect to the distribution, we would not be able to pay our debts as they become due in the usual course of business. Our Board of Directors has declared a cash dividend of $0.17 per share (based upon an initial offering price of $8.50 per share), payable annually in three years, beginning with the first dividend payable on July 14, 2011 to shareholders of record on June 30, 2011 and thereafter to shareholders of record on June 30, 2012 and 2013 thereafter. We expect that the aggregate amount of dividend payable annually to the purchasers of the 1,764,706 shares of common stock sold in this offering will be $300,000 per year for an aggregate of $900,000. We plan to pay such dividend out of the proceeds of this offering after deducting the proceeds to be used for other purposes and retained by us in the United States as discussed under the section “Use of Proceeds”. However, the aggregate amount of dividends payable may increase above $900,000 in certain circumstances, including (i) the exercise of the over-allotment option by the underwriters in connection with this offering, (ii) to the extent that the existings shareholders transfer any of their shares of stock after expiration of their respective lock-up periods or (iii) the issuance of additional shares of common stock after this offering. While we have a history of profitability and we anticipate that we will continue to be able to pay our debts as they become due after distribution of the dividends that our Board of Director has declared, adverse business developments could restrict our ability to pay any dividend which we intend to pay.

Chinese restrictions on the dividend distribution and foreign exchange may limit our ability to pay future dividends.

As a holding company, we rely principally on dividends and other distributions on equity paid by Beijing CMJM for our cash requirements, including funds necessary to service any debt we may incur. As a result, the payment of the declared dividends in an amount exceeding the available funds allocated from the proceeds of this offering or the payment of dividends declared by our Board of Directors in the future may need to be obtained from the profits resulting from the operation of Beijing CMJM and indirectly, Jinzheng. Under applicable PRC regulations, dividends can only be paid from accumulated profits determined in accordance with PRC accounting standards after deducting 10% of the after-tax profits which must be set aside. There is no assurance that we will have sufficient profits from our PRC entities to be used to pay such dividends. Moreover, if our PRC entities incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Any limitation on the ability of our PRC entities to distribute dividends and other distributions to us could materially and adversely limit our ability to pay future dividends or otherwise fund and conduct our business.

Furthermore, the PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. There is no assurance that we may complete the administrative procedures necessary to obtain and remit foreign currency for the distribution of the funds to the Company in the United States or complete such administrative procedures by the dates designated by our Board of Directors.

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We have considerable discretion in the use of proceeds from this offering and we may use these proceeds in ways with which you may not agree.

We intend to use the net proceeds from this offering for general corporate purposes, including capital expenditures and funding possible future acquisitions. We have not allocated the net proceeds of this offering to any particular project or acquisition, except to expand our processing and cold storage capacity either through acquisition of an existing facility or through construction of a new facility. Rather, our Board of Directors and our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. You must rely on the judgment of our Board of Directors and our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our efforts to maintain profitability or increase the price of our securities. The net proceeds from this offering may be placed in investments that do not produce income or that lose value. See “Use of Proceeds.”

You will experience immediate and substantial dilution in the net tangible book value of your investment and may experience further dilution in the future.

The assumed initial public offering price of our common stock of $8.50 per share in this offering, the mid-point of the price range set forth on the cover of this prospectus, is substantially higher than the net tangible book value per share of our outstanding common stock prior to this offering. Consequently, when you purchase our common stock in this offering at an offering price of $8.50, you will incur immediate dilution of $0.45 per share. See “Dilution.”

We may need additional capital and may sell additional securities or other equity securities or incur indebtedness, which could result in additional dilution to our shareholders or increase our debt service obligations.

We may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our cash resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities or equity-linked debt securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

Substantial future sales of our common stock in the public market, or the perception that these sales could occur, could cause the price of our securities to decline.

Additional sales of our securities in the public market after this offering, or the perception that these sales could occur, could cause the market price of our securities to decline. Upon completion of this offering, we will have 3,795,163 shares of our common stock outstanding. Of that amount, approximately 1,764,706 shares of our common stock are freely transferable without restriction upon resale, and 2,030,457 shares of common stock outstanding after this offering will be available for resale subject to volume and other restrictions as applicable under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). Of such 2,030,457 shares of common stock, 1,797,000 shares of common stock beneficially owned by Mr. Junfeng Shan may not be resold for 12 months after the date of this prospectus pursuant to a lock-up agreement and the remaining 233,457 shares of common stock owned by the other four minority shareholders may not be resold for six months after the date of this prospectus pursuant to certain lock-up agreements, without the consent of the underwriters. Any or all of these shares subject to a lock-up period may be released prior to expiration of the lock-up period at the discretion of the underwriters for this offering. See “Shares Eligible for Future Sale.” All securities sold in this offering will be freely transferable without restriction under the Securities Act. In addition, we may grant or sell additional options, restricted shares or other share-based awards in the future under our share incentive plan to our management, employees and other persons, the settlement and sale of which may further dilute our shares and drive down the price of our securities.

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NASDAQ may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

We have applied for listing of our common stock on NASDAQ to be effective concurrently with this offering. NASDAQ is a national securities exchange. We cannot assure you that our securities will meet the continued listing requirements to be listed on NASDAQ in the future.

If NASDAQ delists our common stock from trading on its exchange, we could face significant material adverse consequences including:

•

a limited availability of market quotations for our securities;

•

a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;

•

a limited amount of news and analyst coverage for our company; and

•

a decreased ability to issue additional securities or obtain additional financing in the future.

Our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

We have historically operated our business as a private company. As a public company, we will incur additional legal, accounting, compliance and other expenses that we have not incurred historically. After this offering, we will become obligated to file with the SEC annual and quarterly information and other reports that are specified in Section 13 and other sections of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We will also be required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. In addition, we will become subject to other reporting and corporate governance requirements, including certain requirements of NASDAQ, certain provisions of Sarbanes-Oxley and the regulations promulgated thereunder, which will impose significant compliance obligations upon us.

Sarbanes-Oxley, as well as new rules subsequently implemented by the SEC and NASDAQ, have imposed increased regulation and disclosure and required enhanced corporate governance practices of public companies. We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard are likely to result in increased marketing, selling and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. These changes will require a significant commitment of additional resources. We may not be successful in implementing these requirements and implementing them could materially adversely affect our business, results of operations and financial condition. In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our operating results on a timely and accurate basis could be impaired. If we do not implement such requirements in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC or NASDAQ. Any such action could harm our reputation and the confidence of investors and clients in our company and could materially adversely affect our business and cause our share price to fall.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley could have a material adverse effect on our business and stock price.

As a public company, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of Sarbanes-Oxley, which will require annual management assessments of the effectiveness of our internal control over financial reporting, to the extent we are subject to the requirement, and a report by our independent registered public accounting firm that addresses the effectiveness of internal control over financial reporting. During the course of our testing, we may identify deficiencies, which we may not be able to remediate in time to meet our deadline for compliance with Section 404. Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. We also expect the new regulations to increase our legal and financial

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compliance costs, make it more difficult to attract and retain qualified officers and members of our Board of Directors, particularly to serve on our Audit Committee, and make some activities more difficult, time consuming and costly. We may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 or, to the extent we are subject to the requirement, our independent registered public accounting firm may not be able or willing to issue an unqualified report on the effectiveness of our internal control over financial reporting. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or their effect on our operations because there is presently no precedent available by which to measure compliance adequacy. If either we are unable to conclude that we have effective internal control over financial reporting, or to the extent we are subject to the requirement, our independent auditors are unable to provide us with an unqualified report as required by Section 404, then investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

If our shares of common stock become subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

Our common stock may be considered to be a “penny stock” if it does not qualify for one of the exemptions from the definition of “penny stock” under Section 3a51-1 of the Securities Exchange Act for 1934, as amended (the “Exchange Act”). SEC rules generally defines penny stock to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. The penny stock rules impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules may discourage investor interest in, and limit the marketability of, our common stock should our common stock be considered a penny stock.

In addition to the penny stock rules promulgated by the SEC, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

Our chairman and chief executive officer exercises control over most matters submitted to a shareholder vote and may have interests that differ from other shareholders. He may, therefore, take actions that are not in the interests of our other shareholders.

As of December 31, 2010, approximately 88.5% of our outstanding common stock was beneficially held by Mr. Junfeng Shan, our chairman and chief executive officer. After this offering, Mr. Junfeng Shan is expected to retain his status as our controlling shareholder and hold approximately 47.3% of our outstanding common

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stock. As a result, Mr. Shan is able to control the outcome of shareholder votes on various matters, including the election of directors and extraordinary corporate transactions, including business combinations. The interests of Mr. Junfeng Shan, as the controlling shareholder, could be in conflict with the interests of other shareholders and he would have the ability to cause us to take actions in his interest. In addition, Mr. Junfeng Shan may pursue transactions that, in his judgment, could enhance his equity investment, even though such transactions may involve risks to our other shareholders.

This concentration of ownership could have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could have a material and adverse effect on the market price of the common stock or prevent our stockholders from realizing a premium over the market prices for their shares of common stock. In addition, the occurrence of sales of a large number of shares of our common stock, or the perception that these sales could occur, may affect our stock price and could impair our ability to obtain capital through an offering of equity securities.

Furthermore, the current ratios of ownership of our common stock reduce the public float and liquidity of our common stock, which can in turn affect the market price of our common stock.

The issuance of preferred stock could discourage, delay or prevent a change of control of our company and may result in an entrenchment of management and diminish the value of our common stock.

Our certificate of incorporation provides that our Board of Directors may issue, without further stockholder approval, up to 20,000,000 shares of preferred stock in one or more series with such rights, preferences and designations as determined by the Board of Directors. Our bylaws provide that, unless otherwise prescribed by statute, special meetings of the stockholders can only be called by the Chairman of our Board of Directors, our Chief Executive Officer, our President, or by a majority of the Board of Directors. These provisions may discourage, delay or prevent a merger, acquisition or other change of control that our stockholders may consider favorable. See “Description of Capital Stock.”

Such anti-takeover provisions could impede the ability of our common stockholders to benefit from a change of control and, as a result, could materially adversely affect the market price of our common stock and your ability to realize any potential change-in-control premium.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements are included throughout this prospectus, including in, but not limited to, the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. You can generally identify these forward-looking statements by words such as “anticipate,” “assume,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future” and similar terms and phrases.

The forward-looking statements contained in this prospectus are based on management’s current expectations and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include those described in “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by us in this prospectus speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

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USE OF PROCEEDS

We estimate that the net proceeds from the sale of the shares of common stock in the offering will be approximately $13,300,000. If the underwriters exercise their over-allotment option in full, we estimate that our net proceeds will be approximately $15,370,000. These estimates are based upon an assumed initial public offering price of $8.50 per share, the mid-point of the range shown on the front cover of this prospectus, and deduct the underwriting discounts and commissions, underwriters’ corporate finance fee and estimated offering expenses.

We intend to use the net proceeds we receive from this offering for the following purposes:

•

approximately $10 million to $11 million for the acquisition or construction of a new factory, including processing and cold storage facilities, and related equipment;

•

approximately $3 million to expand our current facilities; and

•

the remaining net proceeds for other general corporate purposes including the payment of a dividend of $0.17 per share declared by our Board of Directors.

We expect that approximately $11 million to $12 million will be sufficient for the acquisition or construction, respectively, of a new factory, including processing and cold storage facilities and related equipment. However, if additional funds not raised in this offering are necessary, we expect that we will be able to use cash generated from our operations to fund such needs.

Currently we are only exploring the possible opportunity to acquire or construct a new factory. We do not have any specific plans to commence the acquisition or construction process and we have not entered into any agreement or understanding in connection with any possible acquisition or construction opportunity.

The foregoing purposes represent our best estimate of the allocation of the net proceeds from this offering based upon the current state of our business operations, current plans, and the current economic and industry conditions. However, such allocation is subject to reapportionment among the categories listed above or to new categories altogether. The amounts and timing of our actual expenditures will depend on numerous factors, including the status of our development efforts, sales and marketing activities, the amount of cash generated or used by our operations and our competition. We may find it necessary or advisable to use portions of the proceeds for other purposes, and we will have broad discretion in the application of the net proceeds. Pending these uses, the proceeds will be invested in short-term, investment grade, interest-bearing securities.

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DETERMINATION OF OFFERING PRICE

We have been advised that the underwriters propose to offer the common stock directly to the public at the public offering price that appears on the cover page of this prospectus. In addition, the representative may offer some of the common stock to other securities dealers at such price less a concession of $ per share. The underwriters may also allow, and such dealers may re-allow, a concession not in excess of $ per share to other dealers. After the common stock is released for sale to the public, the representatives may change the offering price and other selling terms at various times.

Prior to this offering, there was no public market for any of our securities. The public offering price of our common stock was determined by negotiation between us and the representatives of the underwriters. The principal factors considered in determining the public offering price of the common stock included:

•

the information in this prospectus and otherwise available to the underwriters;

•

the history and the prospects for the industry in which we compete;

•

the ability of our management;

•

the prospects for our future earnings;

•

the present state of our development and our current financial condition;

•

the general condition of the economy and the securities markets in the United States at the time of this offering;

•

the recent market prices of, and the demand for, publicly-traded securities of generally comparable companies; and

•

other factors as were deemed relevant.

We cannot be sure that the public offering price will correspond to the price at which our common stock will trade in the public market following this offering or that an active trading market for our common stock will develop or continue after this offering.

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DIVIDEND POLICY

On , 2011 our Board of Directors has declared a cash dividend of $0.17 per share (based upon an initial offering price of $8.50 per share) which will be paid in three years after the offering, Such dividend will be paid annually to the shareholders of record, beginning on July 14, 2011 to shareholders of record on June 30, 2011 and June 30, 2012 and 2013 thereafter. The existing holders of our common stocks have agreed to waive their right to dividends during this period. However, if the existing shareholders transfer any of their shares of common stock after termination of their respective lock-up periods, the transferees shall be entitled to dividends at the rate of $0.17 per share. In addition, should we issue additional shares of common stock to persons other than the current shareholders during the three year period commencing June 30, 2011, the holders of such newly issued shares of common stock will also be entitled to dividends. The aggregate amount of dividends payable annually to the purchasers of the 1,764,706 shares of common stock sold in this offering will be $300,000 per year based on a dividend of $0.17 per share, for an aggregate of $900,000, which amount will be paid out of the available funds allocated from the proceeds of this offering and retained by us in the United States. The payment of such dividends is contingent upon our being solvent at the time such dividend is distributed. In addition, the aggregate amount of dividends payable will increase above $900,000 in certain circumstances, including (i) the exercise of the over-allotment option by the underwriters, (ii) to the extent that the existing shareholders transfer any of their shares of stock or (iii) we issue additional shares of common stock after the offering. We are not a party to any contracts or agreements that currently materially limit our ability to pay dividends.

Except for the declared cash dividend of $0.17 per share, we intend to retain future earnings, if any, to finance the expansion of our business. The decision to pay any cash dividends on our common stock will be made by our Board of Directors, in their discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the Board of Directors considers significant. Jinzheng, our operating entity, declared and paid dividends to its shareholders in the amounts of $210,499 in 2009 and $1,755,288 in 2008. Pursuant to the VIE Agreements entered into on March 25, 2010, Beijing CMJM, our subsidiary, is entitled to retain 85% of net profits earned by Jinzheng during the term of the VIE Agreements and, without Beijing CMJM’s prior written consent, Jinzheng cannot pay any dividends. Beijing CMJM intends to restrict Jinzheng from declaring or paying any dividends to its shareholders in the foreseeable future.

Our ability to pay dividends in addition to the funds allocated from the proceeds of this offering may be affected by the complex currency and capital transfer regulations in China that restrict the payment of dividends to us by our subsidiaries in China. Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50.0% of its registered capital. These reserves are not distributable as cash dividends.

Furthermore, the ability of our Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. Because substantially all of our operations are conducted in China and a substantial majority of our revenues are generated in China, a majority of our revenue being earned and currency received are denominated in RMB. RMB is subject to the exchange control regulation in China, and, as a result, we may be unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into U.S. Dollars.

As a result, Jinzheng’s funds may not be readily available to us to satisfy obligations, which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations. Accordingly, if we do not receive dividends from our Chinese operating entity, our liquidity, financial condition and ability to make dividend distributions to our stockholders will be materially and adversely affected.

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CAPITALIZATION

The following table summarizes our capitalization as of December 31, 2010, on an actual and as adjusted basis to reflect our receipt of estimated net proceeds from the sale of 1,764,706 shares of common stock (excluding the 264,706 shares of common stock which the underwriters have the option to purchase to cover over-allotments, if any) in this offering at an assumed public offering price of $8.50 per share, and after deducting estimated underwriting discounts and commissions, the underwriters’ corporate finance fee and estimated offering expenses of approximately $1,700,000.

You should read this table in conjunction with “Use of Proceeds,” “Selected Financial and Operating Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited combined and unaudited consolidated financial statements and related notes included elsewhere in this prospectus.


	As of December 31, 2010
	Actual		As Adjusted
	USD		USD
Short-term loans		1,333,637		1,333,637
Long-term loans		119,102		119,102
Preferred stock, $0.001 par value, 20,000,000 shares authorized, and 0 shares issued and outstanding actual and as adjusted		—		—
Common stock, $0.001 par value, 180,000,000 shares authorized, and 2,030,457 shares and 3,795,163 shares issued and outstanding actual and as adjusted, respectively		2,030		3,795
Additional paid-in capital		4,574,695		17,872,930
Statutory reserves		1,811,105		1,811,105
Retained earnings		12,024,562		12,024,562
Accumulated other comprehensive income		1,673,348		1,673,348
Total shareholders’ equity		20,085,740		33,385,740
Total capitalization	$	21,538,479	$	34,838,479

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DILUTION

If you invest in our securities, your investment will be diluted immediately to the extent of the difference between the public offering price per share of common stock you pay in this offering, and the pro forma net tangible book value per share of common stock immediately after this offering.

After giving effect to the sale of 1,764,706 shares of common stock in the offering at an assumed public offering price of $8.50 per share, and after deducting the underwriting discount and commission and estimated offering expenses, our pro forma net tangible book value as of December 31, 2010 would have been $33.4 million, or $8.80 per share. This represents an immediate decrease in pro forma net tangible book value of $1.09 per share to existing stockholders and immediate dilution of $0.30 per share to new investors purchasing shares in the offering.

The following table illustrates this per share dilution:


Public offering price per share Public offering price per share	$	8.50
Net tangible book value per share as of December 31, 2010	$	9.89
Decrease in pro forma net tangible book value per share attributable to new investors	$	(1.09	)
Pro forma net tangible book value per share after the offering	$	8.80
Dilution in net tangible book value per share to new investors	$	(0.30	)

Our adjusted pro forma net tangible book value after the offering, and the dilution to new investors in the offering, will change from the amounts shown above if the underwriters’ over-allotment option is exercised.

A $0.50 increase or decrease in the assumed public offering price per share to $9.00 or $8.00 per share would decrease our pro forma net tangible book value per share after this offering by approximately $ 0.82 or $1.30, respectively, and represent dilution per share to new investors of approximately $(0.02) or $(0.50), after deducting the underwriting discount, the underwriters’ corporate finance fee and estimated offering expenses payable by us.

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EXCHANGE RATE INFORMATION

Our business is conducted in China, and all of our revenue and the majority of our expenses are denominated in RMB, their functional currency. However, we use the U.S. dollar as our reporting currency. The assets and liabilities of our PRC subsidiaries are translated from RMB into U.S. dollars at the exchange rates on the balance sheet date, shareholders’ equity is translated at the historical rates and the revenues and expenses are translated at the weighted average exchange rate for the period. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade.

The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated.


	Noon Buying Rate ⁽¹⁾
Period	Period End ⁽²⁾		Weighted Average⁽³⁾
	(RMB per U.S. Dollar)
2007		7.2946		7.6072
2008		6.8224		6.9477
2009		6.8259		6.8295
2010
January		6.8268		6.8269
February		6.8258		6.8285
March		6.8258		6.8262
April		6.8247		6.8256
May		6.8305		6.8275
June		6.7815		6.8184
July		6.7735		6.7762
August		6.8069		6.7873
September		6.7035		6.7514
October		6.6705		6.6675
November		6.6670		6.6538
December		6.6000		6.6497
2011
January		6.6017		6.5964
February		6.6713		6.5761
March (through March 11)		6.5742		6.5676

(1)

The exchange rates are based on the noon buying rate in the city of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York through December 31, 2008. For January 1, 2009 and all later dates and periods, the exchange rate refers to the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board.

(2)

All yearly periods end on December 31 of the stated year. All monthly periods end on the last day of the stated month, except for March 2011, which ends on March 11.

(3)

Weighted averages for a period are calculated by using the average of the exchange rates on the end of each month during the period; monthly averages are calculated using the average of the daily rates during the relevant period.

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SELECTED FINANCIAL AND OPERATING DATA

The following selected consolidated and combined statement of income data during the years ended December 31, 2010 and 2009 and the summary of the consolidated and combined balance sheet data as of December 31, 2010 and 2009 are derived from our audited consolidated combined financial statements included elsewhere in this prospectus. The following summary of our combined statement of income data for the year ended December 31, 2008 and the summary of the and combined balance sheet data as of December 31, 2008 all derived from our audited combined financial statements and related notes thereto not included in this prospectus. The audited consolidated and combined financial statements have been prepared in accordance with GAAP, and have been audited by EFP Rotenberg, LLP, an independent registered public accounting firm.

The adjusted balance sheet data reflects the balance sheet data as of December 31, 2008, 2009 and 2010, as adjusted to reflect our receipt of the estimated net proceeds from our sale of 1,764,706 shares of common stock in this offering at an assumed initial public offering price of $8.50 per share (the mid-point of the range set forth on the cover page of this prospectus), after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Our historical results for any period are not necessarily indicative of results to be expected for any future period. You should read the following selected financial information in conjunction with the consolidated and combined financial statements and related notes and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.


	Year Ended December 31,
	2010 USD			2009 USD			2008 USD
Net revenue		44,329,478			36,757,703			33,354,535
Cost of sales		35,365,121			29,299,988			26,501,070
Gross profit		8,964,357			7,457,715			6,853,465
Total operating expenses		(1,864,883	)		(1,120,479	)		(1,376,941	)
Income from operations		7,099,474			6,337,236			5,476,524
Total other income		(3,050	)		23,190			65,090
Net income before provision for income taxes		7,096,424			6,360,426			5,541,614
Provision for income taxes		1,797,662			1,630,076			1,458,112
Net income		5,298,762			4,730,350			4,083,502
Net income attributable to stockholders		5,298,762			3,915,595			3,266,802
Other comprehensive income attributable to stockholders		650,418			16,617			341,457
Total comprehensive income attributable to stockholders		5,949,180			3,932,212			3,608,259
Basic and diluted earnings per common share to stockholders		2.62			1.96			1.63
Basic and diluted weighted average common shares outstanding		2,024,112			2,000,000			2,000,000

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	As of December 31,				As of December 31,
	2010				2009		2008
	As Adjusted⁽¹⁾ USD		USD		USD		USD
Consolidated Balance Sheet Data
Cash and cash equivalents		21,567,169		8,267,169		2,543,095		1,720,357
Total assets		37,898,916		24,598,916		18,770,229		15,616,076
Total liabilities		4,513,175		4,513,175		5,014,169		6,617,739
Total Zheng Hui Industry Corporation stockholders’ equity		33,385,740		20,085,740		13,756,060		7,199,069
Non controlling interest in VIE		—		—		—		1,799,268
Total equity		33,385,740		20,085,740		13,756,060		8,998,337

(1)

Does not give effect to the estimated use of proceeds. See “Use of Proceeds.”

The table below sets forth additional financial data for each of the periods indicated that we believe is important to an understanding of our operations:


	Year Ended December 31,
	2010 USD		2009 USD		2008 USD
Other data
EBITDA⁽¹⁾		7,759,983		6,987,651		6,261,206
Adjusted EBITDA⁽²⁾		7,763,033		6,964,461		6,196,116
Capital expenditures		329,594		4,235,306		743,995

(1)

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Our management uses EBITDA:

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as a measure of operating performance;

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for planning purposes, including the preparation of our annual operating budget;

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to allocate resources to enhance the financial performance of our business;

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to evaluate the effectiveness of our business strategies; and

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in communications with our Board of Directors concerning our financial performance.

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EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or other contractual commitments;

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EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

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EBITDA does not reflect interest expense or interest income;

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EBITDA does not reflect cash requirements for income taxes;

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other companies in our industry may calculate EBITDA or similarly titled measures differently than we do, limiting its usefulness as a comparative measure.

(2)

The following table includes a reconciliation of our Net Income to our EBITDA and Adjusted EBITDA for each of the periods indicated:


	Year Ended December 31,
	2010 USD			2009 USD		2008 USD
Net income		5,298,762			4,730,350		4,083,502
Depreciation and amortization		524,149			425,594		323,971
Provision for income taxes		1,797,662			1,630,076		1,458,112
Interest expenses		139,410			201,631		395,621
EBITDA		7,759,983			6,987,651		6,261,206
Other income/(expense)		(3,050	)		23,190		65,090
Adjusted EBITDA		7,763,033			6,964,461		6,196,116

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations are based upon and should be read in conjunction with our financial statements and the related notes included in this prospectus. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. We caution you that our business and financial performance are subject to substantial risks and uncertainties. Our actual results could differ materially from those projected in the forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

Overview

We are engaged in hatching “Cherry Valley” duck and producing, processing, marketing and distributing frozen processed duck, duck feed, and other duck-related products in the PRC. We sell frozen ducks, in whole or cut-up form, to wholesalers, food processing companies and distributors in fifteen Chinese provinces, including the cities of Beijing, Shanghai, Tianjin, and Chongqing. Our objective is to establish ourselves as a leading producer and distributor of “Cherry Valley” ducks in the PRC.

Through years of experience and operation, we believe we have developed a highly effective vertically-integrated supply chain that we describe as a “Company-Base-Farmer” business model. Under our model, we raise breeder ducks and hatch ducklings in our own facilities and then sell the ducklings to our network of approximately 400 contracted farmers. We repurchase the adult commercial ducks that meet our criteria from our contracted farmers then process, freeze, and store the ducks and duck products in our facilities. To assist the ducks’ growth, we also produce and sell duck feed to our contracted farmers through feed brokers.

Our major product is frozen, lean-meat “Cherry Valley” duck, which was developed from traditional Peking or Beijing duck by Cherry Valley Farm, a UK company. Our product is the third generation of the Cherry Valley species introduced from the UK, which we purchase from their authorized distributor in China. According to the China Animal Agriculture Association, Cherry Valley ducks have the following general characteristics relative to other ducks: (1) higher growth rate; (2) higher conversion rate of feed, that is, with the same amount of feed, the duck will provide more meat; (3) higher lean meat content; (4) stronger disease immunity; and (5) greater ability to be cultivated in different geographic region. Also, Cherry Valley ducks have less fat content. According to a report from January 2010 in the Meat Trade News Daily in the UK, a traditional Peking duck will have a fat level in excess of 35%, whereas a Cherry Valley duck will have a fat level of less than 27%.

Significant Factors Affecting Our Results of Operations

The most significant factors that affect our financial condition and results of operations are the following:

Economic Conditions in China

We operate our manufacturing facilities in China and derive the majority of our revenues from sales to customers in China. As such, economic conditions in China will affect virtually all aspects of our operations, including the demand for our products, the availability and prices of our raw materials and our other expenses. China’s economy has grown significantly in recent years. According to research from the International Monetary Fund and the United States Department of Agriculture (the “USDA”), China’s economy grew at an average growth rate of 9.1% between 1999 and 2008. In 2009, the economy grew by 8.7%, and long-term growth rates are expected to show continued expansion at a rate of approximately 10% in coming years. As a result of rapid economic growth, domestic demand for and consumption of duck products has increased substantially and is expected to continue to grow in future years. We believe that economic conditions in China will continue to affect our business and results of operations.

Industry Demand

According to the data provided by the China Meat Association, China produces the largest amount of ducks in the world. In 2009, the number of ducks on hand in China was 1,096 million and the number of ducks sold from farm was 352 million (including 206 million Cherry Valley ducks). The number of ducks on hand in China in 2009 accounted for 67.3% of the total amount in the world. The number of ducks slaughtered in China in 2009 accounted for 74.7% of the total amount in the world.

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Market Pricing

Generally, we price our duck products based upon our knowledge of current market prices and a calculation of our production costs and desired profit margins. Consistent with the duck industry practice in China, our profitability is affected by market prices, which may fluctuate substantially and exhibit cyclical and seasonal characteristics. To adjust to such fluctuation, we establish our base prices on the basis of market prices for each category of product. We also adjust such base prices weekly, or daily depending on different categories of product, according to the added value of each category of products, volume of orders for each product, product varieties and other factors. The final sale prices to each of our customers are generally negotiated from time to time. Our orders and sales are generally made on a basis of thirty days.

Production Capacity

The following table sets forth the daily production capacity for each product segment, including the processed duck, hatching of ducklings and duck feed production. The processed duck and ducklings are based on the numbers of heads processed or hatched, and the duck feed is based on the tons of feed our feed production equipment can produce daily.


Product Segment	Capacity Per Day
Processed duck (heads)		25,000
Duckling (heads)		25,000
Duck Feed (tons)		137

Supply and Costs of Raw Materials

We purchase breeder ducks from one of the major Cherry Valley breeder duck suppliers in Shandong Province, Weifang Legang Food Co., Ltd. We purchase the breeder ducks from this supplier once or twice a year and therefore we do not have long-term contracts with our supplier. One breeder duck costs approximately $900 (6,000 RMB) for each combination (110 females and 30 males) and in 2010 we spent approximately $288,800 (1.8 million RMB) on the purchase of breeder ducks. The price for the breeder ducks has historically been stable and we believe that our supplier of breeder ducks is replaceable in the event we need to change suppliers. The raw materials for our duck feed production are primarily corn (50 – 70%) and soybean meal (15 – 33%). We also purchase soybean meal from two suppliers, China Oil & Foodstuff (Weifang) Co., Ltd and Weifang Haihua Zhenxing Oil & Foodstuff Co., Ltd., with each supplier accounting for 4.91% and 4.23% of our total purchases of raw materials in 2010, respectively. In addition, we purchase corn from eight individuals, in the aggregate, accounting for 10.3% of our total purchases of raw materials in 2010. Historically, we have not had difficulty obtaining these materials from our suppliers and we do not anticipate any difficulty obtaining these materials in the future. We believe that our sources of supplies are adequate for our present needs and anticipated growth. We use approximately 2,000 tons of corn per month, which costs over $6.05 million (41 million RMB) per year. We usually purchase the grains in the amounts we expect to need, but during each fall season when corn supply is abundant and prices are low, we purchase corn for future needs and store the excess supply. We have storage capacity for 5,000 tons of feed.

Seasonality of Our Industry

The demand for our duck products is greatest prior to the Chinese New Year, which is usually during early February resulting in a general peak in demand in the fourth quarter. Otherwise, the demand for duck is not seasonal. The table below shows our total revenues by quarter for the years ended December 31, 2010 and 2009.


Year	Quarter Ended March 31, USD		Quarter Ended June 30, USD		Quarter Ended September 30, USD		Quarter Ended December 31, USD		Total USD
2010		9,277,974		10,292,013		10,621,915		14,212,476		44,404,378
2009		7,641,152		8,534,839		8,945,719		11,671,785		36,793,495

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[GRAPHIC MISSING]

Government Programs and Regulations

Our facilities and operations are subject to regulation by various government agencies, including, but not limited to, local agencies of the State Federal Food and Drug Administration (“SFDA”), the Ministry of Agriculture (“MOA”), and the Department of Health. Our duck processing plant is subject to continuous on-site inspection by the government. The Quality Control Agency visits our facilities every month to ensure our products meet the applicable standards. The local Health Agency visits every three months to inspect the sanitation of our facilities and the local Husbandry Agency visits our contracted farmers and our slaughter facilities periodically. Each time we repurchase ducks from our contracted farmers, we need a permit from the local Husbandry Agency, which is present when we repurchase the ducks to check whether the ducks satisfy the food safety standards.

The duck industry is subjected to policies, which are promulgated to ensure the development of the industry and the improvement of farmers’ living standards and disposable income. Given our engagement in duck raising and food processing, we are subject to various policies and regulations regarding tax, finance and product and production safety applicable only to the agricultural industry that have been issued and are enforced by government agencies.

Exchange Rate Fluctuations

Our reporting currency is the U.S. dollar and our operations in China use their local currency as their functional currencies. All of our revenue and expenses are in Chinese Renminbi. Since 1994, the official exchange rate for the conversion of Renminbi to the U.S. dollar had generally been stable and the Renminbi had appreciated slightly against the U.S. dollar. However, on July 21, 2005, the Chinese government changed its policy of pegging the value of Chinese Renminbi to the U.S. dollar.

The income statements of our operations are translated into U.S. dollars at the average exchange rates in each applicable period.

Our Expansion Plan

We expect to increase our current production capacity from processing 25,000 heads to 80,000 heads per day. To realize this goal, we intend to acquire or construct a new factory including processing and storage facilities and related equipment. We also intend to expand our current facilities, including our breeder farm, feed production facility and hatchery.

If we choose to acquire a new factory, we expect that it would take approximately eighteen months to reach full production capacity of the newly acquired factory. To breakdown the timeline, we expect that it would take six months to complete the acquisition transaction and to start the operation and the expansion of feed production facility and breed farm. We expect it would take an additional six months to complete the test running of machineries (including machinery installation, training of workers and alignment) and complete the improvement and expansion of the hatchery to realize 50% of the production capacity of the newly acquired factory and another six months to realize 100% of the production capacity of the newly acquired factory.

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If we choose to construct a new factory, we expect that it would take approximately twenty seven months to reach full production capacity of the newly constructed factory. To breakdown the timeline, we expect that it would take approximately fifteen months to complete the construction of the factory, installation of the facilities to start the operation, expand the feed production facility and breeder farm and hatchery. We expect it would take an additional six months to complete the test running of machineries (including machinery installation, training of workers and alignment) to realize 50% of the production capacity of the newly constructed factory and another six months to realize 100% of the production capacity of the newly constructed factory.

Our sales and marketing strategy is expected to focus on channels through food processors and distributors while seeking opportunities to enter the rural markets of Shanghai and Nanjing. We intend to explore new selling channels such as supermarkets and groceries. We plan to expand our sales and marketing team and develop a network of distributors and we also intend to hire additional sales staff in order to strengthen our existing relationships with food processors and develop new relationships, including with supermarkets and grocery stores both locally and in selected national markets in China. Meanwhile, we will also look to enter into agreements with distributors active in the rural markets of Shanghai and Nanjing to distribute our products there.

We intend to implement our expansion-related sales and marketing strategy in the weeks and months prior to the testing of our new facilities. We will continue to carry out the following activities during our expansion period:

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Expanding our sales and marketing team by recruiting sales employees in our targeted rural markets and with supermarket procurement experience;

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Strengthening our relationships with current customers;

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Exploring new customer relationships, including with supermarkets, grocery stores, food processors and distributors;

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Seeking opportunities to enter rural markets; and

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Implementing a series of branding activities to establish and advertise our brand.

We have set forth the expected costs associated with either an acquisition or construction of a new factory along with the costs associated with the expansion of our current facilities.


Facility/Project	Acquisition		Construction
	Estimated Cost (USD)
Processing and cold storage facilities		11,000,000		9,500,000
Feed facility expansion		900,000		900,000
Hatchery expansion		700,000		700,000
Breeder farm expansion		700,000		700,000
Personnel arrangements		600,000		600,000
Lab for epidemic prevention use		400,000		400,000
Farmer base expansion		550,000		550,000
Other costs		150,000		150,000
Total		15,000,000		13,500,000

We expect that approximately $10 million to $11 million will be sufficient for the acquisition or construction, respectively, of a new factory, including processing and cold storage facilities and related equipment. However, if additional funds not raised in this offering are necessary, we expect that we will be able to use cash generated from our operations to fund such needs. We generated $5.6 million cash in 2010 and expect to maintain the level in 2011 and 2012 by operating under current operation scale.

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The potential acquisition candidates we plan to review would only have some existing processing and cold storage facilities, and thus we expect the cost to expand our feed facility, hatchery, breeder farm, personnel staff, lab and farmer base under both acquisition and construction scenarios would be the same.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, fair valuation of stock related to stock-based compensation and other items. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which from the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Revenue from sales of our products is recognized when the significant risks and rewards of ownership have been transferred to the third-parties at the time when the products are delivered to and accepted by them, the sales price is fixed or determinable as stated in the sales contract, and collection is reasonably assured. Revenues consist of the invoice value of the sale of goods and services net of value added tax. There are no general rights of return on delivered products and no price protection is granted to customers.

Allowance for Doubtful Accounts

Our accounts receivable balance on our balance sheet is affected by our allowance for doubtful accounts, which reflects our estimate of the expected amount of the receivables that we will not be able to collect. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Our allowance for doubtful accounts is based on our assessment of the collectability of specific customer accounts, the aging of accounts receivable, our history of bad debts, and the general condition of the industry. If a major customer’s credit worthiness deteriorates, or our customers’ actual defaults exceed our historical experience, our estimates could change and impact our reported results.

Allowance for doubtful accounts amounted to $131,474 and $117,911 as of December 31, 2009 and 2010, respectively, representing 3.0%, and 2.1%, of our accounts receivable as of those dates. This allowance reflected a reduction in accounts receivable that was charged to the bad debt provision under operating expenses.

Inventories and Allowance for Obsolescence

We state inventories at the lower of cost or market value, determined using the weighted average cost method. We provide inventory allowances when conditions indicate that the selling price is less than cost due to physical deterioration, usage, obsolescence and reductions in estimated future demand. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact our gross margins. Conversely, favorable changes in demand could result in higher gross margins when we sell products.

We do not provide allowance for our breeders. There was no allowance for other types of inventories at December 31, 2010 and 2009.

Income Taxes

We account for income tax using an assets and liability approach, which allows for recognition of deferred tax benefits in future years. Under the assets and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purpose. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before we are able to realize their benefits, or that future realization is uncertain.

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Impairment of Long-Lived Assets

We evaluate our long-lived assets or asset group for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or a group of long-lived assets may not be recoverable. When these events occur, we evaluate the impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, we would recognize an impairment loss based on the excess of the carrying amount of the asset group over its fair value. We generally determine fair value by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available for the long-lived assets. We did not recognize any impairment of long-lived assets for any of the periods presented.

Variable Interest Entities

Pursuant to the VIE Agreements effective on March 25, 2010 between Beijing CMJM and Jinzheng, Jinzheng is considered our VIE. For accounting purposes, this resulted in the combination of the balance sheet data and financial results of Jinzheng with that of Beijing CMJM for the years ended December 31, 2010 and 2009. As a wholly-owned subsidiary of Zheng Hui, the combined financial statements of Beijing CMJM are further consolidated with the financial statements of Zheng Hui. Accordingly, the financial statements of Beijing CMJM and Jinzheng are contained in this prospectus and the discussion below includes the financial condition and results of operation of both Beijing CMJM and Jinzheng.

Results of Operations

Year ended December 31, 2010 Compared to Year ended December 31, 2009

Revenues

We derive our revenues from the sales of processed frozen duck products, ducklings, duck feed and other duck related products. Our revenues during the year ended December 31, 2010 were approximately $44.4 million, an increase of approximately $7.6 million, or approximately 20.7%, as compared to total revenues of approximately $36.8 million during the year ended December 31, 2009. The breakdown of our revenues by product is as follows:


	Year Ended December 31, 2010		Year Ended December 31, 2009
Frozen duck products	$	24,812,408	$	20,241,941
Duck feed		11,419,214		8,894,336
Ducklings		4,976,189		4,993,530
Other revenues		3,192,567		2,663,688
Total gross revenues	$	44,400,378	$	36,793,495

Frozen duck products. During the year ended December 31, 2010, our revenues from the sales of frozen duck products increased by approximately $4.6 million, or approximately 22.6%, compared to the year ended December 31, 2009. Our main frozen duck products consist of Bai Tiao, which is duck sold in whole, and duck parts and organs, such as wings, chests, legs, flippers, gizzard and other duck parts. Bai Tiao is the main product, accounting for 37.9% of total revenue in the year ended December 31, 2010, compared to 30.4 % of total revenues in the year ended December 31, 2009. Duck parts are new products we developed in 2009, and they accounted for 8.4% of our total revenues in the year ended December 31, 2010 compared to 13.9% of our total revenue in the year ended December 31, 2009. The increased revenues from the sales of frozen duck products were primarily attributed to the recovery of the global economy and increasing market demand. In the year ended December 31, 2010, we increased our sales of frozen duck products by 2,700 tons and the average selling price has increased by $42 per ton as compared to the same period in 2009. Our existing customers consumed approximately $3.6 million more of our products in the year ended December 31, 2010 as compared to the year ended December 31, 2009. We also developed four new customers who, in the aggregate, purchased approximately $0.8 million of our frozen duck products.

Ducklings. Compared to the year ended December 31, 2009, our revenues from the sales of ducklings during the year ended December 31, 2010 decreased by approximately $0.02 million, or approximately 0.3%. In

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order to perform our one-time maintenance for the production machinery after the Chinese New Year in 2010, we closed our hatchery facility for 15 days, therefore leading to the decreased sales of ducklings.

Duck feed. Compared to the year ended December 31, 2009, our revenues from the sales of duck feed during the year ended December 31, 2010 increased from approximately $8.9 million to approximately $11.4 million, or approximately 28.4%. We sold approximately 7,200 more tons of duck feed in the year ended December 31, 2010 as compared to 2009. The feed production facility improvement completed in second half year of 2009 led to a more production output in 2010 than 2009, which eventually triggered a sales increase.

Other revenues. For the year ended December 31, 2010, other revenues, which consisted of the sales of feather, ageing breeders and eggs, increased by approximately $0.5 million, or approximately 19.9%. The increase in other revenues is attributable to the increase in sales of feathers and the disposal of aging breeders and eggs.

Cost of Sales

The cost of sales for frozen duck products includes the expenses incurred from our repurchase of live ducks from contracted farmers, direct labor fees, manufacturing overhead (including indirect materials, indirect labor fees, utilities and depreciation), and related taxes. Cost of sales for ducklings includes the expenses incurred from our purchase of breeding ducks, feed, labor costs and manufacturing overhead such as utilities and depreciation. Cost of sales for feed includes the purchase of corn and soybean meal, and manufacturing overhead such as labor cost, utilities, and depreciation.

For the year ended December 31, 2010, our total cost of sales amounted to approximately $35.4 million, or approximately 79.78% of total revenues, as compared to cost of sales of approximately $29.3 million, or approximately 79.71% of total revenues, for the year ended December 31, 2009. The increase in cost of sales as a percentage of total revenue was primarily due to increased prices for the major components of feed. The average purchase prices for corn and soybean meal have increased by $29 and $27 per ton, respectively, or a percentage increase of 12.2% and 6.4%, respectively.

Gross Profit

Gross profit for the year ended December 31, 2010 was approximately $8.9 million, or 20.2% of total revenues, as compared to approximately $7.5 million, or 20.3% of revenues for the year ended December 31, 2009. The decrease in the gross profit margin was attributable to increased cost of sales as a percentage of revenue. The increase in cost of sales as a percentage of revenue was primarily attributed to increased unit prices for corn and soybean meal.

Operating Expenses

Total operating expenses for the year ended December 31, 2010 were approximately $1.9 million, an increase of approximately $0.7 million, or approximately 66%, compared to the total operating expenses in the year ended December 31, 2009 of $1.1 million. This increase resulted from the following items:

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Increased general and administrative expenses: For the year ended December 31, 2010, general and administrative expenses were approximately $1.5 million as compared to $0.7 million for the year ended December 31, 2009, an increase of approximately $0.8 million or approximately 110.0%. The general and administrative expenses primarily consisted of salaries and related benefits, amortization and depreciation, travel and entertainment, professional fees, taxes and other expenses. The increase was mainly attributable to the professional services relating to this offering, such as auditing and legal fees, and recorded additional business tax of $0.2 million as resulted from the contractual arrangement with Jinzheng and Beijing CMJM. Beijing CMJM is required to pay 5% business tax based on the consulting fee due from Jinzheng. We expect general and administrative expenses to increase as we recruit additional professionals and incur additional costs related to the growth of our business, including compliance-related costs to support our future operations as a U.S. listed public company.

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Increased selling expenses: For the year ended December 31, 2010, selling expense was $0.3 million

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as compared to $0.2 million for the year ended December 31, 2009, an increase of $0.07 million, or approximately 34.7%. The increase is in line with the increase of sales in 2010 as compared to 2009.

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Decreased interest expense: For the year ended December 31, 2010, interest expense was $0.14 million as compared to $0.2 million for the year ended December 31, 2009, a decrease of $0.06 million, or approximately 30.9%. The decrease in interest expense was primarily attributable to the decrease in the outstanding balance under our bank loans in 2010 by approximately $0.7 million, or approximately 32%.

Income from Operations

We reported income from operations of approximately $7.1 million and $6.3 million during the year ended December 31, 2010 and 2009, respectively.

Income Taxes

Our income tax expense was approximately $1.8 million and $1.6 million for the years ended December 31, 2010 and 2009, respectively. The effective income tax rate for Jinzheng and Beijing CMJM is 25% for the reporting periods, and 0% (U.S.) for Zheng Hui for the reporting period.

Non-controlling Interest

The net income to our non-controlling interest was nil for the year ended December 31, 2010 and $0.8 million for the year ended December 31, 2009. This change was primarily because our current shareholders acquired the remaining 20% equity interest in Jinzheng on December 1, 2009.

Net Income

As a result of the foregoing factors, our net income was approximately $5.3 million and $3.9 million for the years ended December 31, 2010 and 2009, respectively. This translated to basic and diluted net income per common share of $2.62 and $2.62 respectively, for the year ended December 31, 2010 and $1.96 and $1.96, respectively for the year ended December 31, 2009. In addition, the proforma basic and diluted earnings per share for the year ended December 31, 2009 was $2.37, as if the non-controlling interest was acquired at January 1, 2009.

Other Comprehensive Income

The functional currency of our subsidiary and affiliated operating company in the PRC is the RMB. The financial statements of our subsidiary and affiliate are translated into U.S. dollars using year-end rates of exchange for assets and liabilities, and average rates of exchange (for the year) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the combined statements of operations. As a result of these translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $0.6 million for the year ended December 31, 2010 as compared to $0.02 million for the year ended December 31, 2009. This non-cash gain increased our reported comprehensive income.

Comprehensive Income

We had comprehensive income of approximately $5.9 million during the year ended December 31, 2010, as compared to approximately $3.9 million during the year ended December 31, 2009. This increase was primarily attributable to our foreign currency translation gains.

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Liquidity and Capital Resources

To date, we have financed our operations primarily through cash flows from our operations and short-term bank borrowings. As of December 31, 2010, we had approximately $8.3 million in cash and cash equivalents. Although we combined the results of Jinzheng, our VIE, in our consolidated financial statements for the year ended December 31, 2010, we can only receive cash payments from Jinzheng pursuant to our contractual arrangements with Jinzheng and Jinzheng Stockholders. Pursuant to the Exclusive Technical Consulting Service Agreement between Beijing CMJM and Jinzheng, Beijing CMJM has the exclusive right to provide business consulting and related services in connection with the new management platform, business development and operation, and training of technical and managerial personnel for Jinzheng (the “Services”). Under this agreement, Beijing CMJM owns the intellectual property rights arising from the performance of the Services, including, but not limited to, copyrights, patents, know-how and commercial secrets, whether developed by Beijing CMJM or Jinzheng. Pursuant to this agreement, Jinzheng is obligated to pay 85% of its annual net profit to Beijing CMJM on a semi-annual basis as a consulting service fee.


	Year ended December 31,
	2010 USD			2009 USD
Net cash provided by operating activities		5,592,448			6,576,992
Net cash used in investing activities		(329,594	)		(4,235,306	)
Net cash (used in) financing activities		224,168			(1,523,668	)
Net changes in cash and cash equivalents		5,487,022			818,018
Effect on change of exchange rate		237,052			4,720
Cash and cash equivalents, beginning		2,543,095			1,720,357
Cash and cash equivalents, ending		8,267,169			2,543,095

Operating Activities

Net cash provided by operating activities amounted to $5.9 million during the year ended December 31, 2010, compared to $6.6 million during the year ended December 31, 2009. The change was primarily attributable to our growing business as we increased our net revenue by $7.5 million from $36.8 million in 2009 to $44.3 million in 2010, and the net profit by $0.6 million from $4.7 million in 2009 to $5.3 million in 2010, while the other working capital remains stable.

Investing Activities

Net cash used in investing activities amounted to $0.3 million in 2010. We purchased a transportation vehicle for $0.2 million and the rest $0.1 million is resulted from the flattening the land we owned the right for future construction.

Net cash used in investing activities amounted to $4.2 million in 2009, mainly as a result of our purchases of a land use right for $3.3 million and construction of the new bio-gas and feed facility for $0.9 million. The land use right we purchased enables us have a fifty-year use right over two pieces of land with total area of approximately 126,000 square meters. To fulfill our expansion plan, we plan to expand supporting facilities, such as our breeder farm, hatchery, and feed production facilities. In addition, if we choose to construct a new factory, we might use our current land resources.

Financing Activities

Net cash provided by financing activities amounted to $0.2 million in the year ended December 31, 2010, mianly as a result of (1) $0.4 million proceeds received for the issuance of our common stock of 30,457 shares to Blue Net Group Limited, (2) $0.6 million repayment received from Jintai, (3) the repayment of short term bank loan amounting to $1.9 million, and (4) proceeds received from bank amounting to $1.2 million.

Net cash used in financing activities amounted to $1.5 million in 2009, mainly as a result of (1) the repayment of $3.4 million of our short-term bank loans, partially offset by proceeds of $1.9 million from additional short-term bank loans, and (2) the payment of a dividend of $0.2 million by Jinzheng in 2009.

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Capital Expenditures

We had capital expenditures of $0.3 million, and $4.2 million for the years ended December 31, 2010 and 2009, respectively. Our capital expenditures were made primarily for the construction of our production facilities, obtaining land use rights and the purchases of property, plant and equipment. Our capital expenditures have been primarily funded by net cash generated from our operating activities and cash provided by financing activities. We expect our capital expenditures in 2011 to primarily consist of the purchases of property, plant and equipment and construction of a production facility. We expect to fund these capital expenditures by cash generated from operating and financing activities as well as net proceeds from this offering.

Contractual Obligations

We have no material contractual obligations.

Off-Balance Sheet Commitments and Arrangements

We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity, or that are not reflected in our combined financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

We entered into certain financial guarantees to guarantee the payment obligations of a third party as described in the following table. As of December 31, 2010, we guaranteed the following outstanding bank loans:


Guaranteed Third Party Loans	Maturity Date		Loan Amount
Shouguang Desheng Steel Construction Equipment Installation Co., Ltd		March 26, 2011	$	606,888
Shandong Haihui Group Co., Ltd		April 2, 2011		758,610
Shouguang Desheng Steel Construction Equipment Installation Co., Ltd		June 17, 2011		455,166
Shandong Haihui Group Co., Ltd		June 20, 2011		531,027
Shandong Yilong Textile Co., Ltd		April 22, 2011		303,444
Total loans outstanding on December 31, 2010			$	2,655,135

All the bank loans we guaranteed as of December 31, 2010 are expected to be repaid in full upon their respective due dates.

Pursuant to the guarantees entered into among with the borrower, the banks and Jinzheng, Jinzheng is obligated to repay the respective loan to the banks if the borrower fails to repay the indebtedness including accrued interest to the banks within two years after the due date of the loans.

The borrowers are unrelated parties that have reciprocally guaranteed our bank loans. Mutual guarantee for bank loans is a common business practice in China. Since each borrower has not defaulted in its payment obligations and each appears to have solid financial position, we do not anticipate recognizing any liabilities pursuant to these guarantees.

Recent Accounting Pronouncements

In June 2009, the FASB issued FASB ASC 810-10-05 (Prior authoritative literature: FASB Statement No. 167, “Amendments to FASB Interpretation No. 46(R)”). FASB ASC 810-10-05 improves financial reporting by enterprises involved with variable interest entities and to address (1) the effects on certain provisions of prior authoritative literature FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities”, as a result of the elimination of the qualifying special-purpose entity concept in prior authoritative literature SFAS 166 and (2) constituent concerns about the application of certain key provisions of prior authoritative literature Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provide timely and useful information about an enterprise’s

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involvement in a variable interest entity. FASB ASC 810-10-05 is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. As such, the Company was required to adopt this standard in January 2010. The adoption of FASB ASC 810-10-05 has not had a material effect on the Company’s consolidated and combined financial statements.

In June 2009, the FASB issued revised authoritative guidance related to variable interest entities, which requires entities to perform a qualitative analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. The guidance also requires an ongoing reassessment of variable interests and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. This guidance, which was reissued by the FASB in December 2009 as ASU No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” amends ASC Topic 810, “Consolidation”, and became effective as of the beginning of an entity’s first annual reporting period that begins after November 15, 2009 (January 1, 2010 for the Company). The adoption of this guidance has not had a significant impact on the Company’s consolidated and combined financial statements.

In January 2010, the FASB issued Accounting Standards Updated (ASU) No. 2010-06, “Improving Disclosures about Fair Value Measurements,” which amends ASC 820, “Fair Value Measures and Disclosures.” ASU No. 2010-06 amends the ASC to require disclosure of transfers into and out of Level 1 and Level 2 fair value measurements, and also require more detailed disclosure about the activity within Level 3 fair value measurements. The changes to the ASC as a result of this update are effective for annual and interim reporting periods beginning after December 15, 2009 (January 1, 2010 for the Company), except for the requirements related to Level 3 disclosures, which are effective for annual and interim reporting periods beginning after December 15, 2010 (January 1, 2011 for the Company). This guidance requires new disclosures only, and has not had a significant impact on the Company’s consolidated and combined financial statements.

In February 2010, the FASB issued ASU 2010-09, Subsequent Events: Amendments to Certain Recognition and Disclosure Requirements, which amends FASB ASC Topic 855, Subsequent Events. The update provides that SEC filers, as defined in ASU 2010-09, are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The update also requires SEC filers to evaluate subsequent events through the date the financial statements are issued rather than the date the financial statements are available to be issued. The Company adopted ASU 2010-09 upon issuance. The adoption of this ASU update has no material impact on the Company’s financial statements. In September 2006, FASB issued Accounting Standards Codification (“ASC”) 820 (prior authoritative literature: SFAS No. 157, “Fair Value Measurements”) which defines fair value, establishes a market-based framework or hierarchy for measuring fair value and expands disclosures about fair value measurements. This guidance is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value. It does not expand or require any new fair value measures; however the application of this statement may change current practice. The Company adopted this guidance for financial assets and liabilities effective on January 1, 2008 and for non-financial assets and liabilities effective on January 1, 2009. The adoption did not have a material effect on the Company’s financial condition, results of operations, or cash flows.

In December 2007, FASB issued FASB ASC 805 (prior authoritative literature: SFAS No. 141(R), “Business Combinations”) and FASB ASC 810-10-65 (prior authoritative literature: SFAS No. 160, “Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51”). These new standards will significantly change the accounting for and reporting of business combinations and non-controlling (minority) interests in consolidated financial statements. FASB ASC 805 and FASB ASC 810-10-65 are required to be adopted simultaneously and are effective for the first annual reporting period beginning on or after December 15, 2008. The adoption of FASB ASC 805 and FASB ASC 810-10-65 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

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In December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB 110 permits companies to continue to use the simplified method, under certain circumstances, in estimating the expected term of “plain vanilla” options beyond December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously stated that the Staff would not expect a company to use the simplified method for share option grants after December 31, 2007. Adoption of SAB 110 did not have a material impact on the Company’s financial statements.

In March 2008, FASB issued FASB ASC 815-10 (prior authoritative literature: SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”). FASB ASC 815-10 requires enhanced disclosures about an entity’s derivative and hedging activities. FASB ASC 815-10 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. As such, the Company was required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The adoption of ASC 815-10 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

In May 2008, FASB issued FASB ASC 944 (prior authoritative literature: SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts — an interpretation of FASB Statement No. 60”). FASB ASC 944 interprets Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement. FASB ASC 944 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years. The Company adopted these provisions for the fiscal year ended December 31, 2009. The adoption of issued FASB ASC 944 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

In May 2009, FASB issued FASB ASC 855-10 (prior authoritative literature: SFAS No. 165, “Subsequent Events”). FASB ASC 855-10 establishes principles and requirements for the reporting of events or transactions that occur after the balance sheet date, but before financial statements are issued or are available to be issued. ASC 855-10 is effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009. The Company adopted these provisions for the fiscal year ended December 31, 2009. Adoption of ASC 855-10 did not have a material effect on the Company’s financial statements.

In June 2009, FASB issued FASB ASC 105-10 (prior authoritative literature: SFAS No. 168, “The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162”). FASB ASC 105-10 establishes the FASB Accounting Standards Codification TM (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. FASB ASC 105-10 is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009. The Company adopted these provisions for the fiscal year ended December 31, 2009. Adoption of FASB ASC 105-10 did not have a material effect on the Company’s financial statements.

In February 2010, FASB issued Accounting Standard Update (“ASU”) 2010-09 Subsequent Event (Topic 855) Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removes the requirement for an SEC filer to disclose a date in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of GAAP. All of the amendments in ASU 2010-09 are effective upon issuance of the final ASU, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010. Adoption of ASU 2010-09 did not have a material effect on the Company’s financial statements.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

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INDUSTRY OVERVIEW

China Meat-Duck Industry

According to the statistics from Food and Agriculture Organization of the United Nations or the FAO, the breeding stock of duck worldwide was 1,046 million in 2005, among which Asia had 931 million breeding stock, accounting for 89% of the world total. In Asia, raising ducks for meat is mainly practiced in countries like China, Vietnam, Thailand, Indonesia, and India.

China is the largest duck producer in the world. In 2009, the number of ducks on hand was 1,096 million and the number of ducks sold from farm was 352 million (including 206 million Cherry Valley ducks). The number of ducks on hand in China in 2009 accounted for 67.3% of the total amount in the world. The number of ducks slaughtered in China in 2009 accounted for 74.7% of the total amount in the world. China’s output of poultry meats amounted to approximately 7.9 million tons in the first half of 2008 with ducks accounting for approximately 1.2 million tons and a growth rate of 8.2%, compared to the same period in the previous year, according to China’s Ministry of Agriculture and as published by the China Animal Agriculture Association.

According to the FAO as shown in the chart below, duck meat production in China has also been growing at a faster pace than other major meat groups. Duck’s share of all meat production increased from 2.0% to 3.4% from 1990 to 2009. Duck meat production increased from 1.87 million tons in 1999 to 2.66 million tons in 2009, a compound annual growth rate, or CAGR of 3.6% which compares to a CAGR of 3.4% for chicken, 2.3% for pork and 2.4% for beef over the same period. Duck meat production’s growth rate has been even higher over the last five years, going from 1.95 million tons in 2004 to 2.66 million tons in 2009, a CAGR of 6.4% compared to CAGR of 3.8% for chicken, 2.3% for pork and 2.7% for beef over the same period.

The following table shows meat production statistics in China for 1990 and 1999 – 2009:



	Meat Production in China (in million tons)
	1990		1999		2000		2001		2002		2003		2004		2005		2006		2007		2008		2009
Pig Meat		24.02		39.90		40.75		41.65		42.32		43.43		44.48		46.62		47.59		43.93		47.19		49.88
Beef and Buffalo Meat		1.30		5.08		5.16		5.11		5.24		5.45		5.62		5.70		5.79		6.15		6.15		6.43
Chicken Meat		2.66		8.17		9.06		8.85		9.17		9.45		9.48		9.97		10.16		10.62		11.05		11.44
Duck Meat		0.60		1.87		1.87		1.91		1.85		1.92		1.95		2.15		2.18		2.33		2.52		2.66
Total Poultry Meat		3.74		11.76		12.69		12.52		12.73		13.14		13.24		14.06		14.29		15.04		15.81		16.44
Total Meat		30.42		60.10		62.11		62.99		64.23		66.26		67.91		71.19		72.69		70.42		74.51		78.21

Source: Food and Agriculture Organization of the United Nations.

According to Zero Power Intelligence Co. Ltd., a consulting firm engaged by the Company, with approximately 67% of world duck population, China has the largest stock of domestic ducks in the world. The total poultry meat output in China will reach 16 million tons in 2010, and duck meat output will reach 3.2 million tons, an equivalent of 20% of the total output. Duck meat output is expected to rise to approximately 3.53 million tons in 2012 and 5.16 million tons in 2015. In addition to the traditional duck meat products, the product portfolio is expected to expand to include duck neck, duck liver, duck feet, and duck down, which is expected to help provide higher profit margins.

Zheng Hui is expected to benefit from the following trends: 1) Chinese consumers have been eating more meat, including more duck; 2) duck meat consumption in China has been increasing faster than other major meat groups (pork, beef, and chicken); and 3) duck’s share of total meat consumption has been growing. We expect these trends to continue as China becomes more prosperous, living standards continue to improve, the middle class continues to grow and consumers turn to healthier diets which generally favors poultry over beef and pork.

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Cherry Valley Duck

According to Zero Power Intelligence Co., Ltd., Cherry Valley Duck has become the most widespread type of meat-duck in China, representing over 50% of the total number of meat ducks. In Guangdong Province, Cherry Valley Duck accounts for over 70% of the total number of meat ducks. When compared with Muscovy Duck and Gouyu Duck, two other popular duck breeds in China, Cherry Valley Duck has significantly higher body weight, breast meat weight, and breast meat proportion. With respect to ducks raised for 70 days, the gross weight for Cherry Valley Duck is approximately 4,187 grams, compared to 3,095 grams for Muscovy duck and 1,915 grams for Gaoyou duck; the breast meat weight for Cherry Valley Duck is approximately 554 grams accounting for 13% of the total duck weight, compared to 371 grams for Muscovy duck accounting for 12% of the total duck weight, and 175 grams for Gaoyou duck accounting for 9% of the total weight. It generally becomes ready for market at 40 days old, and reaches sexual maturity at 26 weeks old. A mature duck can lay 210 – 220 eggs per year, each of which weighs 90 grams. It also has a higher proportion of lean meat and breast meat. Its eviscerated percentage is 72.55%, which is eviscerated weight divided by its pre-slaughter live weight multiplied by100%, and its feed conversion is 2.45:1 to 2.5:1, meaning that every 2.45-to-2.5 kilos of feed can result in one kilo of weight gain.

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BUSINESS

Overview

We are engaged in hatching “Cherry Valley” duck and producing, processing, marketing and distributing frozen processed duck, duck feed, and other duck-related products in the PRC. We sell frozen duck, in whole or cut-up form, to wholesalers, food processing companies and distributors in fifteen Chinese provinces including the cities of Beijing, Shanghai, Tianjin, and Chongqing. Our objective is to establish ourselves as a leading producer and distributor of ducks and duck products in the PRC.

Through years of experience and operation we believe that we have developed a highly effective vertically-integrated supply chain that we describe as a “Company-Base-Farmer” business model. Under our model, we raise breeder ducks and hatch ducklings in our own facilities and then the sell ducklings to our network of approximately 400 contracted farmers. We repurchase the adult commercial ducks that meet our criteria from our contracted farmers, then process, freeze, and store the ducks and duck products in our own facilities. To assist in the ducks’ growth, we also produce and sell duck feed to our contracted farmers through feed brokers.

Year Ended December 31,

2010
USD

2009
USD

2008
USD

Net revenue

44,329,478

36,757,703

33,354,535

Cost of sales

35,365,121

29,299,988

26,501,070

Gross profit

8,964,357

7,457,715

6,853,465

Gross profit ratio

20.2

20.3

20.6

Net income

5,298,762

4,730,350

4,083,502

Our major product is frozen, lean-meat “Cherry Valley” duck, which was developed from the traditional Peking or Beijing ducks by Cherry Valley Farm, a United Kingdom (“UK”) company. Our product is the third generation of Cherry Valley species introduced from the UK, which we purchase from their authorized distributor in China. According to the China Animal Agriculture Association, Cherry Valley ducks have the following general characteristics relative to other ducks: (1) higher growth rate; (2) higher conversion rate of feed, that is, with the same amount of feed, the duck will provide more meat; (3) higher rate of lean meat; (4) stronger disease immunity; and (5) greater ability to be cultivated in different geographical regions. Also, Cherry Valley ducks have less fat content. According to a report from January 2011 in the Meat Trade News Daily in the UK, a traditional Peking duck will have a fat level in excess of 35%, whereas a Cherry Valley duck will have a fat level of less than 27%.

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of our ducklings, duck feed and duck feathers. Specifically, we expect to increase the number of breeder ducks raised in our breeder duck farm from 50,000 heads to 100,000 heads annually which would lay on average 80,000 eggs per day, purchase approximately 120 additional sets of hatchery machines to increase our duckling hatching capacity from 8.5 million heads to 20 million heads annually, and build an additional feed production facility to increase our feed production capacity from approximately 50,000 tons to 80,000 tons annually. As we process more ducks, we expect our feather production output to also increase. Further, as we expand, we intend to hire additional personnel for sales, feed production, processing production feather production, hatching, breeding and administrative functions.

To expand our production capacity to approximately 80,000 ducks per day, we will need more contracted farmers to fulfill the capacity. We believe we have abundant access to local poultry farmers in Shandong Province to accommodate our growth, because according to the municipal government statistics by Shouguang City there are approximately 970,000 farmers in the city. We also expect we will need approximately 42,000 tons of corn and 12,000 tons of soybean meal in addition to our current supplies. According to Chinese official statistics, the corn production of China in 2010 will be approximately 165 million tons, and therefore we believe we will have no difficulty in purchasing additional corn. Although we don’t have official information about domestic soybean meal production in 2010, we believe we will have no difficulty in purchasing additional 12,000 tons soybean meal. We believe such amounts under prevailing market prices will be available in the future as well. If the prevailing market prices for corn and soybean meal increase, we intend to pass on the price increases to our customers by raising our product prices to maintain our profit margins. There can be no assurance, however, that we will be able to pass any such price increases to our customers. We also need to expand our marketing and sales team and strengthen our marketing efforts to develop additional customers including the expansion to the rural duck consumers in three major areas such as Shanghai and Nanjing areas. We also intend to expand our sales to the supermarkets and grocery stores, which yield higher profit margins than sales to food processors. To help our existing contracted farmers to increase their production capacity, we would also need to expand our technical and administrative personnel to provide them sufficient technical and delivery services.

In order to maintain quality control and ensure compliance with applicable government regulations, we supervise and direct the use of veterinary medicine and vaccines to our contracted farmers. We also have established and maintained standards so that our production facilities for the process of raising ducks and duckling hatching, producing duck feed, commercial duck processing, feather removal, partition processing, refrigeration and storage technologies meet all government regulations. We believe that these measures help us produce, what we believe to be, high quality ducks and duck products.

Market Opportunity

•

According to the CIA World Factbook, China’s population is estimated to have grown by approximately 0.7% in 2009 and is expected to grow further in future years. We expect duck consumption to increase with this population growth.

Our Competitive Strengths

We believe that we have the following competitive advantages:

•

Location: Our production facilities are located on 115,211 square meters in Shouguang City, Shandong Province, China. We believe Shandong Province is well situated logistically for distribution to all the main areas of duck consumption in China — Central, Beijing, Tianjin, Northeast, Northwest and the Yangtze River delta zone. Shandong Province has historically had a moderate climate, has ample land for growth, an abundant supply of corn and other ingredients for our feed production, and thousands of local poultry farmers, which are all characteristics that will facilitate our duck production and growth. In addition, we have access to abundant supplies of corn

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and other feed ingredients locally, which lowers the cost of our feed production. Furthermore, approximately 9,000 to 10,000 experienced poultry-raising farmers are located in the Shouguang metropolitan area in 2010, the same region as our facilities, according to data provided by Shouguang City Husbandry Bureau. Moreover, our operation is located in the transportation hub of Shandong Province, providing our customers across China with easy access to our facilities thus we believe significantly reducing the cost of transportation and logistics.

•

Vertically-Integrated Business Model: Our industrial chain is a vertically-integrated business model that integrates feed producing, hatchery, farming, slaughtering, cutting and processing, and wholesaling high volume duck production. Our company has built a breeder farm with 50,000 breeder ducks providing eggs for the hatchery of ducklings, a feed production facility producing feed for breeders and meat ducks, a hatchery facility providing 25,000 ducklings daily, a processing factory, and a long-term relationship with approximately 400 farmer families. The facilities arrangement and the vertically-integrated operation model have resulted in cost advantage while mitigating the price volatility of our raw material supply-feed and ducklings.

•

Cost: Our vertically-integrated business model, has reduced volatility of the costs of our raw materials, feed and ducklings. We also implemented a cost control strategy throughout the process, such as operating our facilities during the time of the day when electricity cost is the lowest. In addition, abundant access to our local supplies of corn and other feed ingredients assures the low cost for our feed production, which is a substantial cost component for our final frozen duck products.

•

Long-Term Relationships with Key Customers and Diversified Customer Base: We believe we have established strong business relationships with several key customers. Among our long-term customers, those with whom we have been doing business for at least five to eight years, Yurun Group, listed on the Hong Kong Stock Market, purchased nearly 6.5% of our duck production in 2010 making them our biggest customer of frozen duck products. Furthermore, our top ten long-term customers, including Yurun Group, purchased frozen duck products, in the aggregate, approximately 16.8% of our total sales in 2010. Given the lack of high concentration of sales to our largest customers, we are not overly dependent on any one customer.

•

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processing plants and the prepared-duck plant. Our technician team visits farmers on a regular basis, supervising and providing assistance in the use of veterinary medicine vaccines by our contracted farmers. Contracted farmers are required to sanitize and clean their duck habitats completely between rounds of raising ducks. In addition, we have adopted various measures to assure the quality of the ducks we repurchase from the farmers, including providing our farmers with our on-site hatched ducklings, self-produced feed, technical support throughout the duck raising period, and the supervision and direction regarding the use of veterinary medicine.

Our Growth Strategies. Our primary objectives are to capitalize on current market opportunities and build on our competitive strengths to enhance our position as a leader in the duck industry.

•

Expand Geographic Presence: We intend to expand the sales of our frozen duck products geographically. We continue to focus on our markets including those in the Shanghai and Nanjing areas. By establishing and strengthening business relationships with food processing customers, supermarkets, restaurants, and the individual distributors in the areas and expanding our market share in the rural areas of these markets, we believe we will be able to increase our sales. In addition, we plan to strengthen our sales and marketing efforts by expanding our sales team.

•

Expand Production Capacity: We intend to expand the production capacity from the current daily capacity of processing 25,000 heads to 80,000 heads through the related expansion of the feed production facility, hatchery, and breeder farm. Specifically, we expect to increase our breeder from duck purchase from 50,000 heads to 100,000 heads and maintain that level, purchase approximately 120 additional sets of hatchery machines to increase our duckling production capacity from 8.5 million heads to 20 million heads annually, and build an additional feed production facility to increase our feed production capacity from 50,000 tons to 80,000 tons annually. We also intend to hire additional personnel for sales, feed production, processing production, feather production, hatchery, breeder farm, and administrative functions.

•

Strengthen Our Farmer Network: To strengthen our farmer network, we intend to help our existing farmers expand their production and to continue adding additional contracted farmers to the system. Specifically, we intend to help existing farmers reduce the cost of raising ducks by providing them additional technical support to assure a high survival rate, and offering duckling delivery services and commercial adult duck pick up services. We intend to offer competitive prices for such services, which we believe will allow our contracted farmers to be more profitable. In addition, as we expand our production capacity, we believe we could easily find available farmers within Shandong Province to work with.

•

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Products

We have produced a wide range of processed frozen duck products that allows us to take advantage of certain marketing opportunities. Specifically, we market a full range of duck and duck industry products, including the following:

•

Duck Meat Products: Our main frozen duck related products consist of Bai Tiao, which is duck sold in whole, and duck parts and organs, such as wings, chests, legs, flippers, gizzard, and other duck parts. Bai Tiao is our main product, accounting for 37.9% of total revenue in 2010 compared to 30.4% in 2009. Duck parts are new products which accounted for 8.4% of total revenue in 2010 compared to 13.9% in 2009.

•

Duckling Products: We have 60 automatic hatchery machines and we are capable of producing approximately 25,000 ducklings per day and we expect to be able to produce approximately 80,000 ducklings per day after our production expansion plan is implemented. We sell the ducklings to our contracted farmers to raise the ducklings for approximately 30 days. We then repurchase the adult ducks back from the contracted farmers.

•

Duck Feed Products: We produce two different categories of duck feed for breeding ducks and commercial ducks. Each category has three types of feed corresponding to the three development stages of the ducks. We have the capacity to produce approximately 50,000 tons of finished feed annually under current configurations, and we expect to expand our capacity to 80,000 tons per year after our production expansion plan is implemented.

•

Duck Feather Products: We shave and collect the duck feathers, dry them, and sell them to a domestic feather processing manufacturer in China. We only sell duck feathers to one customer under a one-year contract renewable each year for four years. The revenue from duck feathers accounted for approximately 7% of our total revenue in 2010. If this customer becomes unavailable, we believe we can find alternate garment manufacturers.

The following table sets forth, for the periods indicated, the contribution, as a percentage of net sales dollars, of each of our major product lines.


	Year Ended December 31, 2010 USD				Year Ended December 31, 2009 USD
Frozen duck products		24,812,408	56	%		20,241,941	55	%
Ducklings		4,976,189	26	%		4,993,530	14	%
Duck feed		11,419,214	11	%		8,894,336	24	%
Other revenues (Feather)		3,192,567	7	%		2,663,688	7	%
Total net revenues		44,400,378	100	%		36,793,495	100	%

Market Segments and Pricing

The following table sets forth our general market segments and the daily capacity at full capacity expressed in number of heads processed.


Market Segment	Capacity Per Day
Processed Duck		25,000
Duckling		25,000
Duck Feed (tons)		137

Generally, we price many of our duck products based upon knowledge of current market prices and calculation of our production cost and desired margins. Consistent with the industry, our profitability is impacted by such market prices which may fluctuate substantially and exhibit cyclical and seasonal characteristics. We will adjust base prices depending upon value added, volume, product mix and other factors. While base prices may change weekly and daily, our adjustment is generally negotiated from time to time with our customers.

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Sales and Marketing

We sell our frozen duck products primarily through the efforts of our sales team consisting of six persons. We sell to food processors principally located in fifteen Chinese provinces including the major cities of Beijing, Shanghai, Tianjin, and Chongqing. We also have three brokers who are responsible for selling one to two percent of our frozen duck products. For the frozen duck products, the customers usually arrange for picking up their purchases at our processing facilities and assume the transportation risk. Altogether, we have approximately 70 customers. This wide range of customers, together with our product mix, provides us with flexibility in responding to changing market conditions in our effort to maximize profits. This flexibility also assists us in our efforts to reduce our exposure to market volatility order in advance, although our ability to do so is limited.

Our employees sell and distribute our ducklings directly to the contracted farmers. Contracted farmers are required to raise only our ducklings and use our feed. By contract we are required to repurchase from the contracted farmers the adult ducks which satisfy our selection standards.

Sales and distribution of our duck feed are sold through approximately thirteen independent feed brokers. Pursuant to the arrangements between us and the independent feed brokers, we recognize revenues upon the delivery of the feed to the independent feed brokers. The independent feed brokers then resell the feed to the contracted farmers with the payments being made at the time of our repurchase of ducks from the contracted farmers. We have no further obligations to the independent feed brokers. The independent feed brokers undertake the risk should the contracted farmers fail to pay them.

The independent feed brokers have to assume the risk should the farmers fail to pay, not us. As for the ducklings and feed, we use our employees and leased trucks to provide transport to the contracted farmer’s farm of each contracted farmer.

Yurun Group, which is listed on the Hong Kong Stock Market, purchased nearly 6.5% of our frozen duck production in 2010 making them our biggest customer of frozen duck products. Our top ten long-term customers, including Yurun Group, purchased frozen duck products, in the aggregate, approximately 16.8% of our total sales in 2010. We do not believe the loss of any single customer would have a material adverse effect on us because we could sell duck or duck products earmarked for any single customer at market prices to others.

We expect to focus on channels through food processors and distributors while seeking opportunities to enter the rural markets of Shanghai and Nanjing. We intend to explore new selling channels such as supermarkets and groceries. We plan to expand our sales and marketing team and develop a network of distributors and we also intend to hire additional sales staff in order to strengthen our existing relationships with food processors and develop new relationships, including with supermarkets and grocery stores both locally and in selected national markets in China. Meanwhile, we will also look to enter into agreements with distributors active in the rural markets of Shanghai and Nanjing to distribute our products there.

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Production and Facilities

General

We are a vertically-integrated producer of frozen duck products, which includes breeding, duck raising, egg laying, hatching, duck meat processing and packaging of the products.

The “Company-Base-Farmers” model of producing duck products can be reflected in the following chart:

[GRAPHIC MISSING]

Purchase of Breeding Ducks

We purchase all the breeder flocks from Weifang Legang Food Co., Ltd. and we raise them in our own farms for the production of hatching eggs. Our breeder flocks are acquired as one-day old ducks (known as ducklings) from this primary breeding company that has a division specializing in the production of Cherry Valley breeder stock. We purchase on a yearly basis the ducklings in proportion of approximately one male to four female ducks with a cost of approximately $204 (1,430 RMB) for each combination (30 males and 110 females). To date, we had approximately 50,000 breeding ducks being raised in our facility. Prior to the year of 2010, we did not have a sales agreement with this breeder duck supplier. In March 2010, we entered into a one time sales contract with this supplier by which this supplier shall provide us with 320 units of breeder ducks.

Raising and Hatching

The breeding ducks start to lay eggs in 6 months. They attain a maximum ability to lay eggs in 10 months and can be maintained at that level for one year. Therefore, after the total of 22 months, the breeding ducks will be either sold to farmers or disposed. 1,000 female ducks can produce approximately 950 eggs per day and the selection rate is approximately 90%. We sell the unused eggs to other farmers.

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We own and operate one hatchery facility where eggs are incubated. We have 60 automatic hatchery machines and we are capable of hatching an aggregate of approximately 25,000 ducklings per day. The hatchery rate of eggs is 99%. After our expansion plan is implemented, we will be able to increase that capacity to 80,000 ducklings per day.

On the day after the eggs are hatched, employees transport the ducklings to the contractual farmers using our leased trucks.

Process Flow of Merchandise Duckling Incubation


Brooding and Rearing period:		Brooding period (1 – 4 weeks old), rearing period (5 – 22 weeks old)
Egg Producing:		The breeding ducks in the egg producing period are bred as required by the management of breeding ducks during the egg producing period
Egg Inspection and Disinfection:		The fetching eggs collected are transported to the incubation workshop promptly and strictly selected; the selected hatching eggs are disinfected prior to incubation or storage
Incubation:		Incubation is carried out in accordance with the requirements for the incubation of hatching eggs
Hatching:		Transported to the hatchery on and after 26 days and hatched on and after the 28^th day
Sale of Ducklings:		The ducklings are distinguished and selected after hatching.

Grow-out in Contracted Farmers

We have approximately 400 contracted farmers to raise ducks in surrounding areas with a radius of 10 kilometers to our base farm and processing facilities. We have approximately 10 technician employees designated to help the farmers and direct the vaccination and feeding of the ducks periodically, to ensure quality control. We repurchase from the farm owners after 28 to 35 days the adult ducks which meet our quality criteria. Our contracted farmers have the ability to raise 9 million ducks per year. To ensure the quality of duck meat, our base farmers are required to use only our feed and raise only the ducks we provide.

We provide ducklings in six to eight rounds per year and undergo sanitation and cleaning between rounds. All the contracts with the farmers are short term, but we have worked with many of these farmers for years. We also believe that the Shandong Province provides abundant access to farmers to help raise the ducks.

Feed Production

An important factor in the grow-out of ducks is the rate at which ducks convert feed into body weight. We produce our own duck feed and purchase on the open market the primary feed ingredients, including corn and soybean meal, which historically have been the largest cost components of our total feed costs.

To diversify our products, we sell the feed through our feed brokers to our contracted farmers for profit. The feed brokers sell to the farmers on credit and the brokers are paid upon our repurchase of adult ducks from the farmers. We have approximately 13 feed brokers and none of them account for greater than 10% of our revenue.

Feed grains are commodities subject to volatile price changes caused by weather, size of harvest, transportation and storage costs, demand and the agricultural and energy policies of the Chinese government. Generally, we purchase our corn and other feed supplies at current prices from suppliers and, to a limited extent, directly from farmers. Feed grains are available from an adequate number of sources. The process for such production is reflected in the chart below.

Although the raw material cost of the duck feed an be volatile for a duck raising company, by leveraging our well established relationships and the vertically-integrated model, we have generated substantial revenue and simultaneously reduced the volatility and lowered our cost compared to our competitors. In addition, our operation model distributes most of the risk involved in the duck production process among our farmers and feed brokers. We generally limit the term of our sales contracts to 30 days. In order to avoid over-production, we maintain inventory of frozen duck products at a low level and base our production and sales to farmers of

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ducklings upon the quantity of contracts and sales orders we receive. In addition, due to the short 30-day operation cycle we can easily adjust our production based on market demand, preferences and other fluctuations and variables.

Process Flow of Feed Processing


Inspection and acceptance:		Collect raw materials from qualified suppliers, and inspect pursuant to quality standards.
Cleanup and storage:		Remove impurity substances from the raw materials, and transport the raw materials after treatment to different feed bins for production.
Addition and mix:		Add ingredients as required by the composition of the feed, and mix them up fully.
Granulation:		Harden and temper the mixed raw materials, and make into granulated feed.
Packaging and stocking:		The finished products will be packaged and stocked for sale after inspection and acceptance.

Processing of Frozen Ducks

Once the adult ducks reach a processing weight in 28 to 33 days, we repurchase from the farmers the ducks which meet our quality criteria. The repurchase rate is approximately 99%. We pick up the ducks from each farmer and transport them to our processing plants, which is usually within 10 kilometers.

Our processing plant uses modern, highly automated equipment to process and package the ducks. Our processing plant operates one processing line on a double shift basis and processes approximately 160,000 ducks per week.

Process Flow of Duck Product Processing


Living Stocks:		Repurchase living ducks from our signed raising households and quarantine such living ducks in order to ensure the conformity with our quality standards.
Slaughter:		Slaughtering process.
Processing, Weighting and Classification:		In accordance with the production and processing plan, select, split and classify the segmented ducks, whole ducks and by-products on basis of their respective operation instruction. Weigh and classify the duck after processing and treatment, and then finish package as required by the products.
Fast Freezing and Refrigeration of Fresh Meat:		The well-packaged products will be quickly frozen in one room and the finished products after inspection and acceptance will be transported to separate iceboxes for storage.
Distribution and Sale:		The sale and transportation of products shall be in insulated vans, such vans shall be in compliance with the requirements for the sanitary insulation of frozen products. If customers pick up the frozen products at our plant, they bear the risk of transportation; if we deliver to customers’ location, we bear the risk of transportation.

Business Changes Upon Expansion

We plan to expand our daily processing capacity from 25,000 heads to 80,000 heads daily. To fulfill this goal, we will either acquire an existing factory or build one by ourselves on the land we already purchased. We also intend to expand our other facilities to maintain our vertically-integrated supply chain. Specifically, we expect to increase the number of breeder ducks raised in our breeder duck farm from 50,000 heads to 100,000 heads annually, purchase approximately 120 additional sets of hatchery machines to increase our duckling production capacity from 8.5 million heads to 20 million heads annually, and build an additional feed production facility to increase our feed production capacity from approximately 50,000 tons to 80,000 tons annually. As we

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process more ducks, we expect our feather production output to also increase. Further, as we expand, we intend to hire additional personnel for sales, feed production, processing production, feather production, hatching, breeding and administrative functions.

To expand our production capacity to approximately 80,000 ducks per day, we will need more contracted farmers to fulfill the capacity. We believe we have abundant access to local poultry farmers in Shandong Province to accommodate our growth, because according to the municipal government statistics by Shouguang City there are approximately 970,000 farmers in the city. We also expect we will need approximately 42,000 tons of corn and 12,000 tons soybean meal in addition to our current supplies. According to Chinese official statistics, the corn production of China in 2010 will be approximately 165 million tons, and therefore we believe we will have no difficulty in purchasing additional corn. Although we don’t have official information about domestic soybean meal production in 2010, we believe we will have no difficulty in purchasing additional 12,000 tons of soybean meal. We believe such amounts under prevailing market prices will be available in the future as well. If the prevailing market prices for corn and soybean meal increase, we intend to pass on the price increase to our customers by raising our product prices to maintain our profit margins. There can be no assurance, however, that we will be able to pass on any such price increases to our customers. We also need to expand our marketing and sales team and strengthen our marketing efforts to develop additional customers including the expansion to the rural duck consumers in three major areas such as Shanghai and Nanjing areas. We also intend to expand our sales to the supermarkets and grocery stores, which yield higher profit margins than sales to food processors. To help our existing contracted farmers to increase their production capacity, we would also need to expand our technical and administrative personnel to provide them sufficient technical and delivery services.

Quality Control and Awards

We believe that quality control is important to our business and conduct quality control activities throughout all aspects of our operations. We believe these activities are beneficial to efficient production and in assuring our customers wholesome, high quality products.

We supervise the operation of a modern, well-equipped base farm which, among other things, monitors sanitation at the hatcheries, quality and purity of our feed ingredients and feed, the health of our breeder flocks and ducklings, and conducts microbiological tests of live ducks, facilities and finished products. We conduct on-site quality control activities at each of the processing plants and the prepared duck plant. Our team of technicians visits farms on a regular basis, supervising and directing the farmers’ use of veterinary medicine and vaccines.

The following chart lists the awards we have received from government agencies:


Award/Certification	Awarding/Certifying Body	Award/Certification Date
The Key and Leading Enterprise of Shandong Agricultural Industrialization	Shandong Agriculture Department, Shandong Development and Reform Commission, Shandong Economic Trade Committee, Shandong Finance Department, Shandong Foreign Trade and Economic Cooperation Department, Shandong Internal Revenue Bureau, Shandong Local Taxation Bureau, Shandong Federation of Supply and Marketing Cooperatives, Shandong Fishery & Ocean Department, Shandong Forestry Bureau, Jinan Branch of People’s Bank of China	August 2005
Contribution Award for the Agriculture Leading Enterprise Construction of the City	Weifang Municipal Party Committee Weifang People’s Government	February 2006

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Award/Certification	Awarding/Certifying Body	Award/Certification Date
Agricultural Industrialization High Integrity Service Enterprise	Weifang Administration Bureau for Industry and Commerce Agricultural Work Office of Weifang Municipal Committee Weifang Agriculture Bureau Weifang Enterprise Credit Management Association	September 2005
Outstanding Privately Owned Enterprise of 2007	Yingli Town Party Committee Yingli People’s Government	February 2008
Abiding by Contracts and Keeping Promise Enterprises	Shouguang Administration of Industry and Commerce Shouguang Enterprise Reputation Administration Association	June 2007

The Key and Leading Enterprise of Shandong Agricultural Industrialization award is granted to enterprises when the following criteria are met: (i) the business is engaged in the production and processing of agricultural products with assets over approximately $15 million (RMB 100 million), fixed assets over approximately $7.5 million (RMB 50 million), and revenue over $30 (RMB 200 million); and (ii) financial performance indicators are met, such as consistently earning profits, promptly settling taxes, employees wages, social insurance, and bank loans, maintaining an assets-liability ratio below 60%. The award is intended to recognize companies that meet the set forth government criteria in Shandong Province. No competitive process was undertaken to obtain the award. Currently, 695 enterprises receive this award in Shandong Province. With this award, we expect it to be easier for us to receive bank loans and interest discounts from local governments.

Regulatory and Governmental Licenses and Permits

Our facilities and operations are subject to regulation by various Chinese governmental agencies, including, but not limited to, local agencies of the State Federal Food and Drug Administration (“SFDA”), the Ministry of Agriculture (“MOA”), and the Department of Health. Our duck processing plants are subject to continuous on-site inspection by the government. The Quality Control Agency visits our facilities every month to ensure our products meet the applicable standards. The local Health Agency visits every three months to monitor the sanitary conditions of our facilities. The local Husbandry Agency visits the contracted farmers and our slaughter facilities periodically. Each time when we repurchase the ducks from the farmers, we need a permit from the local Husbandry Agency, which is there at the time of purchase to check whether the ducks to be repurchased satisfy the food safety standard. We have approximately 10 employees to handle the repurchase and transportation.

The following is a description of the material licenses and permits issued to us in order for us to carry out our operations, other than those pertaining to general business registration requirements:

Hygiene License

We view hygiene control as a critical aspect of food production operations and place great emphasis on the hygienic preparation of our processed frozen duck products to ensure they are safe for consumption. We have received the following hygiene license in relation to our operations:


Name of Certificate	Description of License/Permit	Issuing Authority	Expiration Date
Hygiene License	Permit to process frozen duck products	Shouguang City Hygiene Bureau	April 24, 2012

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Other Licenses and Permits

Our other licenses and permits are as follows:


Name of Certificate	Description of License/Permit	Issuing Authority	Expiration Date
Grain Procurement License	Permit to procure grain from producers	Shouguang City Grain Bureau	December 24, 2011
Breeder Poultry License	Permit to raise breeder poultry	Shandong Province Husbandry Bureau	August 4, 2011
Animal Epidemic Prevention Qualification Certificate	Venue for qualified animal epidemic prevention condition	Shouguang Husbandry Bureau	April 12, 2011
Feed Production License	Permit to produce and sell feed products	Shandong Province Husbandry Bureau	August 31, 2011
Sewage and Waste Disposal Permit	Permit to discharge the sewage and waste	Shouguang Environmental Protection Agency	September 20, 2011

Compliance with existing regulations has not had a material adverse effect on our earnings or competitive position in the past and is not anticipated to have a materially adverse effect in the future. Management believes that we are in material compliance with existing laws and regulations relating to the operation of its facilities and does not know of any major capital expenditures necessary to comply with such statutes and regulations.

We take extensive precautions to ensure that our flocks are healthy and that our processing plants and other facilities operate in a healthy and environmentally sound manner. Events beyond our control, however, such as an outbreak of disease in its flocks or the adoption by governmental agencies of more stringent regulations, could materially and adversely affect our operations.

Customers

We sell frozen duck, in whole or cut-up form, to food processing companies and distributors in fifteen Chinese provinces, including the cities of Beijing, Shanghai, Tianjin, and Chongqing. We have established business relationships with our key customers since Jinzheng was established and have been doing business with our key customers for five to eight years. Yurun Group, which is listed on the Hong Kong Stock market, purchased nearly 6.5% of our frozen duck production in 2010 making them our biggest customer of frozen duck products. Our top ten long-term customers, including Yurun Group, purchased frozen duck products, in the aggregate, approximately 16.9% of our total sales in 2010.

The below chart illustrates the geographic location of our customers based on the provinces and major cities. The percentage reflects the proportion of revenues generated by each province or city in 2010.

Our Customer Geographic Location

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Competition

In 2007, China had 737 million ducks on hand with a slaughter capacity of 2,089 billion. Many large scale poultry enterprises started to engage in producing and processing this type of duck meat in recent years. Some of them have slaughter capacity of more than 10 million ducks, with an integrated production process that includes breeding duck raising and hatching, commercial duck raising, slaughtering and production of duck products. Besides such large enterprises, China also has many small enterprises engaged in raising, slaughtering and processing bird species. However, in recent years, the Chinese government has strengthened the supervision of the safety of the food processing industry, and put strict requirements on hygiene and animal epidemic prevention, so the amount of individual slaughterhouse operators has gradually decreased.

We have become one of the leading vertically-integrated duck producers in Shandong Province, with the value chain of parental breeder duck raising, hatching, feed processing, commercial duck raising, processing and sale of duck products. We have the capacity of hatching 10 million ducklings and processing 8.5 million meat ducks annually. This provides us with a competitive advantage in cost control and ability to manage risk compared to smaller producers. Our complete industry chain can ensure the continuity and stability of the production, improve the product quality and reduce the costs, and therefore strengthen our competition position. However, we are still subject to significant competition from regional and national firms in the duck markets in which we compete and some of our competitors have greater financial and marketing resources than us.

Shandong Province is one of the poultry production centers in China. Some of our competitors in the province have greater capacity for production of ducks and duck products than us. Some of these competitors have entered into the pre-cooked duck product market and some of them sell both ducks and chickens. Although some of these competitors may have greater access to capital and higher market shares than us, the market for ducks in China has shown significant growth and provides us with significant opportunities.

Sources of Supply

We purchase breeder ducks from Weifang Legang Food Co., Ltd., one of the major Cherry Valley breeder duck suppliers in Shandong Province. We purchase the breeder ducks from this supplier once or twice a year and therefore we do not have long term contracts with them. Our breeder ducks costs approximately $204 (1,430 RMB) for each combination of 30 males and 110 females. We believe that the prices for the breeder ducks are stable and the breeder duck supplier is replaceable in the event we need a new source of supply.

The raw materials for our duck feed production are primarily corns (50 – 70%) and soybean meal (15 – 33%) We do not anticipate any difficulty in obtaining these materials in the future. We purchase these materials from a number of vendors and believe that our sources of supply are adequate for our present needs and anticipated growth. We use approximately 1,500 tons of corn per month which cost over $4.4 million (30 million RMB) per year. We usually purchase the grains in the amount we need, but during fall seasons when corn supply is abundant and the price is low we generally purchase more corn supply than we need and store it, lowering our average cost of raw materials and reducing the impact from market volatility. We have storage capacity for 5,000 tons of feed.

Seasonality

The demand for our duck products is the highest prior to the Chinese New Year, which is usually during early February. Demand is otherwise not seasonal.

Intellectual Property

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We have registered “Zheng Hui” as our trademark with the Trademark Office of the State Administration for Industry and Commerce of China. We use our trademark for the sales and marketing of our products. Our trademark expires on September 20, 2020 and may be continually renewed thereafter. We also own three domain names: “jinzhenggroup.com”, “jinzhenggroup.cn”, and “jinzhenggroup.com.cn”.

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We are not aware of any material infringement of our intellectual property rights.

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Insurance

We maintain various insurance policies to safeguard against risks and unexpected events. In protecting against work-related casualties and injuries, we purchase accidental injury insurance policies for our employees. In addition, we provide social security insurance including pension insurance, unemployment insurance, work related injury insurance and medical insurance for our employees. We have not maintained insurance for our plants, machinery, equipment, inventories and motor vehicles. We do not have product liability insurance for our products. All of our products have met the relevant regulatory requirements under PRC laws and we have not been subject to any material fines or legal action involving product non-compliance.

Employees

We had 397 full-time employees as of December 31, 2010. The following table shows the breakdown of employees by department:


Function	Number of employees		% of total
Administration (6 sales personnel)		30		8	%
Base farm (16 technicians), hatchery (2 technicians), process and cold storage (5 technicians)		322		81	%
Feed Production (2 technicians)		45		11	%
Total		397		100	%

Legal Proceedings

We may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. We are not currently a party to any litigation or other legal proceedings brought against us. We are also not aware of any legal proceeding, investigation or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect on our business, financial condition or results of operations.

Property

Under the current PRC law, land is owned by the state, and parcels of land in rural areas, which is known as collective land, is owned by the rural collective economic organization. “Land use rights” are granted to an individual or entity after payment of a land use right fee made to the applicable state or rural collective economic organization. Land use rights grant the holder the right to use the land for a specified long-term period.

Our properties are located in Shandong Province under land use rights for purposes of production and employee living quarters.

We have land use rights, expiring at different times from years 2053 to 2059, for a total of approximately 82,294 square meters of land for all of our existing facilities, including an office building of 3,815 square meters, a processing facility of 21,121 square meters, a breeder farm of 44,130 square meters, a feed production facility of 13,228 square meters, and 158,694 square meters of undeveloped land on which we may build a new processing facility and cold storage.

Government Regulation

This section sets forth a summary of the most significant regulations or requirements that affect our business activities in China. Certain of these regulations and requirements, such as those relating to tax, foreign currency exchange, dividend distribution, regulation of foreign exchange in certain onshore and offshore transactions and regulations of overseas listings, may affect our shareholders’ right to receive dividends and other distributions from us.

Environmental Regulations

On December 26, 1989, the Standing Committee of the National People’s Congress issued the Environment Protection Law, setting forth the legal framework for environment protection in China. The Environmental Protection Law requires the State Administration of Environmental Protection to implement uniform

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supervision and administration of environmental protection standards nationwide and to establish national waste discharge standards. Local environmental protection bureaus are responsible for environmental protection in their jurisdictions and may set stricter local standards which are required to be registered at the State Administration of Environmental Protection. Companies are required to comply with the stricter one of the two standards. Enterprises producing environmental contamination and other public hazards must incorporate the relevant environmental protection standards into their planning and establish environmental protection systems. These companies must also adopt effective measures to prevent environmental contamination and hazardous emissions, such as waste gas, waste water, deposits, dusts, pungent gases and radioactive matters as well as noise, vibration and magnetic radiation. Companies discharging contaminated wastes in excess of the discharge standards prescribed by the State Administration of Environmental Protection must pay non-standard discharge fees in accordance with national regulations and be responsible for the applicable remediation. Government authorities may impose different penalties against persons or companies in violation of the environmental protection laws and regulations depending on individual circumstances. Such penalties may include warnings, fines, imposition of deadlines for remediation, orders to cease certain operations, orders to reinstall contamination prevention and remediation facilities that have been removed or left unused, imposition of administrative actions against the responsible persons or orders to close down the company. Where the violation is deemed serious, responsible persons may be required to pay damages, and may be subject to criminal liability.

New M&A Regulations and Overseas Listings

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and the SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006. This New M&A Rule, among other things, includes provisions that purport to require that an offshore special purpose vehicle formed for purposes of overseas listing of equity interests in PRC companies and controlled directly or indirectly by PRC companies or individuals obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.

On September 21, 2006, the CSRC published on its official website its approval procedures for overseas listings by special purpose vehicles. The CSRC approval procedures require the filing of certain documents with the CSRC and may take several months to complete. However, other than documents required to be submitted, no other details with respect to the timing, criteria and process for obtaining any required approval from the CSRC have been specified. Therefore, it remains unclear how the New M&A Rule or the CSRC procedures will be interpreted, amended and implemented by the relevant authorities. See “Risk Factors — Risks Associated with Doing Business in China — The application of PRC regulations relating to the overseas listing of PRC domestic companies is uncertain, and we may be subject to penalties for failing to request approval of the PRC authorities prior to listing our shares in the U.S.”

Foreign Exchange Regulation

Pursuant to the Foreign Exchange Administration Rules promulgated on January 29, 1996 and amended on January 14, 1997 and August 5, 2008, and various regulations issued by the SAFE and other relevant PRC government authorities, RMB is freely convertible only with respect to current account items, such as trade-related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and repatriations of investments, require the prior approval of the SAFE or its local branches for conversion of RMB into foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC.

Payments for transactions that take place within the PRC must be made in RMB. Unless otherwise approved, PRC companies must repatriate foreign exchange payments received from abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks subject to a cap set by the SAFE or its local counterpart. Unless otherwise approved, domestic enterprises must convert all of their foreign exchange receipts into RMB.

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Pursuant to the SAFE’s Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment via Overseas Special Purpose Vehicles, or the SAFE Circular No. 75, issued on October 21, 2005, (i) a PRC resident must register with the local SAFE branch before establishing or controlling an overseas special purpose vehicle, or SPV, for the purpose of obtaining overseas equity financing using the assets of or equity interests in a domestic enterprise; (ii) when a PRC resident contributes the assets of or its equity interests in a domestic enterprise into an SPV, or engages in overseas financing after contributing assets or equity interests into an SPV, such PRC resident must register his or her interest in the SPV and any subsequent change thereto with the local SAFE branch; and (iii) when the SPV undergoes a material event, such as a change in share capital, merger and acquisition, share transfer or exchange, spin-off or long-term equity and debt investment, the PRC resident must, within 30 days from the occurrence of such event, register such change with the local SAFE branch. On May 29, 2007, the SAFE issued relevant guidance to its local branches for the implementation of the SAFE Circular No. 75. This guidance standardizes more specific and stringent supervision on the registration requirement relating to the SAFE Circular No. 75 and further requests PRC residents holding any equity interests or options in SPVs, directly or indirectly, controlling or nominal, to register with the SAFE.

Our beneficial owners who are PRC residents have registered with the local SAFE branch as required under the SAFE Circular No. 75. See “Risk Factors — Risks Associated with Doing Business in China — Recent PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute profits to us, or otherwise adversely affect us.”

Pursuant to the Implementation Rules of the Administration Measure for Individual Foreign Exchange, or the Individual Foreign Exchange Rule, and an implementation notice on the rule, issued in January and March 2007, respectively, by the SAFE, PRC citizens who are granted share options by an overseas publicly-listed company are required, through a PRC agent designated by such overseas publicly-listed company, to register with the SAFE and complete certain other procedures related to the share options. PRC agents may be the subsidiary of such overseas publicly-listed company, trade union of any such PRC subsidiary having legal person status, a trust and investment company or other financial institution qualified to engage in assets custodian business. Such individuals’ foreign exchange income received from the sale of shares or dividends distributed by the overseas publicly-listed company must first be remitted into a collective foreign exchange account opened and managed by the PRC agent before distribution to such individuals in a foreign currency or in RMB. We and our PRC citizen employees who may be granted share options, or PRC optionees, will be subject to these rules when our company becomes an overseas publicly-listed company. If we or our PRC optionees fail to comply with these regulations, we or our PRC optionees may be subject to fines and legal sanctions. However, as these rules have only been recently promulgated, it is currently unclear as to how these rules will be interpreted and implemented.

Regulation of Dividend Distribution

The principal regulations governing distribution of dividends of foreign holding companies include the Foreign Investment Enterprise Law (1986), as amended, and the Administrative Rules under the Foreign Investment Enterprise Law (1990), as amended. Under these regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, foreign-invested enterprises in China are required to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds unless these reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable as cash dividends. Our Chinese subsidiaries, which are all foreign-invested enterprises, are restricted from distributing any dividends to us until they have met these requirements set out in the regulations.

According to the new EIT law and the implementation rules on the new EIT law, if a foreign legal person is not deemed to be a resident enterprise for Chinese tax purposes, dividends generated after January 1, 2008 and paid to this foreign legal person from business operations in China will be subject to a 10% withholding tax, unless such foreign legal person’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement.

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Under the new EIT law and its implementation rules, if an enterprise incorporated outside China has its “de facto management organization” located within China, such enterprise would be classified as a resident enterprise and thus would be subject to an enterprise income tax rate of 25% on all of its income on a worldwide basis, with the possible exclusion of dividends received directly from another Chinese tax resident.

Regulations on Trademarks

Both the PRC Trademark Law, adopted in 1982 and revised in 1993 and 2001, and the Implementation Regulation of the PRC Trademark Law adopted by the State Council in 2002, give protection to the holders of registered trademarks. The Trademark Office, under the authority of the State Administration for Industry and Commerce, handles trademark registrations and grants rights for a term of ten years for registered trademarks, which may be renewed by the Trademark Office. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s use. Trademark license agreements must be filed with the Trademark Office or its regional offices.

Regulation on Employment

On June 29, 2007, the National People’s Congress promulgated the Labor Contract Law of PRC, or the Labor Contract Law, which became effective as of January 1, 2008. On September 18, 2008, the PRC State Council issued the PRC Labor Contract Law Implementation Rules, which became effective as of the date of issuance. The Labor Contract Law and its implementation rules are intended to give employees long-term job security by, among other things, requiring employers to enter into written contracts with their employees and restricting the use of temporary workers. The Labor Contract Law and its implementation rules impose greater liabilities on employers, require certain terminations to be based upon seniority rather than merit and significantly affect the cost of an employer’s decision to reduce its workforce. Employment contracts lawfully entered into prior to the implementation of the Labor Contract Law and continuing after the date of its implementation remain legally binding and the parties to such contracts are required to continue to perform their respective obligations thereunder. However, employment relationships established prior to the implementation of the Labor Contract Law without a written employment agreement were required to be memorialized by a written employment agreement that satisfies the requirements of the Labor Contract Law within one month after it became effective on January 1, 2008.

Tort Liability Law

The Tort Liability Law of the People’s Republic of China, which was passed during the 12th Session of the Standing Committee of the 11th National People’s Congress on December 26, 2009, states that manufacturers are liable for damages caused by defects in their products and sellers are liable for damages attributable to their fault. If the defects are caused by the fault of third parties such as the transporter or storekeeper, manufacturers and sellers are entitled to claim for compensation from these third parties after paying the compensation amount.

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OUR HISTORY AND CORPORATE STRUCTURE

The following diagram illustrates our corporate and shareholder structure as of the date of this prospectus.

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Mr. Junfeng Shan, the sole shareholder of Zheng Hui Holding Limited (BVI Co1), also owns directly 89.85% of the capital stock of Jinzheng, while Yufen Zhang, Yan Wang and Li Qian own in aggregate the balance of the capital stock of Jinzheng. The same three individuals also are sole shareholder for each of the BVI Co2, BVI Co3 and BVI Co4, respectively, as described in the chart above.

Corporate History

On January 22, 2009, we were incorporated in the State of Oregon, and we changed our domicile to the State of Nevada on May 21, 2010. On March 23, 2010, we established our wholly-owned subsidiary, Beijing CMJM, in Beijing China. On March 25, 2010, Beijing CMJM entered into a series of contracts with Jinzheng and/or Jinzheng Stockholders and obtained the exclusive control over its duck production and distribution business in China. Accordingly, we have consolidated Jinzheng’s historical financial results in our financial statements as a VIE pursuant to GAAP.

We believe that, (1) the ownership structure of Beijing CMJM and Jinzheng complies with, and immediately after this offering, will comply with, current PRC laws and regulations; (2) our contractual arrangements with Jinzheng and the Jinzheng Stockholders are valid and binding on all parties to these arrangements, and do not violate current PRC laws or regulations; and (3) the business operations of our company, Beijing CMJM and Jinzheng comply with current PRC laws and regulations.

Material Operating Entities

Beijing CMJM. Since our inception, we have conducted our operations in China primarily through Beijing CMJM, a wholly foreign-owned enterprise in China. Beijing CMJM manages the businesses and also provides consulting and other related services to Jinzheng. See “Contractual Arrangements with Jinzheng and Jinzheng Stockholders.”

Jinzheng. We conduct our duck production and distribution business through Jinzheng, a limited liability company established in China. Junfeng Shan beneficially owns 89.85% of the equity and three other individuals beneficially own 3.05%, 3.55%, and 3.55% of the equity respectively. Jinzheng operates our duck production and distribution business and holds the licenses and approvals necessary to the operation of business in China.

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Contractual Arrangements with Jinzheng and Jinzheng Stockholders

Our relationships with Jinzheng and the Jinzheng Stockholders are governed by a series of contractual arrangements. Under PRC laws, each of the Jinzheng Stockholders is an independent legal person and neither of them is exposed to liabilities incurred by the other party. The contractual arrangements are comprised of a series of agreements, including Exclusive Technical Consulting Service Agreements and Operating Agreements, through which we have the right to advise, consult, manage and operate Jinzheng, and collect and own 85% of their respective net profits. In order to further reinforce our rights to control and operate Jinzheng, the Jinzheng Stockholders have granted us, under the Exclusive Equity Interest Purchase Agreement, the exclusive right and option to acquire all of their equity interests in Jinzheng, or alternatively, all of the assets of Jinzheng. Further the Jinzheng Stockholders have pledged all of their rights, titles and interests in Jinzheng to us under the Exclusive Equity Interest Pledge Agreement.

On March 25, 2010, we entered into the following contractual arrangements:

Exclusive Technical Consulting Service Agreement. Pursuant to the Exclusive Technical Consulting Service Agreement between Beijing CMJM and Jinzheng, Beijing CMJM has the exclusive right to provide business consulting and related services, including the provision of advanced management skills to offer a framework for the construction of a new management platform, the provision of technology information and materials related to Jinzheng’s business development and operation, training of technical and managerial personnel for Jinzheng and provision of required training documents (the “Services”). Under this agreement, Beijing CMJM owns the intellectual property rights arising from the performance of the Services, including, but not limited to, copyrights, patent, know-how and commercial secrets, whether developed by Beijing CMJM or Jinzheng. Jinzheng pays 85% of its annual net profit to Beijing CMJM on a semi-annual basis as consulting service fee. The remaining 15% of annual net profits is restricted by the Equity Interest Pledge Agreement, which entitles Beijing CMJM to collect dividends from Jinzheng during the term of the pledge. Because the pledge remains in effect to guarantee payment under the Exclusive Technical Consulting Service Agreement, the Jinzheng Stockholders will not have any right to receive any dividends from Jinzheng if they are declared. The consulting service agreement is in effect for a term of ten years starting from March 25, 2010 unless previously terminated. This agreement may be renewed for additional ten-year terms upon notice by Beijing CMJM.

Operating Agreement. Pursuant to the Operating Agreement among Beijing CMJM, Jinzheng and the Jinzheng Stockholders, Beijing CMJM fully guarantees the performance of the contracts, agreements or transactions executed by Jinzheng related to Jinzheng’s business. Jinzheng, in return, agrees to pledge all of its receivables and assets to Beijing CMJM. In addition, Jinzheng agrees that without the prior consent of Beijing CMJM, Jinzheng will not engage in any transactions that could materially affect the assets, obligations, rights or the business of Jinzheng, including, without limitation, (a) borrowing money from a third party or assuming any debt, (b) selling to or acquiring from any third party any assets or rights, including without limitation, any intellectual property rights, (c) providing any real guaranty for any third party with its assets or intellectual property rights, or (d) assigning to any third party its business agreements. Moreover, Jinzheng agrees to accept the corporate policy advice and guidance provided by Beijing CMJM on Jinzheng’s daily operations, financial management and employment issues. The Jinzheng Stockholders appoint the candidates recommended by Beijing CMJM to Jinzheng’s board of directors. Beijing CMJM has the right to appoint personnel to high level managerial positions of Jinzheng, including General Manager, Chief Financial Officer and other senior officers. The term of this agreement is ten years from March 25, 2010 unless earlier terminated. The agreement can be renewed for additional ten-year periods at Beijing CMJM’s written request. Beijing CMJM may terminate the agreement at any time upon thirty (30) days’ written notice to Jinzheng.

Equity Interest Pledge Agreement. Under the Equity Interest Pledge Agreement between the Jinzheng Stockholders and Beijing CMJM, the Jinzheng Stockholders pledged all of their equity interests in Jinzheng to Beijing CMJM to guarantee Jinzheng’s consulting fees paid to Beijing CMJM. According to the Equity Interest Pledge Agreement, the Jinzheng Stockholders can not transfer their shares to any third party other than Beijing CMJM and upon an event of default, Beijing CMJM, as pledgee, will be entitled to certain rights, including but not limited to the right to sell the pledged equity interests. The Jinzheng Stockholders agree that without Beijing CMJM’s prior written consent, they will not transfer any equity interest, create or permit to exist any pledge that may damage Beijing CMJM’s rights or interests in the pledged equity interests,

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or cause Jinzheng’s meeting of stockholders or board of directors to pass any resolutions about the sale, transfer, pledge or other disposal of the lawful right to derive income from any equity interest in Jinzheng or about the permission of the creation of any other security interests thereon. The term of this agreement is the same as the Service Agreement. If the term of Service Agreement is renewed, the term of this agreement will extend accordingly.

Exclusive Equity Interest Purchase Agreement. Pursuant to the Exclusive Equity Interest Purchase Agreement between Jinzheng, the Jinzheng Stockholders and Beijing CMJM, the Jinzheng Stockholders irrevocably, unconditionally and exclusively granted Beijing CMJM a purchase option (the “Purchase Option”) whereby, to the extent permitted under Chinese law, Beijing CMJM has the right to request the Jinzheng Stockholders transfer, to it or its designated entity or person, the total equity interests held by them in the registered capital of Jinzheng, which as a group equals 100% of the outstanding equity of Jinzheng. The Purchase Option, which was granted to Beijing CMJM, and the consulting fees are in exchange for the services provided to Jinzheng by Beijing CMJM. Beijing CMJM did not pay any cash consideration for the Purchase Option. Beijing CMJM has sole discretion to decide the specific time, method and number of the exercise of the Purchase Option. At the time of each exercise of the Purchase Option by Beijing CMJM, the total consideration to be paid to the Jinzheng Stockholders shall be determined through negotiation according to the evaluation of the equity interest by the relevant qualified institute and it shall be the lowest price permitted under PRC laws. The term of this agreement is ten years from March 25, 2010 unless earlier terminated. The agreement can be renewed for additional ten-year periods at Beijing CMJM’s written request.

Power of Attorney. Pursuant to a power of attorney, each of the Jinzheng Stockholders agreed to irrevocably entrust Beijing CMJM with his stockholder voting rights and other stockholder rights for representing him to exercise such rights at the stockholders’ meeting of Jinzheng in accordance with applicable laws and its Article of Association, including, but not limited to, the right to sell or transfer all or any of his equity interest in Jinzheng, and appoint and vote for the directors and Chairman as the authorized representative of the Jinzheng Stockholders. The term of each proxy and voting agreement is as long as each of the Jinzheng Stockholders is a shareholder of Jinzheng from March 25, 2010.

Zheng Hui and Beijing CMJM are considered foreign investors or foreign invested enterprises under PRC law. As a result, Zheng Hui and Beijing CMJM are subject to limitations under PRC law on foreign ownership of domestic companies. According to the Catalogue of Industries for Guiding Foreign Investment, there are four kinds of industries which are encouraged, permitted, restricted and prohibited for foreign investment. Although the primary business of Jinzheng is not within the category in which foreign investment is currently restricted or prohibited, the uncertainty of PRC law, regulations and governmental policies affecting foreign ownership may result in Zheng Hui being required to hold (or, conversely, being prohibited from holding), directly or indirectly, a given percentage of Jinzheng’s equity interests. Our VIE Agreements with Jinzheng and Jinzheng Stockholders allow us to substantially control Jinzheng through Beijing CMJM without exercising the exclusive equity interest purchase agreement. Therefore we set up our corporate structure this way rather than exercising the exclusive equity interest purchase agreement. While we are not aware of many United States public companies in the duck industry that have all or substantially all of their operations in China, this corporate structure is typical among other United States public companies that have all or substantially all of their operations in China and we are aware of other companies whose corporate structure is the same as the corporate structure of Zheng Hui in similar industries, such as the swine industry.

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MANAGEMENT

Directors and Executive Officers

Set forth below is information regarding our current directors and executive officers:


Name	Age	Position
Junfeng Shan	53	Chief Executive Officer, President and Chairman
Xiaofang Xue	32	Chief Financial Officer, Secretary
Lilian Jiang*	42	Independent Director
Yuan Gong*	37	Independent Director
Jing Cao*	31	Independent Director
Kunshan Wang*	65	Independent Director
Shidian Shan	36	Vice President
Yunqing Wu	32	Vice President
Yongping Shan	56	Vice President

Indicates member of Audit, Nominating and Corporate Governance Committee and Compensation Committee

Below is the ten year employment history of each director, executive officer and significant employees listed above. None of them are directors or officers for any other public companies or investment companies in the United States.

Junfeng Shan: President and CEO. Mr. Shan was the founder of our company in 2002 and has since served as President and Chief Executive Officer. From November 1980 to February 1990, he acted as deputy manager and then as manager of Shouguang Daokou Construction Co., Ltd. From March 1990 to March 2002, he acted as manager of No.4 Shouguang Construction Co., Ltd. and as deputy manager of Daokou Shangsheng Chicken meat factory. Mr. Shan has a Bachelor degree in Science from Shandong Construction College. As a founder of our company and leaders in each of the companies he served previously, the Board believes that Mr. Shan has the experience, qualifications, attributes and skills necessary to serve on the Board because of his extensive years of experience in the industry, his having provided leadership and strategic direction to the Company as its founder and his unparalleled knowledge of the Company and its business.

Xiaofang Xue: Chief Financial Officer and Secretary. Ms. Xue became our Chief Financial Officer in December 2009. From 2005 to 2009, Ms. Xue acted as Senior Auditor in Ernst & Young’s Beijing office where she led the pre-public offering auditing. From 2004 to 2005, she was an accountant for Kunming XinKe Electronic Co. Ltd; from 2002 through 2004, she acted as an auditor in Ernst & Young Shenzhen office. From 2001 through 2002, she was an English teacher at Lingnan Technology College. She has a Bachelor of Art in English from Zhongshan University, Guangzhou, China. Her six years of experience with Ernst & Young demonstrates her ability to serve as Chief Financial Officer for the Company.

Lilian Jiang: Director, Chairman of Audit Committee. Ms. Jiang became a member of our Board of Directors in April 2010. From February 2008 through the present, Ms. Jiang has worked as manager for Wen Jiang & Company, PC, formerly known as Wen Y Jiang CPA, PC in Portland, Oregon where she provides consulting and accounting services to Chinese public and private companies. She is responsible for accounting control systems and the preparation of financial statements. From April 1994 to January 2008, she acted as Senior Financial Analyst & Internal Auditor, at Port of Portland located at Portland, Oregon. From January 1992 to April 1994, she was an accountant at Larson, Dowsett & Fogg, CPA’s, P.C., located in Portland, Oregon. Ms. Jiang has a Bachelor of Science in Accounting from Jinan University in Guangzhou, China and a Post-Baccalaureate Certificate in Accounting from Portland State University, Portland, Oregon. She’s also a licensed Certified Public Accountant in the State of Oregon since July 1997. By working for U.S. accounting firms in the finance industry for more than 18 years and as a certified public accountant, the Board of Directors believes that Ms. Jiang has the credentials to serve as the Chairman of our Audit Committee.

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Yuan Gong: Director. Mr. Gong has served as a Director of the Company since April 2010. Mr. Gong has served as a partner of Jessie International a financial advisory firm Beijing, China since March 2008. His responsibilities include advising and assisting private and public companies in accessing capital markets and introducing private equity and hedge fund investors. Since December 2009, he has been the Chief Financial Officer of China Energy Corp. (CHGY.OB). From September 2008 until November 2009, he served as the Vice President of Capital Markets of China Integrated Energy (NASDAQ: CBEH). From September 2007 to April 2008, he was Director of Investor Relations for Xinyuan Real Estate Company Ltd. (NYSE: XIN) From March 2007 to August 2007, he was Assistant General Manager for SPG Land, located in Shanghai, China. From March 2005 to March 2007, he was Research Associate at Morgan Stanley Asia Limited, and from October 2003 to March 2004, he was a Project Specialist for JP Morgan Investment Management Security Operation. From September 1997 to March 2000, he was Chief Representative for ConAgra Refrigerated Foods International. He has Master of Business Administration from the University of Delaware, and Bachelor of Arts in English from Peking University. The Board of Directors believes that Mr. Gong’s extensive experiences with public companies and his knowledge of finance industry make him qualified to serve as a Director.

Jing Cao: Director. Ms. Cao has been a Director of the Company since April 2010. Since May 2010, Ms. Cao has worked in Zonbo Media Company Limited as financial controller, where she has been in charge of daily financial matters and fund raising. From July 2009 to May 2010, Ms. Cao worked in Cell Tech Electronic Limited as finance director. Her responsibilities include assisting in fundraising and pre-IPO preparation. From July 2001 to July 2009, Ms. Cao worked as manager at Assurance and Advisory Business Services Group in Ernst &Young, where she served numerous public companies listed in the U.S., Hong Kong and China. She has acted as a leader on public company audit engagements, U.S. integrated audits, PRC statutory reporting and Group reporting for multinational corporations. Ms. Cao has a bachelor of international enterprises management from the Central University of Finance and Economics, Beijing China. She has a certificate from the Chinese Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. The Board of Directors believes that her experience as an auditor serving public companies provides Ms. Cao has the knowledge and credentials to serve as a Director.

Kunshan Wang: Director. Mr. Wang has been Director of the Company since May 2010. From March 1998 to 2008, Mr. Wang was Deputy Director of Municipal People’s Congress of Shouguang city. From March 1987 to 1998, he was vice commissioner of Shouguang County in charge of local agriculture and rural construction. From September 1984 to February 1987, he was Secretary of the Party Committee of Chengguan Commune, Shouguang County. From October 1983 to August 1984, he was Secretary of the Party Committee of Daotian Commune. From September 1982 to September 1983, he was Director of Prefectures Agriculture Committee. From June 1980 to August 1982, he was Secretary of the Party Committee of Jitai Commune. From November 1979 to May 1980, he was Deputy Secretary of the Party Committee of Jitai Commune, the director of Management Committee. From 1971 to October 1979, he was Deputy Secretary of the Party Committee of Madian Commune, the director of Management Committee. The Board of Directors believes that Mr. Wang’s extensive experience in the local government of Shouguang city and agricultural industry provides him with the knowledge and expertise to serve the Company as a Director.

Shidian Shan: Vice President. Mr. Shan joined the Company in 2002, becoming a Vice President in 2002. Mr. Shan has responsibility for financial and accounting matters. From April 1994 to July 1997, he acted as chief accountant for No.4 Shouguang Construction Co., Ltd. From August 1997 to December 2001, he acted as Chief Financial Officer for Shouguang Antisepticise and Heat Preservation Installation Co., Ltd. Mr. Shan has a degree in accounting from Weifang Technology college.

Yunqing Wu: Vice President. Mr. Wu joined the Company in 2008. Mr. Wu is responsible for the Company’s administration and human resources functions. From January 2001 to October 2004, he acted as network centre director of Shandong Shouguang Vegetable Industry Group. From October 2004 to March 2007, he acted as assistant to the president and network centre director of Qicai Farm Industry Marketing of Shandong Shouguang Vegetable Industry Group respectively. From March 2007 to October 2008, he acted as chief of office and director of human resources of Shandong Haoyuan Industry Co., Ltd. He has a bachelor degree in economic management from Weifang college.

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Yongping Shan: Vice President. Since April 2002, Mr. Shan has served as Vice President of Jinzheng Poultry Co. Ltd. Mr. Shan is responsible for production and sales. From April 1980 to June 1991, he acted as deputy manager of Shouguang Daokou Prawn Feed Welfare Factory. From July 1991 to October 1997, he acted as deputy factory director in Shouguang Daokou Changsheng Chicken Farm. From November 1997 to March 2002, he acted as manager of Shouguang Prawn Feed Welfare Factory, a company engaged in the prawn industry.

Family Relationships

There are no family relationships among our executive officers, directors or significant employees.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Corporate Governance

Board of Directors

Director Independence

Our Board of Directors consists of five members: Junfeng Shan, Lilian Jiang, Yuan Gong, Jing Cao, and Kunshan Wang. Ms. Jiang, Ms, Cao and Mr., Gong were elected in April 2010, and Mr. Wang was elected in May 2010, and our Board of Directors has determined that each qualify as an “independent director” as defined by Rule 5605(a)(2) of NASDAQ’s Marketplace Rules. Our Board of Directors made its determination based on information furnished by all of the directors regarding their relationships with us and our affiliates and research conducted by management. All actions of the Board of Directors require the approval of a majority of the directors in attendance at a meeting at which a quorum is present.

Leadership Structure

Our Board of Directors has chosen Mr. Junfeng Shan to serve as both Chairman and Chief Executive Officer because we believe he will best serve the Company and our stockholders in that dual role given his unique knowledge of the Company as its founder and vast experience in our industry.

Communications with the Board

Any of our stockholders or any other interested party may communicate with our Board of Directors directly through one or more directors in writing addressed to the director or directors, c/o Zheng Hui Industry Corporation, Daokou Industry Park, Yingli Town, Shouguang, Shandong Province, China, attention: Secretary. Please identity the party or parties to whom the correspondence is being sent. Any communication that is addressed to our Board of Directors or fails to identify a particular director will be sent to our Chairman. The Company’s Secretary will review each communication and will promptly forward to the appropriate party or parties all communications that relate to our business, operations, financial condition, management, employees or similar business matters. The Company’s Secretary will not forward any advertising, solicitation or similar materials.

Director Attendance at Annual Meeting of Stockholders

We will hold annual meetings of stockholders and we will invite all of our directors to attend such meetings, and we will strongly encourage attendance.

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Board Diversity

We do not have a specific policy on diversity relating to the selection of nominees for our Board of Directors. While we believe that diversity and a variety of experiences and viewpoints represented on the Board should always be considered, we also believe that a director nominee should not be chosen nor excluded solely or largely because of race, color, gender, national origin, sexual orientation, or identity. In selecting a director nominee, the Nominating and Corporate Governance Committee focuses on diversity in the broadest sense, considering, among other things, skills, expertise, or background that would complement our existing Board taking into account the Company’s business and industry.

Board Committees

The Board of Directors has an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee, each of which was formed on May 30, 2010.

Audit Committee. The Audit Committee members consist of Lilian Jiang, Yuan Gong, Jing Cao, and Kunshan Wang. Each of these members would be considered “independent” as defined by Rule 5605(a)(2) of NASDAQ’s Marketplace Rules, as determined by our Board of Directors.

The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. The Audit Committee’s responsibilities include the following functions:

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approve and retain the independent auditors to conduct the annual audit of our books and records;

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review the proposed scope and results of the audit;

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review and pre-approve the independent auditors’ audit and non-audited services rendered;

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approve the audit fees to be paid;

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review accounting and financial controls with the independent auditors and our internal auditors and financial and accounting staff;

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review and approve transactions between us and our directors, officers and affiliates;

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recognize and prevent prohibited non-audit services; and

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meeting separately and periodically with management and our internal auditor and independent auditors.

The Audit Committee operates under a written charter. Ms. Lilian Jiang serves as the Chairman of our Audit Committee. The Company’s Board of Directors has determined that the company has one audit committee financial expert as defined by the rules and regulations of the SEC and NASDAQ, Lilian Jiang, serving on its Audit Committee. Lilian Jiang has been a certified public accountant since 1997 and understands U.S. GAAP and financial statements.

Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for identifying potential candidates to serve on our board and its committees. The Nominating and Corporate Governance Committee’s responsibilities include the following functions:

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making recommendations to the board regarding the size and composition of the board;

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identifying and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy;

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establishing procedures for the nomination process;

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advising the board periodically with respect to corporate governance matters and practices, including periodically reviewing corporate governance guidelines to be adapted by the board; and

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establishing and administering a periodic assessment procedure relating to the performance of the board as a whole and its individual members.

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Lilian Jiang, Yuan Gong, Jing Cao, and Kunshan Wang are the members of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee operates under a written charter. The Nominating and Corporate Governance Committee will also consider director nominees recommended by stockholders. The Nominating and Corporate Governance Committee will evaluate such director candidates in the same manner as it evaluates director candidates recommended by our directors, management or employees.

Compensation Committee. The Compensation Committee is responsible for making recommendations to the board concerning salaries and incentive compensation for our officers and employees and administers our stock option plans. Its responsibilities include the following functions:

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reviewing and recommending policy relating to the compensation and benefits of our officers and employees, including reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer and other senior officers; evaluating the performance of these officers in light of those goals and objectives; and setting compensation of these officers based on such evaluations;

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administering our benefit plans and the issuance of stock options and other awards under our stock plans; and reviewing and establishing appropriate insurance coverage for our directors and executive officers;

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recommending the type and amount of compensation to be paid or awarded to members of our Board of Directors, including consulting, retainer, meeting, committee and committee chair fees and stock option grants or awards; and

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reviewing and approving the terms of any employment agreements, severance arrangements, change-of-control protections and any other compensatory arrangements for our executive officers.

Lilian Jiang, Yuan Gong, Jing Cao, and Kunshan Wang are the members of the Compensation Committee. The Compensation Committee operates under a written charter.

Management’s Role in Compensatory Process. Management also plays a role in the compensation-setting process. The most significant aspects of management’s role are:

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evaluating employee performance;

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establishing business performance targets and objectives; and

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recommending salary levels and any equity awards.

The Chief Executive Officer works with the Compensation Committee to provide:

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background information regarding the Company’s strategic objectives;

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his evaluation of the performance of the senior executive officers; and

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compensation recommendations as to senior executive officers (other than himself).

Although our Chief Executive Officer may recommend to the Compensation Committee the compensation package and awards to our executive officers, the Compensation Committee approves the compensation packages.

Role of Compensation Consultants. The Compensation Committee may retain a compensation consultant from time to time to assist the Compensation Committee in researching and evaluating executive officer and director compensation and compensation programs. The Company did not engage any independent compensation consultants in 2010.

Delegation of Authority. The Compensation Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Compensation Committee in order to determine or administer the compensation to the Company’s executive officers and/or directors.

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Board of Directors’ Role in Risk Oversight

The Board is charged with oversight of and safeguarding the assets of the Company and with maintaining appropriate financial and other controls, and conducting the Company’s business wisely and in compliance with applicable laws and regulations and proper governance. Included in these responsibilities is the Board of Directors’ oversight of the various risks facing the Company. In this regard, the Board seeks to understand and oversee critical business risks. The Board does not view risk in isolation. Risks are considered in virtually every business decision and as part of the Company’s business strategy. The Board recognizes that it is neither possible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for the Company to be competitive on a global basis and to achieve its objectives.

While the Board oversees risk management, the Company’s management is charged with managing risk. The Company has robust internal processes and a strong internal control environment to identify and manage risks and to communicate with the Board. The Board monitors and evaluates the effectiveness of the internal controls and the risk management program at least annually. Management communicates routinely with the Board and individual Directors on the significant risks identified and how they are being managed. Directors are free to, and indeed often do, communicate directly with senior management. The Board implements its risk oversight function as a whole but intends to establish and delegate this risk oversight function to various committees in the future.

Director Qualifications

Directors are responsible for overseeing the Company’s business consistent with their fiduciary duty to shareholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience. The Board believes that there are general requirements for service on the Company’s Board of Directors that are applicable to all Directors and that there are other skills and experience that should be represented on the Board as a whole but not necessarily by each Director. The Board considers the qualifications of Directors and Director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.

Qualifications for All Directors

In its assessment of each potential candidate, the Board considers the nominee’s judgment, integrity, experience, independence, understanding of the Company’s business or other related industries and such other factors the Board determines are pertinent in light of the current needs of the Board. The Board also takes into account the ability of a Director to devote the time and effort necessary to fulfill his or her responsibilities to the Company.

The Board requires that each Director be a recognized person of high integrity with a proven record of success in his or her field. Each Director must demonstrate respect for and an ability and willingness to learn corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to ethical business practices. In addition to the qualifications required of all Directors, the Board assesses intangible qualities including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.

The Board does not have a specific diversity policy, but considers diversity of professional and academic experiences in evaluating candidates for Board membership. Diversity is important because a variety of points of view contribute to a more effective decision-making process.

Code of Ethics

We adopted a Code of Ethics pursuant to Section 406 of Sarbanes-Oxley in April 2010. Our Code of Ethics includes our Standards of Business Conduct and Finance Code of Professional Conduct which apply to our officers, directors and employees. The Finance Code of Professional Conduct applies to all employees and not only employees in the finance department. The Standard of Business Conduct provides guidelines to employees to report any suspected or known violations of the Finance Code of Professional Conduct, the Standards of Business Conduct, or our other policies.

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All employees will:

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Act with honesty and integrity, avoiding actual or apparent conflicts of interest in their personal and professional relationships.

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Provide shareholders with information that is accurate, complete, objective, fair, relevant, timely, and understandable, including information in our filings with and other submissions to the SEC and other public bodies.

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Comply with rules and regulations of federal, state, provincial and local governments, and of other appropriate private and public regulatory agencies.

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Act in good faith, responsibly, with due care, competence, and diligence, without misrepresenting material facts or allowing one’s independent judgment to be subordinated.

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Respect the confidentiality of information acquired in the course of one’s work except when authorized or otherwise legally obligated to disclose.

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Not use confidential information acquired in the course of one’s work for personal advantage.

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Share knowledge and maintain professional skills importance and relevancy to shareholders’ needs.

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Proactively promote and be an example of ethical behavior as a responsible individual among peers, in the working environment and the community.

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Exercise responsible use, control, and stewardship over all Zheng Hui’s assets and resources that are employed by or entrusted to us.

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Not coerce, manipulate, mislead, or unduly influence any authorized audit or interfere with any auditor engaged in the performance of an internal or independent audit of Zheng Hui’s system of internal controls, financial statements, or accounting books and records.

This Finance Code of Professional Conduct embodies principles which we are expected to adhere to and advocate. These principles of ethical business conduct encompass rules regarding both individual and peer responsibilities, as well as responsibilities to our shareholders and the public. The CEO, CFO, and all employees are expected to abide by this Code. Any violations of our Finance Code of Professional Conduct may result in disciplinary action, up to and including termination of employment.

We are required to disclose any amendment to, or waiver from, a provision of our Code of Ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions. We intend to use our website as a method of disseminating this disclosure, as permitted by applicable SEC rules. Any such disclosure will be posted to our website within four business days following the date of any such amendment to, or waiver from, a provision of our Code of Ethics.

Compensation Committee Interlocks and Insider Participation

None of the Company’s executive officers have served as a member of the compensation committee (or other board committee performing similar functions) of any entity of which a member of the Company’s Compensation Committee was an executive officer, nor did any of the Company’s executive officers serve as a member of the compensation committee (or other board committee performing similar functions or, in the absence of such a committee, the entire Board of Directors) of any entity for which any of the Company’s Directors served as an executive officer.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Background and Compensation Philosophy

Our Compensation Committee consists of Lilian Jiang, Yuan Gong, Jing Cao and Kunshan Wang, all independent directors. The Compensation Committee and, prior to its establishment in May 2010, our Board of Directors determined the compensation to be paid to our executive officers based on our financial and operating performance and prospects and contributions made by the officers’ to our success. Each of the named officers will be measured by a series of performance criteria by the Board of Directors, or the compensation committee, on a yearly basis. Such criteria will be set forth based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance.

Our compensation program for our executive officers and all other employees is designed such that it will not incentivize unnecessary risk-taking. We provide our executive officers with a base salary and, at the discretion of the Compensation Committee, may provide bonuses. Our policy of compensating our executives with a cash salary has served us well. Because of our history of attracting and retaining executive talent, we do not believe it is necessary at this time to provide our executives equity incentives, or other benefits in order for us to continue to be successful.

Our Board of Directors and Compensation Committee have not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. The Compensation Committee makes an independent evaluation of appropriate compensation to key employees, with input from management. The Compensation Committee has oversight of executive compensation plans, policies and programs.

Our compensation program for our executive officers and all other employees is designed such that it will not incentivize unnecessary risk-taking. The base salary component of our compensation program is a fixed amount and does not depend on performance. Our cash incentive program takes into account multiple metrics, thus diversifying the risk associated with any single performance metric, and we believe it does not incentivize our executive officers to focus exclusively on short-term outcomes. If we provide equity awards, we intend that they will be subject to vesting to align the long-term interests of our executive officers with those of our stockholders.

Compensation Committee Process

Tax Implications of Executive Compensation

Under Section 162(m) of the Code, annual compensation in excess of $1,000,000 paid to certain executive officers of a publicly held corporation will not be deductible, unless such compensation is based upon performance objectives meeting certain regulatory criteria or is otherwise excluded from the limitation.

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Summary Compensation Table

The following table sets forth the compensation paid or accrued by us to our Chief Executive Officer, President and Chief Financial Officer and each of our other officers. None of their compensation exceeded $100,000 for each of the Company’s last three completed fiscal years.



Name and Principal Position	Fiscal Year		Salary ($)⁽¹⁾		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)⁽²⁾
Junfeng Shan, President and CEO		2010		26,549		—		—		—		—		—		—		26,549
		2009		5,933		—		—		—		—		—		—		5,933
		2008		4,097		—		—		—		—		—		—		4,097
Xiaofang Xue, CFO		2010		17,669		—		—		—		—		—		—		17,669
		2009		1,751		—		—		—		—		—		—		1,751
		2008		—		—		—		—		—		—		—		—
Shidian Shan, VP		2010		17,669		—		—		—		—		—		—		17,669
		2009		4,187		—		—		—		—		—		—		4,187
		2008		3,618		—		—		—		—		—		—		3,618
Yongping Shan, VP		2010		17,669		—		—		—		—		—		—		17,669
		2009		5,589		—		—		—		—		—		—		5,589
		2008		3,722		—		—		—		—		—		—		3,722
Yunqing Wu, VP		2010		17,669		—		—		—		—		—		—		17,669
		2009		1,391		—		—		—		—		—		—		1,391
		2008		—		—		—		—		—		—		—		—

(1)

The salary presented was converted into U.S. dollars from RMB at a conversion rate of 6.83 for the years ended December 31, 2008 and 2009, and at a conversion rate of 6.78 for the year ended December 31, 2010. Our named executive officers reside in China and therefore may receive their at a conversion annual compensation in RMB.

(2)

Reflects total compensation converted into U.S. Dollars, provided by the PRC operating companies for the years ended December 31, 2010, 2009 and 2008, respectively.

Grants of Plan-Based Awards

None.

Outstanding Equity Awards at Fiscal Year-End

None.

Option Exercise and Stock Vested

None.

Pension Benefits

We do not sponsor any qualified or non-qualified defined benefit plans.

Nonqualified Deferred Compensation

We do not maintain any non-qualified defined contribution or deferred compensation plans.

Director Compensation

None of the directors received compensation for their respective services rendered to the Company for the year ended December 31, 2010.

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Equity Compensation Plan Information

We have not established equity based incentive program and have not granted stock based awards as a component of compensation. In the future, we may adopt and establish an equity incentive plan pursuant to which awards may be granted if our Compensation Committee determines that it is in the best interests of our stockholders and the Company to do so.

Outstanding Equity Awards at Fiscal Year End

For the year ended December 31, 2010, no director or executive officer has received compensation from us pursuant to any compensatory or benefit plan. There is no plan or understanding, express or implied, to pay any compensation to any director or executive officer pursuant to any compensatory or benefit plan, although we anticipate that we will compensate our officers and directors for services to us with stock or options to purchase stock, in lieu of cash.

Executive Employment Agreements and Potential Payments upon Termination or a Change of Control

Employment Agreements

The following employment terms were entered into by the Company and Junfeng Shan, Xiaofang Xue, Shidian Shan, Yunqing Wu and Yongping Shan pursuant to employment agreements dated of May 24, 2010. The terms for the employment agreements are three years until April 30, 2013.

Prior to this offering, Jinzheng was a private limited company organized under the laws of the PRC, and in accordance with PRC regulations, the salary of our executives was determined by our shareholders. Mr. Junfeng Shan, our Chairman and Chief Executive Officer, Ms. Xiaofang Xue, our Chief Financial Officer, and our VPs, Mr. Shidian Shan, Mr. Yunqing Wu, and Mr. Yongping Shan, have executed employment agreements which provide for the following annual salaries:


Name		Annual Salary
Junfeng Shan		RMB 180,000 (approximately $26,549)
Xiaofang Xue		RMB 120,000 (approximately $17,699)
Shidian Shan		RMB 120,000 (approximately $17,699)
Yunqing Wu		RMB 120,000 (approximately $17,699)
Yongping Shan		RMB 120,000 (approximately $17,699)

Other than the salary and necessary social benefits required by the government, which are defined in the employment agreements, we currently do not provide other benefits to the officers at this time. Our executive officers may receive performance bonuses at the discretion of the Compensation Committee. We do not provide retirement benefits (other than a state pension scheme in which all of our employees in China participate).

According to the employment agreements, each of our executive officers has agreed that he or she will not, during the term of his employment, and for a period of one (1) year thereafter the termination of employment, either directly or indirectly, engage in any business, with or for any company, enterprise, institution, organization or other legal entity, which is in competition with the Duck Business. The term “Duck Business” includes duck feeding, duck breeding, duck feed production, duck slaughtering, cold storage, and sale of duck food.

Severance and Change of Control Payments

In the event of termination of employment without cause, employees are entitled to a maximum of one year’s salary pursuant to their employment agreements. The agreements do not provide for any payments in the event of a change of control.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of March 21, 2011 the number of shares of our common stock beneficially owned by (i) each person who is known by us to be the beneficial owner of more than five percent of the Company’s common stock; (ii) each director; (iii) each of the named executive officers in the Summary Compensation Table; and (iv) all directors and executive officers as a group. As of March 21, 2011, we had 2,030,457 shares of common stock issued and outstanding.

Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Unless otherwise indicated, the stockholders listed in the table have sole voting and investment power with respect to the shares indicated. Unless otherwise noted, the principal address of each of the stockholders, directors and officers listed below is c/o Daokou Industry Park, Yingli Town, Shouguang, Shandong, China, 262717.

All share ownership figures include shares of our common stock issuable upon securities convertible or exchangeable into shares of our common stock within sixty (60) days of March 21, 2011, which are deemed outstanding and beneficially owned by such person for purposes of computing his or her percentage ownership, but not for purposes of computing the percentage ownership of any other person.


Name of Beneficial Owner	Number of Shares Beneficially Owned		Percentage of Class Owned (%)
Officers and Directors
Junfeng Shan⁽¹⁾		1,797,000		88.5	%
Xiaofang Xue		0		*
Shidian Shan		0		*
Yunqing Wu		0		*
Yongping Shan		0		*
Lilian Jiang		0		*
Yuan Gong		0		*
Jing Cao		0		*
Kunshan Wang		0		*
All executive officers and directors as a group (9 persons)		1,797,000		88.5	%
5% Securities Holders
Zheng Hui Holding Limited⁽¹⁾ Daokou Industry Park, Yingli Town Shouguang, Shandong P.R. China 262717		1,797,000		88.5	%

(1)

Mr. Shan is the sole shareholder of Zheng Hui Holding Limited, the record owner of the shares.

Indicates less than 1%.

Changes of Control

There are currently no arrangements which could result in a change in control.

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During the year ended December 31, 2010, Mr. Junfeng Shan, our Chairman and Chief Executive Officer, paid $341,774 on behalf of the Company for professional services and expenses relating to this offering, including auditing and legal services. This loan from Mr. Junfeng Shan is interest free and has no fixed term of repayment. As of December 31, 2010, $65,468 was outstanding.

Shouguang Jintai Construction Co., Ltd. (“Jintai”) is a related party to the Company. Mr. Junfeng Shan owns a majority of the capital stock of Jintai. We had an outstanding loan of $469,825 and $452,907 to Jintai as of December 31, 2010 and December 31, 2009, respectively. The loan is interest free and has no fixed term of repayment.

During 2008, the Company signed two construction contracts totaling $291,792 (RMB 2,000,000) with Jintai for an animal feed storage facility improvement and construction of a marsh gas facility. As of December 31, 2008, the Company prepaid $237,810 (RMB 1,630,000) on these contracts. These improvements and construction of facilities were completed and in use in December 2009 and the amount of $29,179 (RMB 200,000) was paid to Jintai in 2009.

The Company transferred the lease for a salt field to Jintai in 2007 for a consideration of $640,435 which was the prepayment made to the lessee by us in prior periods. As of December 31, 2010, Jintai has paid approximately $582,000 (RMB4,000,000). It is expected to pay the rest amount in 2011.

On March 25, 2010, Beijing CMJM, our wholly-owned subsidiary, entered into the VIE Agreements with Jinzheng and Jinzheng Stockholders, which agreements include the Exclusive Technical Consulting Service Agreement, the Operating Agreement, the Equity Interest Pledge Agreement, the Exclusive Equity Interest Purchase Agreement and the Power of Attorney. Pursuant to the VIE Agreements, Beijing CMJM obtained the ability to direct the operations of Jinzheng and to receive a majority of the residual returns. Jinzheng is affiliated with us. Mr. Junfeng Shan, our chairman and chief executive officer and controlling shareholder, directly owns 89.85% of the capital stock of Jinzheng. With the effectiveness of the VIE Agreements, for the period from March 25 to December 31, 2010, the approximate dollar value of the total amount involved in the transaction was $4.4 million, and, based solely on his ownership interest in Jinzheng, Mr. Shan’s interest in the transaction was approximate $3.9 million.

All ongoing and future transactions between us and any of our officers and directors and their respective affiliates, including loans by our officers and directors, will be on terms believed by us to be no less favorable than are available from unaffiliated third parties. Such transactions or loans, including any forgiveness of loans, will require prior approval by the Nominating and Corporate Governance Committee (whose members are “independent” directors) and by a majority of our disinterested “independent” directors (to the extent we have any) or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested (“independent”) directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. We will not enter into a business combination or invest alongside any of our directors, officers, any affiliate of ours or of any of our directors or officers or a portfolio company of any affiliate of our directors or officers.

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DESCRIPTION OF CAPITAL STOCK

General

Our authorized capital stock consists of 200,000,000 shares, par value $0.001 per share, consisting of 180,000,000 shares of common stock and 20,000,000 shares of preferred stock.

Common Stock

As of March 21, 2011, we had 2,030,457 shares of common stock issued and outstanding.

Dividend Rights

The holders of outstanding common stock are entitled to receive dividends out of funds legally available at the times and in the amounts that the Board of Directors may determine.

Voting Rights

Each holder of common stock is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for in our certificate of incorporation, as amended and restated. Any action other than the election of directors shall be authorized by a majority of the votes cast, except where the Nevada Corporation Law prescribes a different percentage of votes and/or exercise of voting power.

No Preemptive or Similar Rights

Holders of our common stock do not have preemptive rights, and shares of our common stock are not convertible or redeemable.

Right to Receive Liquidation Distributions

Upon our dissolution, liquidation or winding-up, our assets legally available for distribution to our stockholders are distributable ratably among the holders of common stock.

Preferred Stock

No shares of preferred stock are outstanding. The Board of Directors has discretion to issue one or more series of preferred stock with such designations, rights and preferences as they may determine, in their sole discretion.

Anti-Takeover Provisions

Our certificate of incorporation and bylaws contain certain provisions that may have the effect of entrenching our existing board members, delaying, deferring or preventing a future takeover or change in control of the company unless such takeover or change in control is approved by the Board of Directors. These provisions include:

•

Blank Check Preferred Stock. Our certificate of incorporation provides that our Board of Directors may issue, without further stockholder approval, up to 20,000,000 shares of preferred stock in one or more series with such rights, preferences and designations as determined by the Board of Directors.

•

Special Meetings of Shareholders. Our bylaws provides that, unless otherwise prescribed by the statute, special meetings of the stockholders can only be called by the Chairman of the Board, our Chief Executive Officer or President or by a majority of the directors.

•

Contracts and Transactions with Interested Directors and Officers. We may enter into a contract or a transaction with our directors or officers or any other corporation, firm, association, or entity in which one or more of our directors or officers are financially interested if: (a) the fact of such relationship or interest is disclosed or known to our Board of Directors or committee which authorizes, approves, or ratifies the contract or transaction in good faith by vote or consent sufficient for the purpose without counting the votes or consents of such interested director; (b) the fact of such relationship or interest is disclosed or known to the stockholders entitled to vote and they authorize, approve, or ratify such contract or transaction by vote or written consent; (c) the fact of

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the common directorship, office or financial interest is not disclosed or known to the director or officer at the time the transaction is brought before our Board of Directors for action; or (d) the contract or transaction is fair and reasonable to the Company at the time it is approved. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or committee thereof which authorizes, approves, or ratifies such contract or transaction.

•

Amendment of Bylaws. Our bylaws may be amended by our Board of Directors without shareholder approval.

•

Authorized but Unissued Shares. Our Board of Directors may cause us to issue our authorized but unissued shares of common stock in the future without stockholders’ approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise.

Transfer Agent and Registrar

The Transfer Agent and Registrar for shares of our common stock is Continental Stock Transfer & Trust Company. Our Transfer Agent and Registrar’s telephone number is (212) 509-4000, and its address is 17 Battery Place, 8^th Floor, New York, NY 10004.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock. When a public market develops, future sales of substantial amounts of our common stock in the public market could adversely affect market prices. After the date of this prospectus, we will have 3,795,163 shares of common stock issued and outstanding.


Approximate Number of Shares Eligible for Future Sale⁽¹⁾		Date
1,764,706		After the date of this prospectus, freely tradable shares sold in this offering.

(1)

Assumes the underwriters’ over-allotment to purchase additional shares is not exercised.

Rule 144

Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 promulgated under the Securities Act. In general, under Rule 144 as currently in effect, a person, or persons whose shares are aggregated, who has beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner, except if the prior owner was one of our affiliates, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

•

1% of the number of shares of our common stock then outstanding (which will equal approximately shares immediately after this offering); or

•

the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale, assuming that our common stock is trading at such time.

Sales by a person deemed to be our affiliate under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

In general, Rule 701 of the Securities Act, as currently in effect, provides that any of our directors, executive officers, employees, consultants or advisors who purchased shares of our common stock in connection with a compensatory stock or option plan or other written agreement relating to compensation is eligible to resell those shares 90 days after we became a reporting company under the Exchange Act in reliance on Rule 144, but without compliance with some of the restrictions provided in Rule 144, including the holding period requirements. However, all Rule 701 shares are subject to lock-up agreements as described below and under “Underwriting” included elsewhere in this prospectus and will become eligible for sale upon the expiration of the restrictions set forth in those agreements.

Lock-Up Agreements

All of our directors and officers and one 5% stockholder, Zheng Hui Holding Limited, beneficially owning an aggregate of 1,797,000 shares of common stock, have signed lock-up agreements under which they have agreed not to sell, transfer or dispose of, directly or indirectly, any shares of our common stock or any securities into or exercisable or exchangeable for shares of our common stock without the prior written consent of the underwriter for a period of 12 months, subject to a possible extension under certain circumstances, after the date of this prospectus. In addition, each of the other shareholders of the Company has agreed to a similar restriction for a period of six months. These agreements are described below under “Underwriting.”

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TAXATION

The following sets forth the material PRC and U.S. federal income tax consequences of an investment in our common shares. It is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in our common share, such as the tax consequences under state, local and other tax laws.

People’s Republic of China Taxation

In 2007, the PRC National People’s Congress enacted the new Enterprise Income Tax Law, which became effective on January 1, 2008. The new Enterprise Income Tax Law imposes a single uniform income tax rate of 25% on all Chinese enterprises, including foreign-invested enterprises, and levies a withholding tax rate of 10% on dividends payable by Chinese subsidiaries to their foreign shareholders unless any such foreign shareholders’ jurisdiction of incorporation has a tax treaty with China that provides for a different withholding agreement. Under the new Enterprise Income Tax Law, enterprises established outside China but deemed to have a “de facto management body” within the country may be considered “resident enterprises” for Chinese tax purposes and, therefore, may be subject to an enterprise income tax rate of 25% on their worldwide income. Pursuant to the implementation rules of the new Enterprise Income Tax Law, a “de facto management body” is defined as a body that has material and overall management control over the business, personnel, accounts and properties of the enterprise. Although substantially all members of our management are located in China, it is unclear whether Chinese tax authorities would require (or permit) us to be treated as PRC resident enterprises. If we are deemed a Chinese tax resident enterprise, we may be subject to an enterprise income tax rate of 25% on our worldwide income, excluding dividends received directly from another Chinese tax resident. As a result of such changes, our historical tax rates will not be indicative of our tax rates for future periods and the value of our common shares may be adversely affected. See “Risk Factors — Risks Associated With Doing Business in China — The newly enacted PRC tax law affects tax exemptions on dividends received by us and increases the enterprise income tax rate applicable to us.

United States Federal Income Tax Consequences

The following is a discussion of certain material U.S. federal income tax consequences of purchasing, owning and disposing of our common shares. This discussion does not purport to be a comprehensive description of all of the U.S. tax considerations that may be relevant to a particular person’s decision to acquire our common shares (including any state, local, other U.S. or non-U.S. tax consequences of the ownership of our common shares).

This discussion applies only to those holders that hold our common shares as capital assets for U.S. tax purposes (generally, for investment). This section does not apply to holders that may be subject to special tax rules, including but not limited to:

•

dealers in securities or currencies;

•

banks, insurance companies or certain financial institutions;

•

tax-exempt organizations;

•

regulated investment companies or real estate investment trusts;

•

controlled foreign corporations;

•

passive foreign investment companies;

•

persons who hold or receive our common shares as compensation; or

•

holders that hold our common shares as part of a straddle, hedging or conversion transaction.

This section is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”, its legislative history, existing and proposed U.S. Treasury Department regulations, published rulings and other administrative guidance of the U.S. Internal Revenue Service (the “IRS”) and court decisions, all as in effect on the date hereof. These laws and other authorities are subject to change or different interpretation by the IRS or a court, possibly on a retroactive basis.

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You are a “U.S. holder” if you are a beneficial owner of our common shares and you are:

•

a citizen or resident of the United States for federal income tax purposes;

•

a corporation, or other entity treated as a domestic corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof, or the District of Columbia;

•

an estate whose income is subject to U.S. federal income tax regardless of its source; or

•

a trust, if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or if the trust has a valid election in effect under applicable U.S. Treasury Department regulations to be treated as a United States person.

You are a “non-U.S. holder” if you are a beneficial owner of our common shares and you are not a U.S. holder or a partnership, or other entity treated as a partnership for U.S. federal income tax purposes.

If a partnership (including for this purpose any entity treated as a partnership for U.S. tax purposes) is a beneficial owner of our common shares, the U.S. tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. A holder of our common shares that is a partnership and partners in such a partnership should consult their own tax advisors about the U.S. federal income tax consequences of holding and disposing of our common shares.

YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR COMMON SHARES IN YOUR PARTICULAR SITUATION.

U.S. Holders

Taxation of Distributions on Our Common Shares

Distributions (if any) made to U.S. holders on our common shares generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent these distributions exceed our current and accumulated earnings and profits, the excess will constitute a return of capital that is applied against and reduces (but not below zero) the U.S. holder’s adjusted tax basis in our common shares, and then will be treated as gain from the sale of our common shares.

Any dividends we pay to a U.S. holder that is treated as a taxable corporation for U.S. federal income tax purposes generally will qualify for the dividends-received deduction if the applicable holding period and other requirements are satisfied. For taxable years beginning on or before December 31, 2010, certain “qualified dividend income” will be taxable to a non-corporate U.S. holder at the special reduced rates normally applicable to capital gains (subject to certain limitations), provided that the U.S. holder receiving the dividend satisfies applicable holding period and other requirements.

Taxation of Sale, Exchange or Other Taxable Disposition of Our Common Shares

In general, a U.S. holder must treat any gain or loss recognized upon a sale, taxable exchange, or other taxable disposition of our common shares as capital gain or loss. Any such capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period for the common shares so disposed of exceeds one year. In general, a U.S. holder will recognize gain or loss in an amount equal to the difference between (1) the sum of the amount of cash and the fair market value of any property received in such disposition and (2) the U.S. holder’s adjusted tax basis in the common shares so disposed of. Long-term capital gain recognized by a non-corporate U.S. holder generally will be subject to a maximum tax rate of 15 percent for tax years beginning on or before December 31, 2010, after which the maximum long-term capital gains tax rate is scheduled to increase to 20 percent. The deduction of capital losses is subject to various limitations.

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Non-U.S. Holders

Taxation of Distributions on Our Common Shares

Distributions (if any) made to non-U.S. holders on our common shares will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent these distributions exceed our current or accumulated earnings and profits, the excess will constitute a return of capital that is applied against, and will reduce, a non-U.S. holder’s basis in our common shares, but not below zero, and then will be treated as gain from the sale of our common shares.

Dividends paid to a non-U.S. holder on our common shares generally will be subject to withholding of U.S. federal income tax at a 30% rate, or any lower rate that may be specified by an applicable income tax treaty. To receive a reduced treaty rate, you must complete IRS Form W-8BEN (or substitute form), certify under penalty of perjury that you are eligible for benefits under the applicable treaty, and provide other additional information as required. You must periodically update the information on such forms. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals. In addition, U.S. Treasury Department regulations provide special procedures for payments of dividends through certain intermediaries.

Dividends that (1) are effectively connected with the conduct of a trade or business by a non-U.S. holder within the United States; and (2) if an income tax treaty applies, are attributable to a permanent establishment, or, if the non-U.S. holder is an individual, a fixed base in the United States, as provided in the applicable treaty, are not subject to U.S. federal withholding tax, provided that the non-U.S. holder satisfies certain certification and disclosure requirements, including providing us with a properly executed IRS Form W-8ECI, for effectively connected income, or W-8BEN, for treaty benefits, or such successor form as the IRS designates. In such cases, dividends are subject to U.S. federal income tax on a net income basis at applicable graduated individual or corporate rates. In addition, a “branch profits tax” may be imposed at a 30% rate (or any lower rate that may be specified by an applicable income tax treaty) on dividends received by a foreign corporation that are effectively connected with the conduct of a trade or business in the United States.

If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund together with the required information with the IRS.

Taxation of Sale, Exchange or Other Taxable Disposition of Our Common Shares

A non-U.S. holder generally will not be subject to U.S. federal income or withholding tax with respect to gain recognized on a sale or other disposition of our common shares unless one of the following applies:

•

the gain is effectively connected with your conduct of a trade or business in the United States and, if required by an applicable tax treaty, attributable to a permanent establishment or fixed base you maintain in the United States; in these cases, you will be taxed on the net gain derived from the sale under the regular graduated U.S. federal income tax rates, unless an applicable treaty provides otherwise; if you are a foreign corporation, you will be taxed on your net gain under regular graduated U.S. federal income tax rates and, in addition, you may be subject to a branch profits tax equal to 30% of your effectively connected earnings and profits within the meaning of the Code for the taxable year, as adjusted for specified items, unless you qualify for a lower rate under an applicable income tax treaty and demonstrate that you so qualify; or

•

if you hold our common shares as a capital asset and you are a non-resident alien individual who is present in the United States for 183 or more days in the taxable year of the sale or other disposition, and you meet certain other conditions; in this case, you will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by U.S. capital losses, notwithstanding the fact that you are not considered a resident of the United States.

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Information Reporting and Backup Withholding

Under U.S. Treasury Department regulations, we must report annually to the IRS and to you the gross amount of dividends we paid to you and the tax withheld with respect to such dividends. These reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable income tax treaty. Copies of the information returns reporting such dividends and withholding also may be required to be made available to the tax authorities in the country in which a non-U.S. holder resides under the provisions of an applicable income tax treaty.

Backup withholding, currently imposed at a rate of 28%, may apply to payments of dividends by us. If you are a U.S. holder, backup withholding will apply to you if you fail to provide an accurate taxpayer identification number or certification of exempt status or fail to report all interest and dividends required to be shown on your federal income tax returns. Certain U.S. holders (including, among others, corporations) are not subject to backup withholding.

If you are a non-U.S. holder, and you fail to certify under penalties of perjury and in accordance with applicable U.S. Treasury Department regulations that you are a non-U.S. holder (and we do not have actual knowledge or reason to know that you are a U.S. person as defined under the Code) you may be subject to backup withholding.

The payment of proceeds to you on your sale or other disposition of our common shares by or through a U.S. office of any broker, U.S. or non-U.S., is subject to both backup withholding and information reporting, unless you certify under penalties of perjury that you are a non-U.S. holder (and we do not have actual knowledge or reason to know that you are a U.S. person as defined under the Code), or you otherwise establish an exemption. In general, backup withholding and information reporting will not apply to a payment to you of proceeds on your sale or other disposition of our common shares by or through a non-U.S. office of a non-U.S. broker. If, however, the broker is, for U.S. federal income tax purposes, a U.S. person, a controlled foreign corporation, as defined in the Code, a foreign person that derives 50% or more of its gross income for specified periods from the conduct of a trade or business in the U.S., or a foreign partnership with particular U.S. connections, such payments will be subject to information reporting, but generally not backup withholding, unless:

•

the broker has documentary evidence in its records that you are a non-U.S. holder and other specified conditions are met; or

•

you otherwise establish an exemption.

Any amounts withheld under the backup withholding rules do not constitute a separate U.S. federal income tax. Rather, any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against your U.S. federal income tax liability, if any, if the required information is timely furnished to the IRS.

The foregoing discussion of United States Federal Income Tax Consequences does not address all aspects of U.S. federal income taxes and does not deal with all tax considerations that may be relevant to holders in light of their personal circumstances or particular situations and is not based on an opinion of counsel. Accordingly, you should consult your own tax advisor with respect to the federal, state, local and non-U.S. tax consequences of your ownership and disposition of our common shares in light of your particular tax situation.

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UNDERWRITING

Subject to the terms and conditions in the underwriting agreement, dated , 2011, by and among us and Rodman & Renshaw, LLC and Newbridge Securities Corporation, who are acting as the representatives of the underwriters of this offering, each underwriter named below has severally agreed to purchase from us, on a firm commitment basis, the number of shares of common stock set forth opposite its name below, at the public offering price, less the underwriting discount set forth on the cover page of this prospectus.


Underwriter		Number of Shares
Rodman & Renshaw, LLC
Newbridge Securities Corporation
Total

The underwriters have agreed to purchase all of the shares offered by this prospectus (other than those covered by the over-allotment option described below) if any are purchased. Under the underwriting agreement, if an underwriter defaults in its commitment to purchase shares, the commitments of non-defaulting underwriters may be increased or the underwriting agreement may be terminated, depending on the circumstances. The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares are subject to the passing upon certain legal matters by counsel and certain conditions such as confirmation of the accuracy of representations and warranties by us about our financial condition and operations and other matters.

The shares should be ready for delivery on or about , 2011 against payment in immediately available funds. The underwriters may reject all or part of any order.

Commissions and Discounts

The following table provides information regarding the amount of the discount to be paid to the underwriters by us:


	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to us⁽¹⁾	$	$

(1)

We estimate that the total expense of this offering excluding the underwriters’ discount, will be approximately $500,000.

We have also agreed to pay or reimburse the representatives of the underwriters up to $185,000 for their expenses, including the expenses in connection with the I-Deal and Net Roadshow programs, counsel fees, due diligence expenses and travel and lodging expenses in connection with roadshow events relating to this offering.

Pricing of Securities

The representatives have advised us that the underwriters propose to offer the shares directly to the public at the public offering price that appears on the cover page of this prospectus. In addition, the representatives may offer some of the shares to other securities dealers at such price less a concession of $ per share. The underwriters may also allow, and such dealers may re-allow, a concession not in excess of $ per share to other dealers. After the shares are released for sale to the public, the representatives may change the offering price and other selling terms at various times.

Prior to this offering, there was no public market for our common stock. The public offering price of our common stock was determined by negotiation between us and the underwriters. The principal factors considered in determining the public offering price of the common stock included:

•

the information in this prospectus and otherwise available to the underwriters;

•

the history and the prospects for the industry in which we compete;

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•

the ability of our management;

•

the prospects for our future earnings;

•

the present state of our development and our current financial condition;

•

the general condition of the economy and the securities markets in the United States at the time of this offering;

•

the recent market prices of, and the demand for, publicly-traded securities of generally comparable companies; and

•

other factors as were deemed relevant.

We have applied to have our common stock listed on NASDAQ under the symbol “ZHIC.” We cannot be sure that the public offering price will correspond to the price at which our common stock will trade in the public market following this offering or that an active trading market for our common stock will develop and continue after this offering.

Over-allotment Option

We have granted the underwriters an over-allotment option. This option, which is exercisable for up to 45 days after the date of this prospectus, permits the underwriters to purchase a maximum of 264,706 additional shares of common stock for the purpose of covering over-allotments which may occur during the distribution and sale of the shares of common stock. If the underwriters exercise all or part of this option, they will purchase the shares covered by the option at the public offering price that appears on the cover page of this prospectus, less the underwriting discount. The underwriters have severally agreed that, to the extent the over-allotment option is exercised, they will each purchase a number of additional shares proportionate to the underwriters’ initial amount reflected in the table above.

Underwriters’ Warrants

We have issued to the underwriters share purchase warrants (the “Underwriters’ Warrants”) covering a number of shares of common stock equal to ten percent (10.0%) of the total number of shares of common stock being sold in the offering, including shares of common stock subject to the over-allotment option. The Underwriters’ Warrants are non-exercisable for six (6) months after the effective date of the registration statement relating to this offering and expire five (5) years after such date. The Underwriters’ Warrants are exercisable at a price equal to $ per share (165% of the public offering price) in connection with the offering. The Underwriters’ Warrants shall not be redeemable. The shares of common stock underlying the Underwriters’ Warrants are being registered by us under the Securities Act concurrently with the offering. The Underwriters’ Warrants may not be transferred, assigned or hypothecated for a period of six (6) months following the effective date of the registration statement relating to this offering, except that they may be assigned, in whole or in part, to any successor, officer, or partner of the underwriters (or to officers, or partners of any such successor or member), and to members of the underwriting syndicate or selling group. The Underwriters’ Warrants may be exercised as to all or a lesser number of underlying shares of common stock, provide for cashless exercise and demand registration rights for a period of five (5) years after the effective date of the registration statement relating to this offering at the warrant holders’ expense, and unlimited piggyback registration rights for a period of five (5) years after the effective date of the registration statement relating to this offering at our expense.

Lock-ups

We, our officers, directors and one 5% stockholder, Zheng Hui Holding Limited, have agreed to a 12-month “lock up,” with respect to all of our common stock and any other securities that they beneficially own, including securities that are convertible into our common stock and securities that are exchangeable or exercisable for our common stock. In addition, each of the other shareholders of the Company, including Sino Joint Holding Limited, King Rock Group Limited, Sino Spring Capital Holding Ltd. and Blue Net Group Limited (the “Minority Shareholders”), has agreed to a six-month “lock up,” with respect to all of our common stock and any other securities that they beneficially own, including securities that are convertible into our common stock and securities that are exchangeable or exercisable for our common stock. This means that,

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for a period of 12 months (six months with respect to the Minority Shareholders) following the date of this prospectus (the “Lock-Up Period”), we and such persons may not offer, sell, pledge or otherwise dispose of these securities without the prior written consent of the representatives of the underwriters of this offering. If (i) during the last 17 days of the Lock-Up Period, we issue an earnings release or material news or (ii) before the expiration of the Lock-Up Period, we announce that we will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, the lock-up restrictions will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release unless the representatives waive such extension.

Other Terms

The underwriting agreement provides for indemnification between us and the underwriters against specified liabilities, including liabilities under the Securities Act, and for contribution by us and the underwriters to payments that may be required to be made with respect to those liabilities. We have been advised that, in the opinion of the SEC, indemnification liabilities under the Securities Act is against public policy as expressed in the Securities Act, and is therefore, unenforceable.

Stabilization

Until the distribution of the shares of common stock offered by this prospectus is completed, rules of the SEC may limit the ability of the underwriters to bid for and to purchase our shares of common stock. As an exception to these rules, the underwriters may engage in transactions effected in accordance with Regulation M under the Exchange Act that are intended to stabilize, maintain or otherwise affect the price of our common stock. The underwriters may engage in over-allotment sales, syndicate covering transactions, stabilizing transactions and penalty bids in accordance with Regulation M.

•

Stabilizing transactions permit bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, so long as stabilizing bids do not exceed a specified maximum.

•

Over-allotment involves sales by the underwriters of shares of common stock in excess of the number of shares of common stock the underwriters are obligated to purchase, which creates a short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares of common stock over-allotted by the underwriters is not greater than the number of shares of common stock that they may purchase in the over-allotment option. In a naked short position, the number of shares of common stock involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option or purchasing shares of our common stock in the open market.

These stabilizing transactions, covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market.

Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the prices of our common stock. These transactions may occur on NASDAQ or on any other trading market. If any of these transactions are commenced, they may be discontinued without notice at any time.

A prospectus in electronic format may be made available on a website maintained by the representatives of the underwriters and may also be made available on a website maintained by other underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives of the underwriters to underwriters that may make Internet distributions on the same basis as other allocations. In connection with the offering, the underwriters or syndicate members may distribute prospectuses electronically. No forms of electronic prospectus other than prospectuses that are printable as Adobe® PDF will be used in connection with this offering.

The underwriters have informed us that they do not expect to confirm sales of shares of common stock offered by this prospectus to accounts over which they exercise discretionary authority.

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Sales Outside the United States

No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of the common stock, or the possession, circulation or distribution of this prospectus or any other material relating to us or the common stock in any jurisdiction where action for that purpose is required. Accordingly, the common stock may not be offered or sold, directly or indirectly, and none of this prospectus or any other offering material or advertisements in connection with the common stock may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction.

Each of the underwriters may arrange to sell common stock offered hereby in certain jurisdictions outside the United States, either directly or indirectly or through affiliates, where they are permitted to do so.

Australia

If this document is issued or distributed in Australia, it is issued or distributed to “wholesale clients” only, not to “retail clients.” For the purposes of this paragraph, the terms “wholesale client” and “retail client” have the meanings given in section 761 of the Australian Corporations Act 2001 (Cth). This document is not a disclosure document under the Australian Corporations Act, has not been lodged with the Australian Securities & Investments Commission and does not purport to include the information required of a disclosure document under the Australian Corporations Act. Accordingly, (i) the offer of securities under this document is only made to persons to whom it is lawful to offer such securities under one or more exemptions set out in the Australian Corporations Act, (ii) this document is only made available in Australia to those persons referred to in clause (i) above, and (iii) the offeree must be sent a notice stating in substance that, by accepting this offer, the offeree represents that the offeree is such a person as referred to in clause (i) above, and, unless permitted under the Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the securities sold to the offeree within 12 months after its transfer to the offeree under this document.

China

This prospectus has not been and will not be circulated or distributed in the prc, and common stock may not be offered or sold, and will not be offered or sold to any person for re-offering or resale, directly or indirectly, to any resident of the prc except pursuant to applicable laws and regulations of the PRC.

United Arab Emirates

The offering has not been approved or licensed by the Central Bank of the United Arab Emirates (the “UAE”), Securities and Commodities Authority of the UAE and/or any other relevant licensing authority in the UAE including any licensing authority incorporated under the laws and regulations of any of the free zones established and operating in the territory of the UAE, in particular the Dubai Financial Services Authority (the “DFSA”), a regulatory authority of the Dubai International Financial Centre (the “DIFC”).

The offering does not constitute a public offer of securities in the UAE, DIFC and/or any other free zone in accordance with the Commercial Companies Law, Federal Law No.8 of 1984 (as amended), DFSA Offered Securities Rules and NASDAQ Dubai Listing Rules, accordingly, or otherwise. The securities offered hereby may not be offered to the public in the UAE and/or any of the free zones, including, in particular, the DIFC.

The securities offered hereby may be offered and issued only to a limited number of investors in the UAE or any of its free zones (including, in particular, the DIFC) who qualify as sophisticated investors under the relevant laws and regulations of the UAE or the free zone concerned, including, in particular, the DIFC.

The company represents and warrants that the securities offered hereby will not be offered, sold, transferred or delivered to the public in the UAE or any of its free zones, including, in particular, the DIFC.”

Dubai

The issuer is not licensed by the Dubai Financial Services Authority (“DFSA”) to provide financial services in the Dubai International Financial Centre (“DIFC”). The offering has not been approved or licensed by the Central Bank of the United Arab Emirates (the “UAE”), Securities and Commodities Authority of the UAE and/or any other relevant licensing authority in the UAE including any licensing authority incorporated under the laws and regulations of any of the free zones established and operating in the territory of the UAE, in particular the DFSA, a regulatory of the DIFC.

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Israel

The common stock offered by this prospectus has not been approved or disapproved by the Israeli Securities Authority (the ISA), or ISA, nor has such common stock been registered for sale in Israel. The shares may not be offered or sold, directly or indirectly, to the public in Israel, absent the publication of a prospectus. The ISA has not issued permits, approvals or licenses in connection with the offering or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of the common stock being offered. Any resale, directly or indirectly, to the public of the common stock offered by this prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws and regulations.

Pakistan

The investors / subscribers in Pakistan will be responsible for ensuring their eligibility to invest under the applicable laws of Pakistan and to obtain any regulatory consents if required for such purpose.

Saudi Arabia

No offering of shares is being made in the kingdom of Saudi Arabia, and no agreement relating to the sale of the shares will be concluded in Saudi Arabia. This document is provided at the request of the recipient and is being forwarded to the address specified by the recipient. Neither the agent nor the offering have been licensed by the Saudi’s Securities and Exchange Commission or are otherwise regulated by the laws of the kingdom of Saudi Arabia.

Therefore, no services relating to the offering, including the receipt of applications and/or the allotment of the shares, may be rendered within the kingdom by the agent or persons representing the offering.

United Kingdom

The content of this Memorandum has not been issued or approved by an authorized person within the meaning of the United Kingdom Financial Services and Markets Act 2000 (“FSMA”). Reliance on this Memorandum for the purpose of engaging in any investment activity may expose an Investor to a significant risk of losing all of the property or other assets invested. This Memorandum does not constitute a Prospectus within the meaning of the FSMA and is issued in reliance upon one or more of the exemptions from the need to issue such a prospectus contained in section 86 of the FSMA.

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LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us by McLaughlin & Stern LLP, New York, New York. Certain legal matters as to U.S. federal securities laws in connection with this offering will be passed upon for the underwriters by Pillsbury Winthrop Shaw Pittman LLP, Washington, DC. In addition, certain legal matters relating to PRC law in connection with this offering will be passed upon for us by B&D Law Firm, Beijing and for the underwriters by Team-Run Law Firm. Pillsbury Winthrop Shaw Pittman LLP may rely upon Team-Run Law Firm with respect to matters governed by PRC law.

EXPERTS

Our financial statements as of and for the years ended December 31, 2010 and 2009 included in this prospectus and in the registration statement have been audited by EFP Rotenberg, LLP, an independent registered public accounting firm, as stated in its reports appearing herein. Certain information included in this prospectus and the registration statement under “Industry Overview” has been provided by Zero Power Intelligence Co. Ltd. a consulting firm engaged by the Company.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information in the registration statement and the exhibits of the registration statement. For further information with respect to us and the securities being offered under this prospectus, we refer you to the registration statement, including the exhibits and schedules thereto.

You may read and copy the registration statement of which this prospectus is a part at the SEC’s Public Reference Room, which is located at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of the registration statement by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the SEC’s Public Reference Room. In addition, the SEC maintains an Internet website, which is located at www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. You may access the registration statement of which this prospectus is a part at the SEC’s Internet website. We are subject to the information reporting requirements of the Securities Exchange Act of 1934, and we will file reports, proxy statements and other information with the SEC.

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INDEX TO COMBINED FINANCIAL STATEMENTS


	Page
Financial Statements as of December 31, 2010 and 2009 for Zheng Hui Industry Corporation and Subsidiaries
Report of Independent Registered Public Accounting Firm		F-2
Consolidated and Combined Balance Sheets for Zheng Hui Industry Corporation and Subsidiaries as of December 31, 2010 and 2009 (Audited)		F-3
Consolidated and Combined Statements of Income and Comprehensive Income for Zheng Hui Industry Corporation and Subsidiaries for the years ended December 31, 2010 and 2009 (Audited)		F-4
Consolidated and Combined Statements of Cash Flows for Zheng Hui Industry Corporation and Subsidiaries for the years ended December 31, 2010 and 2009 (Audited)		F-5
Consolidated and Combined Statements of Stockholders’ Equity for Zheng Hui Industry Corporation and Subsidiaries for the years ended December 31, 2010 and 2009 (Audited)		F-6
Notes to Consolidated and Combined Financial Statements		F-7 – F-22

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[GRAPHIC MISSING]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Zheng Hui Industry Corporation and Subsidiaries

We have audited the accompanying consolidated and combined balance sheets of Zheng Hui Industry Corporation and Subsidiaries as of December 31, 2010 and 2009, and the related consolidated and combined statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2010. Zheng Hui Industry Corporation and Subsidiaries’ management is responsible for these consolidated and combined financial statements. Our responsibility is to express an opinion on these consolidated and combined financial statements based on our audits.

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

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

[GRAPHIC MISSING]

EFP Rotenberg, LLP
Rochester, New York
March 11, 2011

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Zheng Hui Industry Corporation

Consolidated and Combined Balance Sheets


	December 31, 2010		December 31, 2009
ASSETS
Current Assets:
Cash and cash equivalents	$	8,267,169	$	2,543,095
Accounts receivable, net		5,464,301		4,394,548
Inventory		810,949		1,438,294
Prepayments		318,842		5,043
Other receivables		628,836		825,842
Due from related parties		528,946		1,094,934
Total Current Assets		16,019,043		10,301,756
Property, Plant and Equipment, net		4,586,775		4,535,026
Land Use Right, net		3,963,620		3,900,579
Deferred tax assets		29,478		32,868
Total Assets	$	24,598,916	$	18,770,229
Current Liabilities:
Short-term loan	$	1,333,637	$	1,901,363
Accounts payable		1,053,278		1,008,627
Advances from customers		304,236		345,196
Tax payable		965,416		985,008
Accrued expenses		123,980		17,537
Salary payable		160,932		122,576
Due to related parties		91,261		24,864
Other current liabilities		361,334		378,641
Total Current Liabilities		4,394,074		4,783,812
Long-term loan		119,102		230,357
Total Liabilities		4,513,176		5,014,169
Stockholders’ Equity:
Preferred stock: $0.001 par value, 20,000,000 shares authorized, zero shares issued and outstanding				—
Common stock: $0.001 par value, 180,000,000 shares authorized, 2,030,457 and 2,000,000 shares issued and outstanding at December 31, 2010 at December 31, 2009, respectively		2,030		2,000
Additional paid in capital		4,574,695		4,194,225
Retained earnings		12,024,562		6,920,959
Statutory reserve		1,811,105		1,615,946
Accumulated other comprehensive income		1,673,348		1,022,930
Total Equity		20,085,740		13,756,060
Non-controlling interest in VIE		—		—
Total Equity		20,085,740		13,756,060
Total Liabilities and Stockholders’ Equity	$	24,598,916	$	18,770,229

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Zheng Hui Industry Corporation

Consolidated and Combined Statements of Operations and Comprehensive Income


For the years ended December 31,	2010			2009
Sales	$	44,404,378		$	36,793,495
Sales tax and surtax		74,900			35,792
Net sales		44,329,478			36,757,703
Cost of sales		35,365,121			29,299,988
Gross profit		8,964,357			7,457,715
Operating expenses:
Selling expenses		263,427			195,572
General and administrative expenses		1,482,052			705,477
Bad debt expense		(20,006	)		17,799
Interest expense		139,410			201,631
Total operating expenses		1,864,883			1,120,479
Income from operations		7,099,474			6,337,236
Other income (expenses):
Other income (expenses)		(3,050	)		23,190
Total other income (expense):		(3,050)			23,190
Net income before provision for income taxes		7,096,424			6,360,426
Provision for income taxes		1,797,662			1,630,076
Net income	$	5,298,762		$	4,730,350
Other comprehensive income:
Foreign currency translation adjustment		650,418			24,921
Comprehensive income	$	5,949,180		$	4,755,271
Less:
Net income attributable to non-controlling interest in VIE		—			814,755
Other comprehensive income attributable to non-controlling interest’s share – foreign currency translation adjustment		—			8,304
Total comprehensive income attributable to non-controlling interest’s share		—			823,059
Net income attributable to stockholders		5,298,762			3,915,595
Other comprehensive income attributable to stockholders – foreign currency translation adjustment		650,418			16,617
Total comprehensive income attributable to stockholders		5,949,180			3,932,212
Basic and diluted earning per common share to stockholders	$	2.62		$	1.96
Basic and diluted weighted average common shares outstanding		2,024,112			2,000,000

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Zheng Hui Industry Corporation

Consolidated and Combined Statements of Cash Flows


For the years ended December 31,	2010			2009
Cash flows from operating activities:
Net income	$	5,298,762		$	4,730,350
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization expenses		524,149			425,594
Bad debt expense		(20,006	)		17,799
Loss on disposal of fixed assets					—
Changes in operating assets and liabilities:
Accounts receivable		(874,556	)		(1,534,426	)
Other receivables		223,261			772,862
Prepayments		(311,091	)		827,333
Inventory		669,418			1,288,781
Deferred tax assets		5,002			(4,450	)
Accounts payable		9,603			(35,151	)
Due to related parties		60,209			—
Advance from customers		(57,997	)		(138,607	)
Tax payable		(38,926	)		180,567
Accrued expenses		104,842			6,979
Salary payable		33,961			(7,234	)
Other current liabilities		(34,183	)		46,595
Net cash provided by operating activities		5,592,448			6,576,992
Cash flows from investing activities:
Acquisition of property, plant and equipments		(329,594	)		(936,249	)
Payment for land use right		—			(3,299,057	)
Net cash used in investing activities		(329,594)			(4,235,306)
Cash flows from financing activities:
Borrowing from related company-net		595,842			146,180
Capital contribution		380,500			2,452
Inception of bank loans		1,203,478			1,900,340
Repayment of bank loans		(1,955,652	)		(3,362,141	)
Dividends distribution		—			(210,499	)
Net cash flows from financing activities		224,168			(1,523,668)
Net changes in cash and cash equivalents		5,487,022			818,018
Effect on change of exchange rate		237,052			4,720
Cash and cash equivalents, beginning		2,543,095			1,720,357
Cash and cash equivalents, ending	$	8,267,169		$	2,543,095
Supplementary cash flow information:
Interest paid	$	135,309		$	204,430
Income tax paid	$	1,915,667		$	1,644,631
Non-cash financing activity resulted from chairman paid IPO related expenses on behalf of the company	$	60,209			—

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Zheng Hui Industry Corporation

Consolidated and Combined Statements of Changes in Stockholders’ Equity



	Common stock				Additional Paid-In Capital USD		Reserve USD		Retained Earnings USD			Accumulated other comprehensive income USD		Shareholders’ equity USD		Non-controlling interest USD			Total equity USD
	Shares		Amount USD		Additional Paid-In Capital USD		Reserve USD		Retained Earnings USD			Accumulated other comprehensive income USD		Shareholders’ equity USD		Non-controlling interest USD			Total equity USD
Balance – December 31, 2008		2,000,000		2,000		3,353,418		938,634		2,106,610			798,407		7,199,069		1,799,268			8,998,337
Capital Contribution		—		—		2,452		—		—			—		2,452		—			2,452
Net income		—		—		—		—		3,915,595			—		3,915,595		814,755			4,730,350
Appropriation to statutory reserve		—		—		—		473,280		(473,280	)		—		—		—			—
Other comprehensive income:		—		—		—		—		—			—		—		—			—
Foreign Currency Translation Adjustments		—		—		—		—		—			16,617		16,617		8,304			24,921
Aquisition of non-controlling interest		—		—		838,355		204,032		1,372,034			207,906		2,622,327		(2,622,327	)		—
Balance – December 31, 2009		2,000,000		2,000		4,194,225		1,615,946		6,920,959			1,022,930		13,756,060		—			13,756,060
Capital Contribution		30,457		30		380,470		—		—			—		380,500		—			380,500
Net income		—		—		—		—		5,298,762			—		5,298,762		—			5,298,762
Appropriation to statutory reserve		—		—		—		195,159		(195,159	)		—		—		—			—
Other comprehensive income:
Foreign Currency Translation Adjustments		—		—		—		—		—			650,418		650,418		—			650,418
Balance – December 31, 2010		2,030,457		2,030		4,574,695		1,811,105		12,024,562			1,673,348		20,085,740		—			20,085,740

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TABLE OF CONTENTS

Zheng Hui Industry Corporation

Notes to Combined Financial Statements

Note 1 — Organization and Basis of Presentation

Zheng Hui Industry Corporation (“Zheng Hui or the Company”) was incorporated under the laws of the State of Oregon, United States on January 22, 2009 as a Corporation. On March 23, 2010, Zheng Hui established a wholly owned subsidiary in Beijing, the Peoples Republic of China (“China”), named Beijing Cheng Mu Jin Ming Technology Service Co., Ltd (“Beijing CMJM”). Other than the equity interest in Beijing CMJM, Zheng Hui does not own any assets or conduct any operations. Beijing CMJM conducts its business through a legal entity located in Shouguang City, Shandong Province, China, named WeiFang Jinzheng Poultry Co., Ltd (“Jinzheng”).

Jinzheng was incorporated on April 22, 2002 by Mr. Junfeng Shan, who held 84% of the equity interest, and four other individuals (“minority shareholders”), Baoying Shan, Yimin Sun, Anjun Zheng, and Yongping Shan, who held the rest 16% of the equity interest. On May 28, 2006, after Mr. Junfeng Shan and the minority shareholders increasing the investment to Jinzheng, Mr. Junfeng Shan held 80% of the equity interest and each of the minority shareholders held 5% of the equity interest, respectively. The non-controlling interests were sold by the minority shareholders directly to the new Zheng Hui shareholder group on December 1, 2009. Baoying Shan sold 5% of the Jinzheng equity interest to Mr. Junfeng Shan; Yimin Sun sold 4.85% of the Jinzheng equity interest to Mr. Junfeng Shan and sold 0.15% of the Jinzheng equity interest to the current shareholder Yufen Zhang; Anjun Zheng sold 2.9% of the Jinzheng equity interest to Yufen Zhang and sold 2.1% of the Jinzheng equity interest to Yan Wang; and Yongping Shan sold 1.45% of the Jinzheng equity interest to Yan Wang and sold 3.55% of Jinzheng equity interest to Qian Li. After the execution of share transfer agreements, Mr. Junfeng Shan held 89.85% of the total equity, and Yufen Zhang, Yan Wang and Qian Li, the three other individuals have obtained 3.05%, 3.55%, and 3.55% of the equity, respectively (these four individuals consists of “Principal shareholders”).

The income attributed to the non-controlling interest was determined as follows:

In 2009 a non-controlling interest existed for 11 months (January 1, 2009 to November 30, 2009). The Company calculated net income and other comprehensive income at November 30, 2009 and 20% of each was attributed to the non-controlling interest and reflected on the December 31, 2009 income statement as such.

Chinese laws and regulations currently do not prohibit or restrict foreign ownership in breeding and food processing businesses. However, Chinese laws and regulations do prevent direct foreign investment in certain industries. On March 25, 2010, to protect Zheng Hui’s shareholders from possible future foreign ownership restrictions, Beijing CMJM, Jinzheng and Principle shareholders entered into a series of agreements, as described below (the Exclusive Technical Consulting Service Agreement, the Operating Agreement, the Equity Interest Pledge Agreement, the Exclusive Equity Interest Purchase Agreement and the Power of Attorney).

Under these agreements Beijing CMJM obtained the ability to direct the operations of Jinzheng and to receive a majority of the residual returns (receive 85% of the expected gains of Jinzheng).Therefore, management determined that Jinzheng became a variable interest entity (“VIE”) under the provisions of Financial Accounting Standards Board (“FASB”) ASC 810-10 and Zheng Hui was determined to be the primary beneficiary of Jinzheng. Accordingly, beginning March 25, 2010, Zheng Hui is able to consolidate the assets, liabilities, results of operations and cash flows of Jinzheng in the financial statements. Because the shareholder group of Zheng Hui and Jinzheng were the same, Zheng Hui and Jinzheng were deemed, until March 25, 2010, to be under the common control.

As the result of the above, the accompanying consolidated and combined financial statements contain:

•

Through January 22, 2009, the assets, liabilities, results of operations and cash flows of Jinzheng;

•

For the period from January 22, 2009 through March 31, 2010, the assets, liabilities, results of operations and cash flows of Zheng Hui combined with Jinzheng.

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TABLE OF CONTENTS

Zheng Hui Industry Corporation

Notes to Combined Financial Statements

Note 1 — Organization and Basis of Presentation – (continued)

The combined financial statements are prepared as if the reorganization structure was completed on January 1, 2008.

Zheng Hui, its subsidiary, Beijing CMJM, and its VIE-Jinzheng (collectively the “Group”) are principally engaged in the poultry breeding and processing, frozen poultry product distribution, and feed production. The Group distributes products nationally in China.

Exclusive Technical Consulting Service Agreement. Pursuant to the Exclusive Technical Consulting Service Agreement between Beijing CMJM and Jinzheng, Beijing CMJM has the exclusive right to provide business consulting and related services provision of advanced management skills to offer a framework for the construction of a new management platform; provision of technology information and materials related to Jinzheng’s business development and operation; training of technical and managerial personnel for Jinzheng and provision of required training documents (the “Services”). Under this agreement, BI CMJM owns the intellectual property rights arising from the performance of the Services, including, but not limited to, copyrights, patent, know-how and commercial secrets, whether developed by Beijing CMJM or Jinzheng. Jinzheng pays 85% of its annual net profit to Beijing CMJM on a semi-annual basis as consulting service fee. The remaining 15% of annual net profits is restricted by the Equity Interest Pledge Agreement, which entitles Beijing CMJM to collect dividends from Jinzheng during the term of the pledge. Because the pledge remains in effect to guarantee payment under the Exclusive Technical Consulting Service Agreement, the Principle shareholders will not have any right to receive any dividends from Jinzheng if they are declared.The consulting service agreement is in effect for a term of 10 years starting from March 25, 2010 unless previously terminated. This agreement may be renewed for one or more 10-year terms upon notice by Beijing CMJM.

Operating Agreement. Pursuant to the Operating Agreement among Beijing CMJM, Jinzheng and the Principle shareholders, Beijing CMJM provides full guarantee for the performance of contracts, agreements or transactions executed by Jinzheng related to Jinzheng’s business. Jinzheng, in return, agrees to pledge the whole receivables and assets to Beijing CMJM. In addition, Jinzheng agrees that without the prior consent of Beijing CMJM, Jinzheng will not engage in any transactions that could materially affect the assets, obligations, rights or the business of Jinzheng, including, without limitation, (a) borrowing money from a third party or assuming any debt, (b) selling to or acquiring from any third party any assets or rights, including without limitation, any intellectual property rights, (c) providing any real guaranty for any third party with its assets or intellectual property rights, (d) assigning to any third party its business agreements. Moreover, Jinzheng agrees to accept the corporate policy advice and guidance provided by Beijing CMJM on Jinzheng’s daily operations, financial management and employment issues. The Principal shareholders shall appoint the candidates recommended by Beijing CMJM to Jinzheng’s board of directors. Beijing CMJM has the right to appoint personnel to high level managerial positions of Jinzheng, including General Manager, Chief Financial Officer and other senior officers. The term of this agreement is 10 years from March 25, 2010 unless previously terminated. The agreement can be renewed for additional 10-year periods at Beijing CMJM’s written request. Beijing CMJM may terminate the agreement at any time upon thirty (30) days written notice to Jinzheng.

Equity Interest Pledge Agreement. Under the Equity Interest Pledge Agreement between the Principal shareholders and Beijing CMJM, the Principal shareholders pledged all of their equity interests in Jinzheng to Beijing CMJM to guarantee Jinzheng’s consulting fees payment to Beijing CMJM. During the Event of Default, Beijing CMJM, as pledgee, will be entitled to certain rights, including but not limited to the right to sell the pledged equity interests. The Principal shareholders agree that without Beijing CMJM’s prior written consent, they will not transfer any equity interest, create or permit to exist any pledge that may damage Beijing CMJM’s rights or interests in the pledged equity interests, or cause Jinzheng’s meeting of stockholders or board of directors to pass any resolutions about the sale, transfer, pledge or other disposal of the lawful right to derive income from any equity interest in Jinzheng or about the permission of the creation of any

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TABLE OF CONTENTS

Zheng Hui Industry Corporation

Notes to Combined Financial Statements

Note 1 — Organization and Basis of Presentation – (continued)

other security interests thereon. The term of this agreement is the same as the longest of the Service Agreements. If the term of any Service Agreement is renewed, the term of this agreement will extend accordingly.

Exclusive Equity Interest Purchase Agreement. Under the Exclusive Equity Interest Purchase Agreement between Jinzheng, the Principal shareholders and Beijing CMJM, the Principal shareholders irrevocably, unconditionally and exclusively granted Beijing CMJM a purchase option (the “Purchase Option”) whereby, to the extent permitted under Chinese law, Beijing CMJM has the right to request the Principal shareholders transfer, to it or its designated entity or person, the total equity interests held by them in the registered capital of Jinzheng, which as a group equals 100% of the outstanding equity of Jinzheng. Beijing CMJM has sole discretion to decide the specific time, method and number of the exercise of the Purchase Option. At the time of each exercise of the Purchase Option by Beijing CMJM, the total consideration to be paid to Principal shareholders shall be determined through negotiation according to the evaluation of the Equity Interest by the relevant qualified institute and it shall be the lowest price permitted under CHINA laws. The term of this agreement is 10 years from March 25, 2010 unless previously terminated. The agreement can be renewed for additional 10-year periods at Beijing CMJM’s written request.

Power of Attorney. Pursuant to the Power of Attorney, each of the Principal shareholders agree to irrevocably entrust Beijing CMJM with his stockholder voting rights and other stockholder rights for representing him to exercise such rights at the stockholders’ meeting of Jinzheng in accordance with applicable laws and its Article of Association, including, but not limited to, the right to sell or transfer all or any of his equity interest in Jinzheng, and appoint and vote for the directors and Chairman as the authorized representative of the Principal shareholders. The term of each Proxy and Voting Agreement is as long as each of the Principal shareholders is a shareholder of Jinzheng from March 25, 2010.

As of May 21, 2010, Zheng Hui Industry Corporation was reincorporated from Oregon to Nevada.

Note 2 — Summary of Significant Accounting Policies

(a)

Basis of Presentation

The consolidated and combined financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The accompanying consolidated and combined financial statements include the consolidated and combined assets, liabilities, revenues, expenses and cash flows of Jinzheng and Zheng Hui as of and for the years ended December 31, 2010 and 2009 (See Note 1). All inter-company transactions and balances are eliminated upon consolidation.

(b)

Cash and Cash Equivalent

Cash and cash equivalents include cash on hand and demand deposits with banks with an original maturity of three months or less. The Group maintains cash with high credit quality financial institutions in the United States and in China.

(c)

Account Receivable

Account Receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad Debts are written off as incurred. The Group monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances.

(d)

Inventory

Inventory consists of breeder ducks, feed, processed poultry, and packaging supplies.

Breeders are stated at the lower of cost or market, less accumulated amortization. The costs associated with breeders are mainly feed cost and labor costs., which are accumulated up to the production stage and amortized over their productive lives which is twelve months using the straight line method.

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TABLE OF CONTENTS

Zheng Hui Industry Corporation

Notes to Combined Financial Statements

Note 2 — Summary of Significant Accounting Policies – (continued)

Other inventory is valued at the lower of cost (using the weighted average method) or net realizable value. Cost includes all costs to acquire and other costs incurred in bringing the inventories to their present location and condition. The Group evaluates the net realizable value of its inventories on a regular basis and records a provision for loss to reduce the computed weighted-average cost. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completing, selling expenses and related taxes.

(e)

Land Use Right

According to the laws of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights would be amortized using the straight-line method over the lease term of 50 years.

Registration No. 333-168073

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

AMENDMENT NO. 8 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

ZHENG HUI INDUSTRY CORPORATION

Daokou Industry Park, Yingli Town Shouguang, Shandong P.R. China, 262717 Telephone: 86-536-5401658

CSC Services of Nevada, Inc. 502 East John Street Carson City, Nevada 89706 Telephone: (888) 690 2882

CALCULATION OF REGISTRATION FEE

ZHENG HUI INDUSTRY CORPORATION

1,764,706 Shares of Common Stock

The date of this prospectus is , 2011

TABLE OF CONTENTS

Dealer Prospectus Delivery Obligation

PROSPECTUS SUMMARY

Overview

Industry Background

Our Competitive Strengths

Our Growth Strategies

Market Opportunity

Our Risks and Challenges

Corporate Information

Our Corporate Structure

The Offering

Summary Financial and Operating Data

RISK FACTORS

Risks Related to Our Business

Industry cyclicality can affect our earnings, especially due to fluctuations in commodity prices of feed ingredients and duck meat.

Outbreaks of avian disease, such as avian influenza, or the perception that outbreaks may occur, can significantly restrict our ability to conduct our operations.

Competition in the duck industry with other duck companies, especially companies with greater resources, may make us unable to compete successfully in this industry, which could adversely affect our business.

We conduct substantially all of our operations through Jinzheng, and our performance will depend upon the performance of Jinzheng.

Due to our growth in recent years, our past results may not be indicative of our future performance so evaluating our business and prospects may be difficult.

Our revenues are all generated in China, and our business will be harmed if demand in China decreases.

Inclement weather, such as excessive heat or storms, could hurt our flocks, which could in turn have a material adverse effect on our results of operations.

We may not be able to effectively control and manage our growth.

Shortages or disruptions in the availability of raw materials could have a material adverse effect on our business.

We depend on the availability of, and good relations with, our contracted farmer family growers.

Increases in raw materials prices may increase credit and default risk with respect to our customers.

If our duck products become contaminated, we may be subject to product liability claims and product recalls.

We are exposed to risks relating to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate.

Since there is no assurance that we will complete the acquisition or construction of a new facility, we may not be able to expand our production capacity as planned and our business and prospects would be adversely affected if we fail to do so.

Our business would be adversely affected if we expand by acquiring other businesses or by building new processing plants, but fail to successfully integrate the acquired business or run a new plant efficiently.

Current and future governmental regulations or changes in the enforcement of existing laws may materially affect our business.

We may be affected by global climate change or by legal, regulatory, or market responses to such change.

Potential environmental liability could have a material adverse effect on our operations and financial condition.

We rely on key personnel in order to grow our business.

We may need additional financing, which may not be available on satisfactory terms or at all.

Risks Related to Our Corporate Structure

Our contractual arrangements with Jinzheng and its shareholders may not be as effective in providing control over these entities as direct ownership.

Our contractual arrangements with Jinzheng may result in adverse tax consequences to us.

The principal shareholder of Jinzheng has potential conflicts of interest with us, which may adversely affect our business.

PRC laws and regulations governing our businesses and the validity of certain of our contractual arrangements are uncertain. If we are found to be in violation of such PRC laws and regulations, our business may be negatively affected.

Risks Associated With Doing Business In China

Our operations and assets in China are subject to significant political and economic uncertainties.

We derive a substantial portion of our sales from China and a slowdown or other adverse developments in the PRC economy may materially and adversely affect our customers, demand for our services and our business.

Currency fluctuations and restrictions on currency exchange may adversely affect our business, including limiting our ability to convert Chinese Renminbi, or RMB, into foreign currencies and, if the RMB were to decline in value, reducing our revenue in U.S. dollar terms.

The application of PRC regulations relating to the overseas listing of PRC domestic companies is uncertain, and we may be subject to penalties for failing to request approval of the PRC authorities prior to listing our shares in the U.S.

Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject our PRC stock incentive plan participants or us to fines and other legal or administrative sanctions.

We may have limited legal recourse under PRC law if disputes arise under our contracts with third parties.

We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our business.

We face uncertainty from the Circular on Strengthening the Administration of Enterprise Income Tax on Non-resident Enterprises’ Share Transfer (“Circular 698”) released in December 2009 by China’s State Administration of Taxation, or the SAT, effective as of January 1, 2008.

Changes in foreign exchange regulations in the PRC may affect our ability to pay future dividends in foreign currency or conduct other foreign exchange business.

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

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

It may be difficult to protect and enforce our intellectual property rights under PRC law.

Under PRC law, we are required to obtain permits and business licenses, and our failure to do so would adversely impact our ability to conduct business in China.

New labor laws in the PRC may adversely affect our results of operations.

Our failure to fully comply with PRC labor laws exposes us to potential liability.

If our land use rights are revoked, we would have no operational capabilities.

Because we may not be able to obtain business insurance in the PRC, we may not be protected from risks that are customarily covered by insurance in the United States.

We are subject to the environmental protection law of China.

Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could adversely affect our operations.

Risks Related to Our Securities and this Offering

No market currently exists for our common stock, and we cannot assure you that an active trading market will develop for our common stock.

The market price for our common stock may be subject to wide fluctuations and our common stock may trade below the initial public offering price.

Restrictions under Nevada law may limit our ability to pay dividends

Chinese restrictions on the dividend distribution and foreign exchange may limit our ability to pay future dividends.

We have considerable discretion in the use of proceeds from this offering and we may use these proceeds in ways with which you may not agree.

You will experience immediate and substantial dilution in the net tangible book value of your investment and may experience further dilution in the future.

We may need additional capital and may sell additional securities or other equity securities or incur indebtedness, which could result in additional dilution to our shareholders or increase our debt service obligations.

Substantial future sales of our common stock in the public market, or the perception that these sales could occur, could cause the price of our securities to decline.

NASDAQ may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 8
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

Daokou Industry Park, Yingli Town
Shouguang, Shandong
P.R. China, 262717
Telephone: 86-536-5401658

CSC Services of Nevada, Inc.
502 East John Street
Carson City, Nevada 89706
Telephone: (888) 690 2882

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS

ZHENG HUI INDUSTRY CORP. S-1/A