~~UNITED~~As filed with the Securities and Exchange Commission on April ~~STATES~~28, 2011

~~SECURITIES AND~~ Registration ~~EXCHANGE~~No. ~~COMMISSION~~333-

~~WASHINGTON~~UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

CHINA KANGTAI CACTUS BIO-TECH INC.(Name of small business issuer in its charter)

(Name of small business issuer in its charter)

Nevada	2834	87-0650263
(State or Jurisdiction of	(Primary Standard Industry	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification No.)

99 Taibei RoadLimin Economic and Technological ~~Road~~Development Zone Harbin, Heilongjiang Province People’s Republic of China 150025 011-86-451-57351189 ext. 126(Address and telephone number of principal executive offices)

~~Limin~~CSC Services of Nevada, Inc. 502 John Street Carson ~~Economic~~City, NV 89706 (702) 882-3072(Name, address and ~~Technological~~telephone number ~~Development~~of ~~Zone~~agent for service)

~~Harbin~~ Copies to: Wayne Chiang, ~~Heilongjiang~~Esq.Chiang ~~Province~~Law Office, P.C. 1700 North 1st Street, Suite 343 San Jose, California 95112 (415) 895--0688 (415) 882-7239 (fax)

People’s Republic of China 150025

011-86-451-57351189 ext. 126

(Address and telephone number of principal executive offices)

CSC Services of Nevada, Inc.

502 John Street

Carson City, NV 89706

(702) 882-3072

(Name, address and telephone number of agent for service)

Copies to:

Mark E. Crone, Esq.

The Crone Law Group

101 Montgomery Street, Suite 1950

San Francisco, California 94104

(415) 955-8900

(415) 955-8910 (fax)

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, as amended (the “Securities Act”), 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. ¨[ ]

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. ¨[ ]

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. ¨[ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ¨[ ]

Indicate by check mark whether 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. (check one):

Large accelerated filer ¨[ ] Accelerated filer ¨[ ] Non-accelerated filer Smaller reporting company [x] (do not check if a smaller reporting company) ¨[ ~~Smaller reporting company x~~]

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered (1)				Proposed maximum offering price per unit			Proposed maximum aggregate offering price		Amount of registration fee(3)
				Proposed			Proposed
Common Stock(4)		1,000,000			$	1.29	(2)	$	1,290,000	$	91.98
				maximum			maximum
Title of each class of	Amount to be			offering price			aggregate		Amount of
securities to be registered	registered (1)(2)			per unit(3)			offering price		registration fee
Common Stock	3,000,000		$	0.42		$	1,260,000 $		146.29

(1)	Represents shares of our common stock being registered for resale that have been issued or will be issued to the selling stockholders named in the registration statement.
(2)	~~Price~~Represents ~~per~~shares ~~share~~we ~~shown~~may isput to Kodiak Capital Group, LLC pursuant to the ~~average~~terms of an Investment Agreement. That Investment Agreement provides that we can put to Kodiak up to $1,500,000 worth of our shares of common stock. The 3,000,000 shares represent our estimate of the ~~high~~maximum ~~and~~number ~~low~~of ~~prices~~shares aswe ~~reported~~may onissue under the ~~OTC~~Investment ~~Bulletin~~Agreement. ~~Board~~The onactual ~~July~~number ~~28,~~of ~~2010~~shares issued may be lower than 3,000,000.
(3)	~~Estimated~~Price per share shown is the average of the high and low prices as reported on the OTC Bulletin Board on April 26, 2011, and is estimated solely for the purposes of computing the registration fee in accordance with Rule 457 of the Securities Act of 1933, as amended.
(4)	Represents shares we may put to Kodiak Capital Group, LLC pursuant to the terms of an Investment Agreement. That Investment Agreement provides that we can put to Kodiak up to $1,000,000 worth of our shares of common stock. The 1,000,000 shares represent our estimate of the maximum number of shares we may issue under the Investment Agreement. The actual number of shares issued may be lower then 1,000,000.

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 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED ~~July~~ ~~30,~~April ~~2010~~28, 2011

PROSPECTUS

CHINA KANGTAI CACTUS BIO-TECH INC.

13,000,000 SHARES OF COMMON STOCK

This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 13,000,000 shares of common stock subject to the terms of an Investment Agreement with Kodiak Capital Group, LLC, a Delaware limited liability company (“Kodiak”) pursuant to which we have the right to “put” to Kodiak (the “Put”) up to $1.5 million in shares of our common stock (the “Investment Agreement”). All of ~~the~~ the shares, when sold, will be sold by these selling stockholders.

We will not receive any proceeds from the sale of our common stock by the selling stockholders. However, we will receive proceeds from the sale of securities pursuant to our exercise of the Put. We will bear all costs associated with this registration.

Kodiak is an “underwriter” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) in connection with the resale of our common stock under the Investment Agreement. Kodiak will pay us 83 85% of the volume-weighted average price of our common stock during five consecutive days immediately preceding and five consecutive days immediately following the date of our notice to Kodiak of our election to put shares pursuant to the Investment Agreement.

The selling stockholders may sell these shares from time to time in the open market at prevailing prices or in individually negotiated transactions, through agents designated from time to time or through underwriters or dealers. We will not control or determine the price at which the selling stockholders decide to sell their shares. The selling stockholders may be deemed underwriters of the shares of common stock, which they are offering. The selling stockholders will pay any underwriting discounts and commissions in connection with their offering of our shares of common stock.

Our common stock is listed on the Over-The-Counter Bulletin Board under the symbol “CKGT.OB.” The last reported sales price per share of our common stock as reported by the Over-The-Counter Bulletin Board on ~~July~~April 2811, ~~2010~~ 2011, was $10.2553.

Investing in our securities involves a high degree of risk. See “Risk Factors” in this Prospectus beginning on page [4 ] for a discussion of information that should be considered in connection with an investment in our securities.

Kodiak is an underwriter in connection with the resale of our common stock issued under the Investment Agreement. No other underwriter or person has been engaged to facilitate the sale of shares of common stock in this offering. None of the proceeds from the sale of stock by the selling stockholders will be placed in escrow, trust or any similar account.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is _________, 2010.

TABLE OF CONTENTS

	PAGE NO.
PROSPECTUS SUMMARY	1
ABOUT THIS OFFERING	32
RISK FACTORS	4
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS	1413
USE OF PROCEEDS	1413
SELLING STOCKHOLDERS	1413
PLAN OF DISTRIBUTION	1514
DESCRIPTION OF SECURITIES	1615
INTERESTS OF NAMED EXPERTS AND COUNSEL	1917
DESCRIPTION OF BUSINESS	1917
MARKET FOR COMMON EQUITY AND RELATED STOCHOLDER MATTERS	2724
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	2825
DIRECTORS AND EXECUTIVE OFFICERS	3730
EXECUTIVE COMPENSATION	4032
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND CORPORATE GOVERNANCE	4133
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	4134
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES	4234
LEGAL MATTERS	4235
EXPERTS	4235
WHERE YOU CAN FIND MORE INFORMATION	4235
INDEX TO FINANCIAL STATEMENTS	4336

PROSPECTUS SUMMARY

The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms “China Kangtai,” “CKGT,” the “Company,” “we,” “us,” and “our” refer to China Kangtai Cactus Bio-Tech Inc., and all of its subsidiaries and affiliated companies.

OUR COMPANY

The Company is principally engaged in the production, ~~research and development~~R&D, sales and marketing of products derived from cacti. The Company’s product lines include cactus nutraceuticals, cactus nutritional food and drinks, as well as cactus raw and intermediate materials.

The Company has over 387 acres of cactus-farming bases in the Guangdong and Heilongjiang Provinces of China. The Company predominantly grows three species of cacti which are Mexican Pyramid, Mexican Milpa-Alta and Mexican Queen. Mexican Pyramid and Queen cacti are used for cactus fruit drinks and nutraceutical products; Mexican Milpa-Alta is mainly used for cactus nutritional food products. Most of the cactus fruits are processed into cactus fruit juice, which is the raw material for cactus nutritional drinks. Most of the harvested edible cacti are processed into dry powders, which are raw materials for ~~cactus~~ cactus nutraceuticals. The Company’s annual production capability of edible cacti in 2010 ~~2009~~ is 1911,~~184~~976 tons.

The Company engages with, by co-operative production agreements, local pharmaceutical, food and beverage manufacturers to produce its products. This strategy allows the Company to fill the orders quickly with short ~~production~~ production runs and to reduce the requirements in fixed assets investment. The ~~Company~~ Company currently has entered into co-production agreements with five processors in in China. They are Harbin Bin County Hualan Dairy Factory, Harbin Ice Lantern Noodle Factory, Tsingtao Brewry (Harbin) Inc., Harbin Diwang Pharmacy Co., Ltd. (a GMP certified processor), and Mudanjiang Kangwei Health Food Company, Ltd. ~~and~~ ~~Harbin Meijia Bio-Tech Co., Ltd.~~ Pursuant to these contracts, the Company provides raw materials, quality control guidelines and technical support while the processors provide other materials, processing facilities and labor to manufacture products for the Company. These processors are required to follow strictly the Company’s guidelines and instructions for production. The Company inspects all final products. The Company currently has long term agreements with all five processors which may be renewed at expiration in 2012. GMP or Good Manufacturing Practice certifications are awarded by the State Food and Drug Administration of China to processors which meet the safety and quality assurance standards set by the State Food and Drug Administration of China.

~~The Company~~GMP ~~has~~or ~~also~~Good ~~established~~Manufacturing ~~its~~Practice ~~own~~certifications ~~cactus~~are ~~beverage and fruit wine production~~awarded ~~facilities.~~by ~~The~~the ~~Company’s~~State ~~cactus~~Food ~~beverage~~and ~~product~~Drug ~~category~~Administration ~~includes~~of ~~cactus~~China ~~beer, cactus~~to ~~fruit~~processors ~~wine~~which ~~(including~~meet the safety ~~brand~~and ~~name~~quality ofassurance ~~Overlord~~standards ~~Scourge~~set ~~Flower~~by ~~Imperial Wine),~~the ~~cactus~~State ~~palm~~Food ~~juices~~ and ~~cactus~~Drug Administration ~~fruit~~of ~~drinks,~~China.

~~The Company~~In ~~sells~~October ~~its~~2007, products through a large network of distributors throughout China consisting of 17 general distributors which in turn manage over 200 city level distributing agents. This network of distributors accounts for about 76% of the ~~total sales by the~~ Company. ~~The Company began using this distribution model in late 2006, which~~ has ~~resulted~~signed in a ~~reduction~~new inagreement ~~sales cost and allowed~~with ~~the~~Harbin ~~Company~~Meijia toBio-Tech ~~penetrate the regional markets in China rapidly~~Co. ~~Currently~~, the Company sells its products through provincial and municipal distributors in various regions of China, including, Heilongjiang, Beijing, Guangzhou, Tianjin, Shenzhen, Jilin, Hebei, Liaoning, Shanxi, Hunan, Gansu, Shangdong, Suzhou, Hangzhou, Fujian and HubeiLtd.

~~Some~~All of the above co-operative production agreements have been ~~our~~renewed ~~regional~~during ~~distributors~~January ~~are:~~and March of 2008.

~~Harbin~~The Company has also established its own cactus beverage and ~~Huadingwei~~fruit ~~Trading~~wine production facilities. The Company’s cactus beverage product category includes cactus beer, ~~Ltd~~cactus fruit wine (including the brand name of Overlord Scourge Flower Imperial Wine), cactus palm juices and cactus fruit drinks.

~~Hunan~~The Company has its own R&D facility, the Heilongjiang ~~Green~~Sino-Mexico ~~food~~Cactus ~~Distribution~~Development ~~Company~~and Utilization Institute, ~~Ltd~~which is certified by Heilongjiang Science & Technology Committee. The Institute has independently developed many patented cactus-based nutraceuticals and nutritional food and drink product formulas and production processes.

~~Jilin~~In order to quickly penetrate the markets in China, enhance the ~~Yanji~~efficiency ~~Economic~~of distributions, lower sales costs and ~~Trading~~administrative overheads, starting August 2006, the Company has reformed its sales and distribution models and gradually disposed its own domestic distribution network of approximately 200 self-owned, ~~Ltd~~franchised chain and Kangtai branded stores in Harbin, Beijing, Guangzhou and other cities in China. The Company has adopted the strategies of distributions and sales of its products primarily through various types and levels of provincial and municipal distributors and agents in Dalian, Heilongjiang, Harbin, Beijing, Guangzhou, Tianjin, Shenzhen, Jilin, Hebei, Liaoning, Shanxi, Hunan, Gansu and Shandong in China. The Company’s major revenue breakdown by region in China for the 2010 fiscal year is as follows:

Qindao Furui Economic and Trading Company, Ltd.

Fujian Tianyi Economic and Trading Company, Ltd.

Liaoning Shenneng Trading and Developing Company, Ltd.

		Sales( in U.S.	Percentage in
Region		Dollars)	Revenue
Heilongjiang	$	9,866,031	27%
Jilin	$	755,375	2%
Shandong	$	1,291,733	4%
Beijing	$	5,001,193	14%
Guangdong	$	4,724,854	13%
Liaoning	$	1,177,811	3%
Shanxi	$	1,393,739	4%
Hunan	$	1,762,199	5%
Gansu	$	1,493,667	4%
Other	$	8,562,948	24%
Total	$	36,029,550	100%

Suzhou Hongde Trading Company, Ltd.

Lanzhou Xinhui Trading Company, Ltd.

Hangzhou Hesheng Economic and Trading Company, Ltd.

In addition to the network of regional distributors, the Company also uses other third party distributors who buy and resell our products to supermarkets, food and nutrition stores, department store counters, liquor boutiques, hotels, restaurants, and disco and karaoke bars. There are also consumer groups and individuals, such as schools, factories, community groups and government organizations, who buy our products directly from the Company for their own consumption in large volumes on a regular basis.

Our principal executive offices are located at 99 Taibei Road, Limin Economic and Technological Development Zone, Harbin, Heilongjiang Province, People’s Republic of China, and our telephone number at that address is 86-451-5735-1189. We maintain Internet websites at www.xrz.cn (Chinese language) and www.biocactus.com (English language). Information on our websites is not part of this prospectus.

ABOUT THIS OFFERING

This prospectus relates to the resale ~~by the selling stockholders identified in this prospectus~~ of up to: 1,000,000 shares of common stock. All of the shares, when sold, will be sold by these selling stockholders. The selling stockholders may sell their shares of common stock from time to time at prevailing market prices. This prospectus also covers such indeterminate number of additional shares of common stock as may become issuable upon stock splits, stock dividends or similar transactions in accordance with Rule 416 promulgated under the Securities Act of 1933. We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders.

Common Stock Offered:		Up to 1,000,000 shares of our common stock issuable to Kodiak Capital Group, LLC for investment banking services pursuant to an Investment Agreement with us dated as of July 9, 2010 (the “Investment Agreement”).
Common Stock Outstanding at July 19, 2010:		21,227,527
Use of Proceeds:		We will not receive any proceeds from the sale of the 1,000,000 shares of common stock subject to sale by the selling stockholders under this prospectus. However, we will receive proceeds from the sale of securities pursuant to our exercise of the Put. Any net proceeds we receive from the selling stockholders through our exercise of the Put will be used for general corporate purposes.
OTC Bulletin Board Symbol:		CKGT.OB

3,000,000 shares of our common stock issuable to Kodiak Capital Group, LLC for investment banking services pursuant to an Investment Agreement with us dated as of April 18, 2011 (the “Investment Agreement”).

Pursuant to the Investment Agreement, we have the right to Put to Kodiak up to $1.5 million in shares of our common stock, at $0.001 par value per share, based on a pre-determined formula (the “Financing”). Accordingly, this prospectus relates to the resale of up to 3,000,000 shares of our common stock by Kodiak.

For the purpose of determining the number of shares of common stock to be offered by this prospectus, we have assumed that we will issue not more than 3,000,000 shares pursuant to the exercise of the Put. We currently do not intend to exercise the Put in a manner which would result in our issuance of more than 3,000,000 shares, but if we were to exercise the Put in that manner, we would be required to file a subsequent registration statement with the Securities and Exchange Commission (“SEC”) and that registration statement would have to be declared effective prior to the issuance of any additional shares.

The Investment Agreement provides, in part, that following notice to Kodiak (the “Put Notice”), we may put to Kodiak up to $1.5 million in shares of our common stock for a purchase price equal to eighty five percent (85%) of the volume-weighted average price of the Company’s common stock five (5) days immediately preceding the date of the Put Notice and five (5) days immediately following the date of the Put Notice (the “Pricing Period”). Under the Investment Agreement, the Company may not deliver the Put Notice until after the resale of the common stock has been registered with the Securities and Exchange Commission. Additionally, provided that the Investment Agreement does not terminate earlier, the Company has a six (6) month period, beginning on the trading day immediately following the effectiveness of the registration statement, during which it may deliver the Put Notice to Kodiak (the “Open Period”).

Under the Investment Agreement Kodiak will only purchase shares when we meet the following conditions:

a registration statement has been declared effective and remains effective for the resale of the common stock until the closing of the Financing;
at all times during the period beginning on the date of the Put Notice and ending on the date of the closing of the Financing, our common stock has been listed on the Over-the-Counter Bulletin Board and has not been suspended from trading thereon for a period of two (2) consecutive trading days during the Open Period;
we have not been notified of any pending or threatened proceeding or other action to delist or suspend our common stock;
We have complied with its obligations and is otherwise not in breach of or in default under the Investment Agreement, the Registration Rights Agreement or any other agreement executed in connection therewith;

no injunction has been issued and remains in force, and no action has been commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the common stock;
the issuance of the common stock will not violate any shareholder approval requirements of the market or exchange on which our common stock are principally listed; and

The Investment Agreement will terminate when any of the following events occur:

Kodiak has purchased an aggregate of $1.5 million of our common stock;
upon written notice from us to Kodiak.

Similarly, this Investment Agreement, may, at the option of the non-breaching party, terminate if Kodiak or the Company commits a material breach, or becomes insolvent or enters bankruptcy proceedings.

This Investment Agreement will be suspended if any of the following were to occur, and would remain suspended until such event were to be rectified:

our common stock ceases to be registered under the Exchange Act; or
the trading of our common stock is suspended by the SEC, the NASD, or its principal market for two consecutive trading days.

All of the shares, when sold, will be sold by Kodiak. Kodiak has indicated that it will resell the shares in the open market, resell our shares to other investors through negotiated transactions, or hold our shares in its portfolio. This prospectus covers the resale of our common stock by Kodiak either in the open market at prevailing market prices or to other investors through negotiated transactions. Kodiak’s obligations under the Investment Agreement are not transferrable and this registration statement does not cover sales of our common stock by transferees of Kodiak.

This prospectus also covers such indeterminate number of additional shares of common stock as may become issuable upon stock splits, stock dividends or similar transactions in accordance with Rule 416 promulgated under the Securities Act of 1933. We will not receive any proceeds from the sale of the shares of common stock by Kodiak.

On July 9, 2010, we entered into an Investment Agreement with Kodiak (“Prior Investment Agreement”), pursuant to which we had the right to “put” to Kodiak shares of our common stock equivalent to $1 million in proceeds. On July 30, 2010 we filed a registration statement on Form S-1 with the SEC to register up to 1,000,000 shares of common stock to be issued to Kodiak in accordance with Prior Investment Agreement. The registration statement went effective on September 7, 2010.

On December 17, 2010 the Company issued 1,000,000 shares of its common stock to Kodiak pursuant to the Prior Investment Agreement. The Company received net proceeds from Kodiak of $742,678 ($784,678 gross based on a price of $0.785678 per share, less $42,000 fees and costs charged by Kodiak. On the same day, the Company also issued 15,000 shares of its common stock to Kodiak for consulting services rendered pursuant to the Prior Investment Agreement.

	The Offering

Common Stock Offered:	Up to 3,000,000 shares of our common stock issuable to Kodiak Capital Group, LLC for investment banking services pursuant to an Investment Agreement with us dated as of April 18, 2011 (the “Investment Agreement”).

Common Stock Outstanding at April 13, 2011:	22,305,527

Use of Proceeds:	We will not receive any proceeds from the sale of the 3,000,000 shares of common stock subject to sale by the selling stockholders under this prospectus. However, we will receive proceeds from the sale of securities pursuant to our exercise of the Put. Any net proceeds we receive from the selling stockholders through our exercise of the Put will be used for general corporate purposes.

OTC Bulletin Board Symbol:	CKGT.OB

RISK FACTORS

An investment in our common stock is speculative and involves a high degree of risk and uncertainty. You should carefully consider the risks described below, together with the other information contained in this prospectus, including the consolidated financial statements and notes thereto of our Company, before deciding to invest in our common stock. The risks described below are not the only ones facing our Company. Additional risks not presently known to us or that we presently consider immaterial may also adversely affect our Company. If any of the following risks occur, our business, financial condition and results of operations and the value of our common stock could be materially and adversely affected.

RISKS RELATED TO OUR BUSINESS

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~~TO MAXIMIZE~~The ~~OUR~~success ~~POTENTIAL~~of ~~FOR~~our ~~FUTURE~~business ~~GROWTH~~depends ~~AND~~on ~~ACHIEVE~~our ~~OUR~~ability ~~EXPECTED REVENUES, WE~~to ~~NEED~~market TOand ~~MANAGE~~advertise ~~GROWTH~~the INproducts ~~OUR~~we ~~CURRENT~~sell ~~OPERATIONS AND TO ALIGN OUR OPERATIONAL, FINANCIAL AND MANAGEMENT PROCESS AND SYSTEM TO U~~effectively.~~S. STANDARDS AND PRACTICES.~~

InOur ~~order~~ ability to ~~maximize~~establish ~~potential~~effective ~~growth~~marketing ~~in our current~~ and ~~potential markets, we~~advertising ~~believe~~campaigns ~~that~~is wethe ~~must~~key ~~expand~~to our ~~manufacturing and marketing operations~~success. ~~This expansion~~Our ~~will~~advertisements ~~place~~promote aour ~~significant~~corporate image, ~~strain on~~ our ~~management~~merchandise and onthe ~~our operational,~~pricing ~~accounting,~~of ~~and~~such ~~information systems~~products. WeIf ~~expect~~we ~~that~~are asunable ~~we continue~~ to increase ~~grow~~awareness weof ~~will~~our ~~need~~brands toand ~~improve~~ our ~~financial controls~~products, ~~operating~~we ~~procedures, and~~may ~~management~~not ~~information~~be ~~systems~~able to ~~handle increased operations. We will also~~attract ~~need~~new ~~to effectively train, motivate, and manage our employees~~customers. ~~Failure~~Our tomarketing ~~manage our~~activities ~~growth~~may ~~could~~not ~~disrupt~~be ~~our~~successful ~~operations~~in ~~and~~promoting ~~ultimately prevent us from~~the ~~generating~~products ~~the revenues~~ we ~~expect.~~sell Ifor wepricing ~~fail~~strategies toor ~~generate~~in ~~any~~retaining ~~revenue,~~and weincreasing ~~can maintain normal operations for approximately seven months with~~ our ~~current cash~~ ~~and~~customer ~~cash equivalents~~base. InWe ~~addition,~~cannot toassure ~~gain~~you ~~acceptance~~that ~~and~~our ~~interest~~marketing ofprograms ~~investors in the U.S., the management~~ will ~~need~~be adequate to ~~revise~~support our ~~operational~~future growth, ~~financial~~which ~~and management~~may ~~process~~result ~~and~~in ~~system~~a tomaterial ~~align~~adverse ~~such~~effect ~~process~~on our ~~and~~results ~~systems~~of ~~to U~~operations.~~S. standards~~ ~~and practices.~~

WECertain disruptions in supply of and changes in the ~~CANNOT~~competitive ~~GUARANTEE~~environment ~~THAT~~for ~~OUR~~our ~~ORGANIC~~products ~~GROWTH~~may ~~STRATEGY~~adversely ~~WILL~~affect BEour ~~SUCCESSFUL~~profitability.

~~One~~A ~~of our~~significant ~~growth~~disruption ~~strategies~~in isthe tosupply ~~grow~~of ~~organically~~the byraw ~~increasing~~material could ~~the~~decrease ~~distribution~~inventory levels and sales, ofand ~~our~~materially ~~products~~adversely inaffect ~~new~~our business ~~markets~~and ~~within~~financial ~~and~~results. ~~outside~~Shortages of ~~China.~~products ~~However,~~or ~~many~~interruptions in ~~obstacles~~transportation tosystems, ~~entering~~labor ~~new~~strikes, ~~markets~~work ~~exist~~stoppages, ~~such~~war, asacts ~~the~~of ~~costs~~terrorism ~~associated with~~or ~~entering~~other ~~into~~interruptions ~~new~~or ~~markets,~~difficulties ~~developing~~in ~~and~~the ~~implementing~~employment ~~effective~~of ~~marketing~~labor or transportation ~~efforts~~in ~~abroad~~the ~~and~~markets ~~maintaining~~in ~~attractive~~which ~~foreign~~we ~~exchange~~purchase ~~ratios.~~raw Wematerials ~~cannot,~~may adversely affect our ~~therefore,~~ability ~~assure~~to ~~you~~maintain ~~that~~sufficient weinventories ~~will~~of beour ~~able~~products to ~~successfully~~meet ~~overcome such~~consumer ~~obstacles~~demand. ~~and~~If ~~establish~~we ~~our~~were ~~products~~to inexperience ~~any~~a ~~additional~~significant ~~markets.~~or ~~Our~~prolonged ~~inability~~shortage toof products ~~successfully~~from ~~implement~~any of our ~~organic~~suppliers ~~growth~~and ~~strategy~~could ~~may~~not ~~have~~procure athe ~~negative~~products ~~impact~~from onother sources, ~~our~~we ~~growth~~would ~~strategy~~be ~~and~~unable onto ~~our~~meet ~~future~~customer ~~financial~~demand, ~~condition~~which, ~~results~~in ofturn, ~~operations~~would adversely oraffect ~~cash~~our ~~flows~~sales, margins and customer relations.

Counterfeit products sold in the PRC could negatively impact our revenues, brand reputation, business and results of operations.

The products we sell are also subject to competition from counterfeit products, which are healthcare products manufactured without proper licenses or approvals and are fraudulently mislabeled with respect to their content and/or manufacturer. Counterfeit products are generally sold at lower prices than authentic products due to their low production costs, and in some cases are very similar in appearance to authentic products. Although the PRC government has recently been increasingly active in policing counterfeit products, including counterfeit healthcare products, there is a lack of effective counterfeit product regulation control and enforcement systems in the PRC. The proliferation of counterfeit products has grown in recent years and may continue to grow in the future. Despite our implementation of quality controls, we cannot assure you that we would not be distributing or selling counterfeit products inadvertently. Any accidental sale or distribution of counterfeit products can subject our company to fines, administrative penalties, litigation and negative publicity, which could negatively impact our revenues, brand reputation, business and results of operations. Moreover, the continued proliferation of counterfeit products and other products in recent years may reinforce the negative image of retailers among consumers in the PRC. The continued proliferation of counterfeit products in the PRC could have a material adverse effect on our business, financial condition, and results of operation.

~~IF WE~~If ~~ARE~~we ~~NOT~~need ~~ABLE~~additional TOcapital ~~IMPLEMENT~~to ~~OUR~~fund ~~STRATEGIES~~our TOgrowing operations, ~~ACHIEVE~~we ~~OUR~~may ~~BUSINESS~~not ~~OBJECTIVES, OUR~~be ~~BUSINESS~~able ~~OPERATIONS~~to ~~AND~~obtain ~~FINANCIAL~~sufficient ~~PERFORMANCE~~capital ~~MAY~~and BEmay ~~ADVERSELY~~be forced to ~~AFFECTED~~limit the scope of our operations.

~~Our~~If ~~business~~adequate additional financing is not available on reasonable terms, we may not be able to undertake our expansion plan, purchase additional equipment for our operations and ~~growth~~we ~~strategy~~would have to modify our business plans accordingly. There is ~~based~~no onassurance ~~currently~~that ~~prevailing~~additional ~~circumstances~~financing will be available to us. In connection with our growth strategies, we may experience increased capital needs and ~~the~~accordingly, ~~assumption~~we ~~that~~may ~~certain~~not have sufficient capital to fund our ~~circumstances~~future ~~will~~operations orwithout additional capital investments. Our capital needs will depend ~~not~~on ~~occur~~numerous factors, asincluding ~~well~~(i) asour ~~the~~profitability; ~~inherent~~(ii) ~~risks~~the ~~and~~release of ~~uncertainties~~competitive ~~involved~~products inby ~~various~~our ~~stages~~competitors; (iii) the level of our investment in research and development.; ~~However,~~and ~~there~~(iv)the isamount noof our capital expenditures, ~~assurance~~including acquisitions. We cannot assure you that we will be ~~successful~~able to obtain capital in ~~implementing~~the future to meet our ~~strategies~~needs. If we cannot obtain additional funding, we may be required to: (i) limit our investments in research and development; (ii) limit our marketing efforts; and (iii) decrease or ~~that~~eliminate capital expenditures. Such reductions could materially adversely affect our business and ~~strategies,~~our ~~even~~ability to compete. Even if ~~implemented~~we do find a source of additional capital, ~~will~~we may ~~lead~~not be able to negotiate terms and conditions for receiving the ~~successful~~additional capital ~~achievement~~that are acceptable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our ~~objectives~~existing shareholders. IfIn weaddition, ~~are~~new ~~not~~equity ~~able~~or convertible debt securities issued by us to ~~successfully~~obtain ~~implement~~financing ~~our~~could ~~strategies~~have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional ~~business~~financing ~~operations~~will ~~and~~be ~~financial~~available ~~performance~~to ~~may~~us, or if available, will be ~~adversely~~on terms favorable ~~affected~~to us.

~~IF WE~~We ~~NEED~~are ~~ADDITIONAL~~dependent ~~CAPITAL~~on TOcertain ~~FUND~~key ~~OUR~~personnel ~~GROWING~~and ~~OPERATIONS,~~loss WEof these ~~MAY~~key ~~NOT~~personnel BEcould ~~ABLE~~have ~~TO OBTAIN~~a ~~SUFFICIENT~~material ~~CAPITAL~~adverse ~~AND~~effect ~~MAY~~on BEour ~~FORCED~~business, financial TOcondition ~~LIMIT~~and ~~THE~~results ~~SCOPE~~of ~~OF OUR OPERATIONS~~operations.

AsOur ~~we implement~~success ~~our~~is, ~~growth~~to ~~strategies~~a certain extent, weattributable ~~may~~to ~~experience~~the management, ~~increased~~sales ~~capital~~and ~~needs~~marketing, and operational and technical expertise of wecertain ~~may~~key ~~not~~personnel. ~~have~~In ~~enough~~addition, ~~capital~~we towill ~~fund~~require ~~future~~an ~~operations~~increasing ~~without~~number ~~additional~~of ~~capital~~experienced ~~investments.~~and ~~Our~~competent ~~capital~~executives ~~needs~~and ~~will~~other ~~depend~~members onof ~~numerous~~senior ~~factors,~~management to ~~including~~implement ~~(1)~~ our ~~profitability;~~growth ~~(2)~~plans. ~~the~~We ~~release~~do ofnot ~~competitive~~maintain ~~products~~key-man byinsurance ~~our~~for members of ~~competition;~~our ~~(3)~~management ~~the~~team ~~level~~because ofit ~~our~~is ~~investment~~not a customary practice in ~~research~~the ~~and~~PRC. ~~development;~~If ~~and~~we ~~(4)~~lose the ~~amount~~services of ~~our~~any ~~capital~~member ~~expenditures.~~of Weour ~~cannot~~senior ~~assure~~management, ~~you that~~ we ~~will~~may not be able to locate ~~obtain~~suitable ~~capital~~or inqualified ~~the~~replacements, ~~future~~and may incur additional expenses to recruit ~~meet~~and train new personnel, which could severely disrupt our ~~needs~~business and prospects.

IfWe weare dependent on a trained workforce and any inability ~~cannot~~to ~~obtain~~retain ~~additional~~or ~~funding~~effectively recruit such employees, weparticularly ~~may~~distribution personnel beand ~~required~~regional ~~to:~~retail managers for our business, could have a material adverse effect on our business, financial condition and results of operations.

·We ~~reduce~~must attract, recruit and retain a sizeable workforce of qualified and trained staff to operate our ~~investments~~business. Our ability to implement effectively our business strategy and expand our operations will depend upon, among other factors, the successful recruitment and retention of highly skilled and experienced distribution personnel, regional retail managers and other technical and marketing personnel. There is significant competition for qualified personnel in ~~research~~our business and ~~development;~~we may not be successful in recruiting or retaining sufficient qualified personnel consistent with our current and future operational needs.

·Our ~~limit~~Chinese ~~our~~operating ~~marketing~~companies ~~efforts;~~maintained their books and records in accordance with the PRC GAAP and, as a result, it involves a risk of accuracy when our personnel convert the financial statements to U.S. GAAP.

·Under ~~decrease~~PRC law, our operating companies in China are required to maintain their books and records in accordance with PRC GAAP. We do not retain an outside accounting firm or ~~eliminate~~consultant ~~capital~~to ~~expenditures~~prepare our financial statements or to evaluate our internal controls over financial reporting. Our Financial Manager prepares the U.S. GAAP financial statements and converts the financial statements prepared under PRC GAAP into U.S. GAAP. Our CFO is responsible for supervising the preparation of our financial statements under PRC GAAP and for reviewing such financial statements to ensure their accuracy and completeness. In addition, he is responsible for reviewing the adjustments made to the financial statements to convert them into U.S. GAAP for SEC reporting requirements. Our CFO and CEO are responsible for evaluating the effectiveness of our internal controls over financial reporting.

~~Such~~Our company is at the early stage of adopting necessary ~~reductions~~financial ~~could~~reporting ~~have~~concepts aand ~~material~~practices, ~~adverse~~including ~~effect~~strong oncorporate governance, ~~our~~internal ~~business~~controls and, computer, financial and other control systems. Most of our ~~ability~~accounting and finance staff are not educated and trained toin ~~compete~~U.S. ~~Even~~GAAP ifand SEC reporting requirements, and we domay ~~find~~have difficulty hiring new employees in the PRC with such training. As a ~~source~~result of ~~additional~~these ~~capital~~factors, we may ~~not~~experience bedifficulty in establishing management, legal and financial ~~able~~controls, tocollecting ~~negotiate~~financial ~~acceptable~~data ~~terms~~and preparing financial statements, books of account and ~~conditions~~corporate ~~for~~records ~~receiving~~and ~~the~~instituting ~~additional~~business practices that meet SEC ~~capital~~reporting requirements. ~~Any~~Therefore, ~~future~~we ~~capital~~may, ~~investments~~in ~~could~~turn, ~~dilute~~experience ordifficulties ~~otherwise~~in implementing ~~materially~~ and ~~adversely~~ ~~affect~~maintaining ~~the~~adequate ~~holdings~~internal orcontrols ~~rights~~as required under Section 404 of ~~our~~the ~~existing~~Sarbanes-Oxley ~~shareholders~~Act of 2002. ~~In addition,~~This ~~new~~may ~~equity~~result in significant deficiencies or ~~convertible~~material ~~debt~~weaknesses ~~securities~~in ~~issued~~our byinternal uscontrols, towhich ~~obtain~~could impact ~~financing~~the ~~could~~reliability ~~have~~of ~~rights,~~our ~~preferences~~financial statements and ~~privileges~~prevent ~~senior~~us tofrom ~~our~~complying ~~common~~with ~~stock.~~SEC Werules ~~cannot~~and ~~give~~regulations ~~you~~and ~~any~~the ~~assurance~~requirements ~~that~~of ~~any~~the ~~additional~~Sarbanes-Oxley ~~financing~~Act ~~will be~~of ~~available~~2002. toAny ussuch deficiencies, weaknesses or iflack ~~available,~~of ~~will~~compliance becould onhave ~~terms~~a materially ~~favorable~~adverse toeffect uson our business.

WE RELY HEAVILY ON OUR RELIABLE INDEPENDENT DISTRIBUTORS, AND THIS COULD AFFECT OUR ABILITY TO EFFICIENTLY AND PROFITABILITY DISTRIBUTE AND MARKET OUR PRODUCTS, AND MAINTAIN OUR EXISTING MARKETS AND EXPAND OUR BUSINESS INTO OTHER GEOGRAPHIC MARKETS.

Our ability to establish a market of our unique brands and products in new geographic distribution areas, as well as maintain and expand existing markets, is dependent on our ability to establish and maintain successful relationships with our developing independent distributors strategically positioned to serve those areas. Many of our distributors sell and distribute competing products, including non-alcoholic and alcoholic beverages, and our products may represent a small portion of their business. To the extent that our distributors are distracted from selling our products or do not expend sufficient efforts in managing and selling our products, our sales will be adversely affected. Our ability to maintain our distribution network and attract additional distributors will depend on a number of factors, many of which are outside our control. Some of these factors include:

· The level of demand for our brands and products in a particular distribution area

· Our ability to price our products at levels competitive with those offered by competing products

· Our ability to deliver products in the quantity and at the time ordered by distributors.

We cannot ensure that we will be able to meet all or any of these factors in any of our current or prospective geographic areas of distribution. Our inability to achieve any of these factors in a geographic distribution area will have a material adverse effect on our relationships with our distributors in that particular geographic area, thus limiting our ability to expand our market, which will likely adversely affect our revenues and financial results.

~~WE RELY~~Our ONfinancial Aresults ~~LIMITED~~may ~~NUMBER~~fluctuate OFbecause ~~CUSTOMERS~~of ~~FOR A LARGE PORTION OF OUR REVENUE. IF OUR~~many ~~CUSTOMERS~~factors ~~CANCEL~~and, ~~THEIR~~as ~~COMMITMENTS~~a ~~OR DO NOT PURCHASE OUR PRODUCTS IN CONNECTION WITH FUTURE PRODUCT LINES~~result, ~~OUR~~investors ~~REVENUE~~should ~~COULD~~not ~~SIGNIFICANTLY~~simply ~~DECREASE,~~rely ~~WHICH~~on ~~WOULD~~our historical ~~ADVERSELY~~financial ~~AFFECT~~data ~~OUR~~as ~~FINANCIAL~~indicative ~~CONDITION~~of ~~AND~~future ~~FUTURE GROWTH~~results.

~~Currently~~Fluctuations in operating results or the failure of operating aresults ~~majority~~to meet the expectations of ~~our~~public ~~sales~~market ~~are~~analysts ~~derived~~and ~~from~~investors ~~customers~~may negatively inimpact the ~~People’s~~market ~~Republic~~price of ~~China~~ ~~(the~~our ~~“PRC”)~~securities. ~~Additionally,~~Operating ~~one~~results ofmay fluctuate ~~our~~in ~~customers~~the ~~accounts~~future ~~for~~due to a ~~sizeable portion~~variety of ~~our~~factors ~~net~~that ~~revenue.~~could ~~Specifically,~~affect ~~Harbin~~revenues or ~~Huadingwei~~expenses ~~Trading~~in ~~Company, Ltd~~any particular quarter. ~~represented~~Fluctuations ~~approximately~~in ~~18%~~operating results could cause the value of our ~~total~~securities ~~sales~~to indecline. ~~2009~~Investors ~~and~~should itnot ~~accounted~~rely on ~~for~~comparisons ~~approximately~~of ~~13%~~results of ~~our~~operations ~~total~~as ~~sales~~an inindication ~~2008~~of future performance. NoAs result ~~other~~of ~~customer~~the ~~accounted for~~factors ~~more~~listed ~~than~~below, ~~10%~~it ofis ~~our~~possible ~~total~~that ~~revenue~~in ~~during~~future ~~any~~periods results of ~~these~~operations ~~periods.~~may Inbe ~~2007, Harbin~~below ~~Huadingwei~~the ~~Trading~~expectations ~~Company,~~of ~~Ltd~~public market analysts and investors. ~~accounted~~This ~~for~~could ~~22%~~cause the market price of our ~~total revenue~~securities to decline. Factors that may affect our quarterly results include:

~~WE COMPETE~~vulnerability INof ANour ~~INDUSTRY~~business ~~THAT~~to ISa ~~BRAND-CONSCIOUS,~~general SOeconomic ~~BRAND~~downturn ~~NAME~~in ~~RECOGNITION~~the ~~AND~~PRC; ~~ACCEPTANCE OF OUR PRODUCTS ARE CRITICAL TO OUR SUCCESS.~~
~~Our business~~fluctuation ~~is substantially dependent upon awareness~~ and ~~market~~unpredictability ~~acceptance~~ of ~~our products~~the ~~and~~prices ~~brands by our targeted consumers. In addition, our business depends on acceptance by our independent distributors~~ of ~~our brands as beverage brands that have~~ the ~~potential~~products ~~to provide incremental sales growth rather than reduce distributors’ existing beverage sales. Although~~ we ~~believe that we have been~~sell; relatively successful towards establishing our brands as recognizable to date in both the alcoholic and non-alcoholic beverage industry, it may be too early in the product life cycle of these brands to determine whether our products and brands will achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers.
~~WE COMPETE~~changes INin ANthe ~~INDUSTRY~~laws ~~CHARACTERIZED~~of BYthe ~~RAPID~~PRC ~~CHANGES~~that INaffect ~~CONSUMER~~our ~~PREFERENCES,~~operations; ~~SO OUR ABILITY TO CONTINUE DEVELOPING NEW PRODUCTS TO SATISFY OUR CONSUMERS' CHANGING PREFERENCES WILL DETERMINE OUR LONG-TERM SUCCESS.~~
~~Our current~~competition ~~market~~from ~~distribution~~other ~~and~~healthcare ~~penetration~~products ~~may~~manufacturers ~~be limited with respect to the population as a whole to determine whether the brand has achieved initial consumer acceptance,~~ and ~~there can be no assurance that this acceptance will~~distributors; ~~ultimately be achieved. In addition, customer preferences are also affected by factors other than taste, such as the recent media focus on obesity in youth. If we do not adjust to respond to these~~ and ~~other changes in customer preferences,~~ ~~our sales may be adversely affected.~~
~~A DECLINE~~our INability ~~THE~~to ~~CONSUMPTION~~obtain OFnecessary ~~ALCOHOL~~government ~~COULD~~certifications ~~ADVERSELY~~and/or ~~AFFECT OUR~~licenses ~~BUSINESS~~ to conduct our business.

~~There have~~RISKS ~~been~~RELATED ~~periods~~TO inCONDUCTING ~~history~~BUSINESS ~~during~~IN ~~which~~THE ~~alcohol~~PRC consumption declined substantially. A decline in alcohol consumption could occur in the future due to a variety of factors including: (i) a general decline in economic conditions, (ii) increased concern about health consequences and concerns about drinking and driving, (iii) a trend toward other beverages such as juices and water, (iv) increased activity of anti-alcohol consumer groups, and (v) increase federal, state or foreign excise taxes. A decline in the consumption of alcohol would likely negatively affect our business.

~~THE~~Our operations are subject to PRC laws and regulations ~~LOSS~~that OFare ~~KEY~~sometimes ~~PERSONNEL~~vague ~~WOULD~~and ~~DIRECTLY~~uncertain. ~~AFFECT~~Any OFchanges ~~EFFICIENCY~~in ~~AND~~such ~~ECONOMIC~~PRC laws and ~~RESULTS~~regulations, or the interpretations thereof, may have a material and adverse effect on our business.

WeThe ~~are~~PRC's legal system is a civil law system based on written ~~dependent~~statutes. ~~upon~~Unlike the ~~creative~~common ~~skills~~law system prevalent in the United States, decided legal cases have little value as precedent in the PRC. There are substantial uncertainties regarding the interpretation and ~~leadership~~application of ~~our~~PRC ~~founder~~laws and regulations, ~~Jinjing~~including ~~Wang~~but not limited to, ~~who~~ ~~serves~~the aslaws and regulations governing our ~~President~~business, or the enforcement and ~~Chief~~performance ~~Executive~~of ~~Officer,~~our asarrangements ~~well~~with customers asin ~~Hong~~the Buevent of the imposition of statutory liens, ~~our~~death, bankruptcy ~~Chief~~or ~~Financial~~criminal ~~Officer~~proceedings. The PRC government has been developing a comprehensive system of commercial laws, and ~~the~~considerable ~~management,~~progress ~~financial~~has been made in introducing laws and ~~operational~~regulations ~~skills~~dealing ofwith economic matters such as foreign ~~Chengzhi~~investment, ~~Wang~~corporate organization and governance, ~~our~~commerce, ~~General~~taxation ~~Manager~~and trade. However, ~~The~~because ~~loss~~these oflaws ~~the~~and ~~services~~regulations are relatively new, and because of the ~~any~~limited volume of ~~our officers~~published ~~could~~cases ~~have~~and ajudicial ~~material~~interpretation ~~adverse~~and ~~effect~~their onlack of ~~our~~authority ~~business~~as precedents, interpretation and ~~operations,~~enforcement of these laws and ~~including~~regulations ~~our~~involve ~~ability~~significant touncertainties. ~~develop~~New laws and ~~execute~~regulations athat affect ~~long-term,~~existing ~~profitable~~and ~~business~~proposed future businesses may also be applied ~~plan~~retroactively.

Our principal operating subsidiaries are regarded as foreign invested enterprises (“FIE”s) under PRC laws, and as a result are required to comply with PRC laws and regulations, including laws and regulations specifically governing the activities and conduct of FIEs. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses. If the relevant authorities find us in violation of PRC laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation:

levying fines;
revoking our business license, other licenses or authorities;
requiring that we restructure our ownership or operations; and
requiring that we discontinue any portion or all of our business.

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

On January 1, 2008, the PRC government promulgated the Labor Contract Law of the PRC, or the New Labor Contract Law. The New Labor Contract Law imposes greater liabilities on employers and significantly impacts the cost of an employer’s decision to reduce its workforce. Further, it may require 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 manner that is most advantageous to our business or in a timely and cost effective manner, thus materially and adversely affecting our financial condition and results of operations.

We may not be able to comply with applicable Good Manufacture Practice (“GMP”) requirements and other regulatory requirements, which could have a material adverse effect on our business, financial condition and results of operations.

We are required to comply with applicable GMP regulations, which include requirements relating to quality control and quality assurance as well as corresponding maintenance, record-keeping and documentation standards. Manufacturing facilities must be approved by governmental authorities before we use them to commercially manufacture our products and are subject to inspection by regulatory agencies. If we fail to comply with applicable regulatory requirements, including following any product approval, we may be subject to sanctions, including:

~~COMPETITION~~fines; ~~FROM EXISTING AND NEW ENTITIES MAY ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY.~~
We compete with other companies, many of whom are developing, or can be expected to develop, products similar to ours. Our top five competitors are Anhui Haozhou Xingbang Cactus Co., Hunan Yongzhou Sino-Mexico Cactus Development Co., Ltd., Henan Luxin Cactus Co., Ltd., Zhengshou Milpa-Alta Cactus Co., Ltd., and Ningxia Milpa-Alta Edible Cactus Development Co., Ltd. The cactus industry in China is not highly competitive, and no published data is available regarding the Company’s relative position in the markets in which it operates. Although no major competitor currently competes with the Company across its entire product ~~line,~~ ~~competitive~~recalls ~~products are available from a number of different vendors offering features similar to those of the Company’s products. There can be no assurance that one~~ or ~~more of these competitors will not develop products that~~seizure; are equal or superior to the products the Company markets. We intend to continue to create greater brand awareness for our brand name so that we can successfully compete with our competitors. We cannot guarantee that we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not harm our business.
WEinjunctions; DEPEND ON EIGHT SUPPLIERS FOR OUR SUPPLY OF RAW MATERIALS AND WRAPPAGE, WHICH IS A KEY COMPONENT OF OUR PRODUCTS. IF ANY OF OUR EIGHT SUPPLIERS CANCELS ITS COMMITMENTS OR IS UNABLE TO MEET OUR DEMAND AND/OR REQUIREMENTS, OUR BUSINESS COULD BE HARMED.
Werefusal ~~rely on a limited number~~ of ~~suppliers~~regulatory toagencies produce cactus based products, which is a key component of our products. For the three months ended March 31, 2010, four suppliers represented approximately 46% of our purchases from all of our suppliers, and for the three months ended March 31, 2009, four suppliers represented approximately 51% of purchases from all of our suppliers. For the years ended December 31, 2009, 2008 and 2007, four suppliers represented approximately 51%, 53% and 55%, respectively, of our purchases from all of our suppliers. If any of our suppliers were to ~~cancel~~review orpending ~~materially~~market ~~change its~~approval ~~commitment with~~ applications us or ~~fail~~supplements to ~~meet~~approval ~~the quality or delivery requirements~~applications; needed to satisfy customer orders for our products, we could lose customer orders, be unable to develop or sell our products cost-effectively or on a timely basis, if at all, and have significantly decreased revenue, which would harm our business, operating results and financial condition.
~~IF WE~~total ~~ARE~~or ~~UNABLE~~partial TOsuspension ~~PROTECT~~of ~~OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS, OUR~~production; ~~COMPETITIVE POSITION COULD BE HARMED AND WE COULD BE REQUIRED TO INCUR SIGNIFICANT EXPENSES TO ENFORCE OUR RIGHTS.~~
Wecivil ~~depend~~penalties; on our ability to protect our proprietary technology. We rely on trade secrets, patent, and trademark laws and confidentiality agreements with employees and third parties, all of which offer only limited protection. We hold 18 PRC patents relating to our products. The terms of these patents will begin to expire in 2022, at which time we could become more vulnerable to increased competition. In addition, we have applied for 12 new PRC patents. We do not know whether any of our pending patent applications will result in the issuance of patents or whether the examination process will require us to narrow our claims, and even if patents are issued, they may be contested, circumvented or invalidated. Protecting against the unauthorized use of our products, trademarks and other proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of management resources, either of which could harm our business.
~~CLAIMS BY~~withdrawals ~~OTHERS~~of ~~THAT~~previously WEapproved ~~INFRINGE~~marketing ~~THEIR~~applications; ~~PROPRIETARY RIGHTS COULD HARM OUR~~or ~~BUSINESS.~~
~~Third parties~~criminal ~~could claim that our technology infringes their proprietary rights~~prosecution. In addition, we may be contacted by third parties suggesting that we obtain a license to certain of their intellectual property rights they may believe we are infringing. We expect that infringement claims against us may increase as the number of products and competitors in our market increases and overlaps occur. In addition, to the extent that we gain greater visibility, we believe that we will face a higher risk of being the subject of intellectual property infringement claims. Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim, and could distract our management from our business. Furthermore, a party making such a claim, if successful, could secure a judgment that requires us to pay substantial damages. A judgment against us could also include an injunction or other court order that could prevent us from offering our products. In addition, we might be required to seek a license for the use of such intellectual property, which may not be available on commercially reasonable terms, or at all. Alternatively, we may be required to develop non-infringing technology, which could require significant effort and expense and may ultimately not be successful. Any of these events could seriously harm our business.

If we fail to protect our intellectual property rights, it could harm our business and competitive position.

Our business relies in part on intellectual properties to stay competitive in the market place. We rely on a combination of trademark laws, patent law, trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property rights and the obligations we have to third parties from whom we license intellectual property rights. Nevertheless, these afford only limited protection and policing unauthorized use of proprietary technology can be difficult and expensive. In addition, intellectual property rights historically have not been enforced in the PRC to the same extent as in the United States, and intellectual property theft presents a serious risk in doing business in the PRC. We may not be able to detect unauthorized use of, or take appropriate steps to enforce our intellectual property rights and this could have a material adverse effect on our business, operating results and financial condition.

Under the new EIT Law, we may be classified a “resident enterprise” for PRC tax purposes, which may subject us to PRC enterprise income tax for any dividends we receive from our PRC Operating Entities and to PRC income tax withholding for any dividends we pay to our non-PRC shareholders.

On March 16, 2007, the National People’s Congress (“NPC”) promulgated the Law of the People’s Republic of China on Enterprise Income Tax, and the new EIT Law as amended became effective on January 1, 2008. In accordance with the new EIT Law, the corporate income tax rate is set at 25% for all enterprises. However, certain industries and projects, such as FIEs, may enjoy favorable tax treatment pursuant to the new EIT Law and its implementing rules.

Under the new EIT Law, an enterprise established outside of the PRC whose “de facto management bodies” are located in the PRC is considered a “resident enterprise” and is subject to the 25% enterprise income tax rate on its worldwide income. The new EIT Law and its implementing rules are relatively new, and currently, no official interpretation or application of this new “resident enterprise” classification is available. Therefore, it is unclear how tax authorities will determine the tax residency of enterprises established outside of the PRC.

Most of our management is currently based in the PRC. If the PRC tax authorities determine that our U.S. holding company is a “resident enterprise” for PRC enterprise income tax purposes, we may be subject to an enterprise income tax rate of 25% on our worldwide taxable income. The “resident enterprise” classification also could subject us to a 10% withholding tax on any dividends we pay to our non-PRC shareholders if the relevant PRC authorities determine that such income is PRC-sourced income. In addition to the uncertainties regarding the interpretation and application of the new “resident enterprise” classification, the new EIT Law may change in the future, possibly with retroactive effect. If we are classified as a “resident enterprise” and we incur these tax liabilities, our net income will decrease accordingly.

Our ability to pay dividends is restricted by PRC laws.

Our ability to pay dividends is primarily dependent on receiving distributions of funds from our PRC Operating Entities. Relevant PRC statutory laws and regulations permit payments of dividends by our PRC Operating Entities only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) differ from those reflected in the statutory financial statements of our PRC Operating Entities.

The principal laws, rules and regulations governing dividends paid by our PRC Operating Entities include the Company Law of the PRC, Wholly Foreign Owned Enterprise Law and its Implementation Rules. Under these laws and regulations, our PRC Operating Entities are required to set aside at least 10% of their after-tax profit based on PRC accounting standards each year to its statutory surplus reserve fund until the accumulative amount of such reserve reaches 50% of their respective registered capital. These reserve funds are recorded as part of shareholders' equity but are not available for distribution to shareholders other than in the case of liquidation. As a result of this requirement, the amount of net income available for distribution to shareholders will be limited.

~~IF WE~~Our ~~FAIL~~business TOis ~~EXPAND~~subject ~~OUR~~to ~~MANUFACTURING~~a ~~FACILITIES~~variety TOof ~~MEET~~environmental laws ~~OUR~~and ~~FUTURE~~regulations. ~~GROWTH,~~Our ~~OUR~~failure to comply with environmental laws and ~~OPERATING~~regulations ~~RESULTS~~may ~~COULD~~have BEa ~~ADVERSELY~~material ~~AFFECTED~~adverse effect on our business and results of operations.

~~Our~~Since the beginning of the 1980s, the PRC has formulated and ~~existing~~implemented ~~manufacturing~~a ~~facilities~~series of environmental protection laws and regulations. Our operations are ~~capable~~subject ofto ~~meeting~~these ~~current~~environmental ~~demand~~protection laws and regulations in ~~demand~~the PRC. These laws and regulations impose fees for the ~~foreseeable~~discharge ~~future.~~of ~~However~~waste substances, permit the ~~future~~levy ~~growth~~ of ~~our~~fines ~~business~~and claims for damages for serious ~~depends~~environmental onoffences ~~our~~and ~~ability~~allow the PRC government, at its discretion, to ~~successfully~~close any ~~expand~~facility ~~our~~that ~~manufacturing~~fails ~~and~~to ~~research~~comply with orders requiring it to correct or stop &operations ~~development~~causing ~~facilities~~environmental damage. WeOur ~~intend~~operations toare ~~add~~in ~~new~~compliance ~~facilities~~with PRC orenvironmental ~~expand~~regulations ~~existing~~in all material aspects. The PRC government has ~~facilities~~taken assteps ~~the~~and ~~demand~~may ~~for~~take ~~our~~additional ~~products~~steps ~~increases.~~towards ~~However~~more rigorous enforcement of applicable environmental laws, weand ~~cannot~~towards ~~ensure~~the adoption of more stringent ~~that~~environmental ~~suitable~~standards. If the PRC national or local authorities enact additional regulations or ~~substitute~~enforce ~~space~~current ~~will~~or new regulations in a more rigorous manner, we may be ~~available~~required to ~~accommodate~~make additional expenditures on environmental ~~any~~matters, ~~such~~which ~~expansion~~could have an adverse impact on our financial condition and results of operations. In addition, environmental liability insurance is not common in the PRC. Therefore, any significant environmental liability claims successfully brought against us would adversely affect our business, financial condition and results of operations.

WEPRC regulations relating to acquisitions of PRC companies ~~MAY~~by ~~INCUR~~foreign ~~SIGNIFICANT~~entities ~~COSTS~~may TOcreate ~~ENSURE~~regulatory ~~COMPLIANCE~~uncertainties ~~WITH~~that ~~U.S.~~could ~~CORPORATE~~restrict ~~GOVERNANCE~~or ~~AND~~limit ~~ACCOUNTING~~our ~~REQUIREMENTS~~ability to operate.

WeOn ~~may incur~~August ~~significant~~8, ~~costs~~2006, ~~associated~~the ~~with~~PRC ~~our~~Ministry ~~public~~of ~~company~~Commerce ~~reporting requirements~~(“MOFCOM”), joined ~~costs~~by ~~associated~~the ~~with~~State-owned ~~newly~~Assets ~~applicable~~Supervision ~~corporate~~and ~~governance requirements,~~Administration ~~including~~Commission ~~requirements~~of the ~~under~~State Council, the ~~Sarbanes-Oxley~~State ~~Act~~Administration of ~~2002~~Taxation, ~~and~~the State ~~other~~Administration ~~rules~~for ~~implemented~~Industry byand Commerce, the China Securities ~~and Exchange~~ Regulatory Commission (“CSRC”) and the ~~OTCBB. We~~State ~~expect~~Administration ~~all~~ of ~~these~~Foreign ~~applicable~~Exchange ~~rules~~(“SAFE”), released ~~and~~a ~~regulations~~substantially toamended ~~increase~~version ~~our~~of ~~legal and~~the ~~financial~~Provisions ~~compliance~~for ~~costs~~Foreign ~~and~~ Investors to ~~make~~Merge ~~some~~with ~~activities~~or ~~more~~Acquire ~~time-consuming and~~Domestic ~~costly.~~Enterprises We(the ~~also~~"Revised ~~expect~~M&A Regulations"), ~~that~~which ~~these~~took ~~applicable~~effect ~~rules~~on ~~and~~September ~~regulations~~8, ~~may~~2006. ~~make it~~These ~~more~~new ~~difficult~~rules significantly ~~and~~revised ~~more~~the ~~expensive~~PRC's ~~for~~regulatory usframework governing onshore-to-offshore ~~obtain~~restructurings ~~director~~ and ~~officer liability~~foreign ~~insurance~~acquisitions ~~and~~of wedomestic enterprises. ~~may~~These benew ~~required~~rules tosignify ~~accept~~greater ~~reduced~~PRC ~~policy~~government ~~limits~~attention ~~and~~to ~~coverage~~cross-border ormerger, ~~incur~~acquisition ~~substantially~~and ~~higher~~other ~~costs~~investment toactivities, ~~obtain~~by ~~the same or similar~~confirming ~~coverage.~~MOFCOM Asas a ~~result,~~key itregulator ~~may~~for beissues ~~more~~related ~~difficult~~to ~~for~~mergers usand toacquisitions ~~attract~~in the PRC and ~~retain qualified~~requiring ~~individuals~~MOFCOM toapproval ~~serve~~of ona ~~our~~broad ~~board~~range of ~~directors~~merger, oracquisition ~~as executive~~and ~~officers~~investment transactions. WeFurther, ~~are~~the ~~currently~~new ~~evaluating~~rules ~~and~~establish ~~monitoring~~reporting ~~developments with respect~~requirements tofor ~~these~~acquisition ~~newly~~of ~~applicable~~control ~~rules,~~by ~~and~~foreigners weof ~~cannot~~companies ~~predict~~in orkey ~~estimate~~industries, and reinforce the ~~amount~~ability of ~~additional~~ ~~costs~~the wePRC ~~may~~government ~~incur~~to ormonitor ~~the~~and ~~timing~~prohibit offoreign control ~~such~~transactions ~~costs~~in key industries.

WEThese rules may significantly affect the means by which ~~MAY~~offshore-onshore ~~ENGAGE~~restructurings INare ~~FUTURE~~undertaken ~~ACQUISITIONS~~in ~~THAT~~the ~~COULD~~PRC ~~DISRUPT~~in ~~OUR~~connection ~~BUSINESS~~with offshore private equity and venture capital financings, ~~CAUSE~~mergers and ~~DILUTION~~acquisitions. TOIt ~~OUR~~is ~~STOCKHOLDERS~~expected ~~AND~~that ~~HARM~~such ~~OUR~~transactional ~~FINANCIAL~~activity ~~CONDITION~~in ~~AND~~the ~~OPERATING~~PRC in the ~~RESULTS~~near future will require significant case-by-case guidance from MOFCOM and other government authorities as appropriate. It is anticipated that application of the new rules will be subject to significant administrative interpretation, and we will need to closely monitor how MOFCOM and other ministries apply the rules to ensure its domestic and offshore activities continue to comply with PRC laws. Given the uncertainties regarding interpretation and application of the new rules, we may need to expend significant time and resources to maintain compliance. It is uncertain how our business operations or future strategy will be affected by the interpretations and implementation of the SAFE notices and new rules. Our business operations or future strategy could be adversely affected by the SAFE notices and the new rules. For example, we may be subject to more stringent review and approval processes with respect to our foreign exchange activities.

InThe ~~the future,~~foreign wecurrency ~~may~~exchange ~~acquire~~rate ~~companies~~between ~~or assets that we believe may enhance our market position~~U. ~~We may not be able to find suitable acquisition candidates and we may not be able to complete acquisitions on favorable terms, if at all~~S. ~~If we~~dollars doand ~~complete~~Renminbi ~~acquisitions,~~(“RMB”) we cannot assure you that they will ultimately strengthen our competitive position or that they will not be viewed negatively by customers, financial markets or investors. In addition, any acquisitions that we make could ~~lead~~adversely toaffect ~~difficulties in integrating personnel and operations from the acquired businesses and in retaining and motivating key personnel from these businesses. Acquisitions may disrupt~~ our ~~ongoing~~reported ~~operations, divert management from day-to-day responsibilities, increase our expenses and harm our operating results or~~ financial condition. Future acquisitions may reduce our cash available for operations and other uses and could result in an increase in amortization expense related to identifiable assets acquired, potentially dilutive issuances of equity securities or the incurrence of debt, any of which could harm our business, operating results and ~~financial~~ condition.

WETo the extent that we need to convert U.S. dollars into RMB for ~~MAY~~our ~~HAVE~~operational ~~DIFFICULTY~~needs, ~~RAISING~~our ~~NECESSARY~~financial ~~CAPITAL~~position TOand ~~FUND~~the ~~OPERATIONS~~price ASof Aour ~~RESULT~~common OFstock ~~MARKET~~may ~~PRICE~~be ~~VOLATILITY~~adversely OFaffected ~~OUR~~should ~~SHARES~~RMB OFappreciate ~~COMMON~~against ~~STOCK~~U.S. dollar at that time. Conversely, if we decide to convert our RMB into U.S. dollars for the operational needs or paying dividends on our common stock, the dollar equivalent of our earnings from our subsidiaries in the PRC would be reduced should U.S. dollar appreciate against RMB.

IfUntil ~~our~~1994, RMB experienced a gradual but significant ~~business~~devaluation ~~development~~against ~~plans~~most ~~are~~major ~~successful~~currencies, weincluding ~~may~~dollars, ~~require~~and ~~additional~~there ~~financing~~was a tosignificant ~~continue~~devaluation toof ~~develop~~RMB ~~and~~on ~~exploit~~January ~~existing~~1, ~~and~~1994 ~~new~~in ~~technologies~~connection ~~and~~with tothe replacement ~~expand~~of the dual exchange rate system with a unified managed floating ~~into~~rate ~~new~~foreign ~~markets~~exchange system. ~~The~~Since ~~exploitation~~1994, the value of ~~our~~RMB ~~technologies~~relative ~~may~~to U.S. dollar has remained stable and has appreciated slightly against U.S. dollar. Countries, ~~therefore~~including the United States, ~~be dependent~~have ~~upon~~argued ~~our~~that ~~ability~~RMB is artificially undervalued due to ~~obtain~~the ~~equity~~PRC's ~~financing~~current ~~through~~monetary ~~debt~~policies and ~~equity~~have orpressured the ~~other~~PRC ~~means~~to allow RMB to float freely in world markets. In ~~recent~~July ~~years~~2005, the ~~securities~~PRC government ~~markets~~changed inits policy of pegging the ~~United~~value ~~States~~of ~~have~~RMB to the U.S. dollar. ~~experienced~~Under athe ~~high~~new ~~level~~policy, ofRMB ~~price~~is ~~and~~permitted ~~volume~~to ~~volatility,~~fluctuate ~~and~~within ~~the~~a ~~market~~narrow ~~price~~and ofmanaged ~~securities~~band ofagainst ~~many~~a ~~companies~~basket ~~have~~of ~~experienced~~designated ~~wide~~foreign ~~fluctuations~~currencies. ~~that~~While ~~have~~the ~~not~~international ~~necessarily~~reaction to RMB revaluation has generally been ~~related~~positive, tothere remains significant international pressure on the ~~operations,~~PRC ~~performance,~~government ~~underlying~~to ~~asset~~adopt ~~values~~an even more orflexible ~~prospects~~currency policy, which could result in further and more significant appreciation of ~~such~~RMB ~~companies~~against the dollar.

~~For~~Restrictions ~~these reasons,~~on ~~our~~currency ~~shares~~exchange ~~of common stock can also be expected to be subject to volatility resulting from purely market forces over which we will have no control. Such volatility~~ may ~~make~~limit itour ~~more difficult~~ ability to ~~find~~utilize ~~investors willing to invest in~~ our ~~common~~revenues ~~stock,~~effectively orand tothe ~~negotiate~~ability ~~equity~~of ~~financing~~our orPRC ~~terms that are~~Operating ~~acceptable~~Entities to usobtain financing.

~~RISKS~~Substantially all of our revenues and operating expenses are ~~RELATING~~denominated TOin ~~THE~~RMB. ~~PEOPLE'S~~Restrictions ~~REPUBLIC~~on OFcurrency ~~CHINA~~exchange imposed by the PRC government may limit our ability to utilize revenues generated in RMB to fund our business activities outside the PRC, if any, or expenditures denominated in foreign currencies. Under current PRC regulations, RMB may be freely converted into foreign currency for payments relating to “current account transactions,” which include among other things dividend payments and payments for the import of goods and services, by complying with certain procedural requirements. Our PRC Operating Entities may also retain foreign exchange in their respective current account bank accounts, subject to a cap set by SAFE or its local counterpart, for use in payment of international current account transactions.

~~THERE~~However, conversion of RMB into foreign currencies and of ~~COULD~~foreign BEcurrencies ~~CHANGES~~into INRMB, ~~GOVERNMENT~~for ~~REGULATIONS~~payments ~~TOWARDS~~relating ~~THE~~to ~~NUTRACEUTICAL~~“capital ~~AND~~account transactions,” ~~HEALTH~~which principally includes investments and loans, generally ~~SUPPLEMENT~~requires ~~INDUSTRIES~~the ~~THAT~~approval ~~MAY~~of ~~ADVERSELY~~SAFE ~~AFFECT~~and ~~OUR~~other ~~BUSINESS~~relevant PRC governmental authorities. Restrictions on the convertibility of the RMB for capital account transactions could affect the ability of our PRC Subsidiary to make investments overseas or to obtain foreign exchange through debt or equity financing, including by means of loans or capital contributions from us.

~~The manufacture~~In ~~and~~August ~~sale~~2008, ofSAFE ~~nutraceutical~~promulgated ~~products~~Circular in142, ~~the~~a ~~PRC~~notice regulating isthe ~~heavily~~conversion ~~regulated~~ by ~~many~~FIEs ~~state,~~of ~~provincial~~foreign ~~and~~currencies ~~local~~into ~~authorities.~~RMB ~~These~~by ~~regulations significantly~~restricting ~~increase~~how the ~~difficulty~~converted ~~and~~RMB ~~costs~~may ~~involved~~be inused. ~~obtaining~~Circular ~~and~~142 ~~maintaining regulatory~~requires ~~approvals~~that ~~for~~RMB ~~marketing~~converted ~~new~~from the ~~and~~foreign ~~existing~~currency-denominated ~~products.~~capital ~~Our~~of ~~future~~a ~~growth and~~FIE ~~profitability~~may ~~depend~~only tobe aused ~~large~~for ~~extent~~purposes within onthe ~~our~~business ~~ability~~scope toapproved ~~obtain~~by ~~regulatory approvals.~~the ~~The~~applicable ~~State~~government ~~Food~~authority and may ~~Drug~~not ~~Administration~~be ofused ~~China~~for ~~recently~~equity ~~implemented new~~investments ~~guidelines~~within ~~for~~the ~~licensing~~PRC ofunless ~~nutraceutical~~specifically provided ~~products~~for otherwise. ~~All~~In ~~existing manufacturers with licenses~~addition, ~~which~~SAFE ~~are~~strengthened ~~currently~~its ~~valid~~oversight ~~under~~over the ~~previous~~ ~~guidelines,~~flow ~~are~~and ~~required~~use toof ~~apply~~RMB ~~for~~funds ~~the~~converted ~~“Food~~from ~~Production~~the ~~Permit,”~~foreign ~~and we~~currency-denominated ~~received~~capital ~~approvals~~of ina ~~September 2005~~FIE. ~~However,~~The ~~should~~use weof ~~fail~~such toRMB ~~maintain~~may ~~the Food~~not ~~Production~~be ~~Permit~~changed ~~under~~without ~~the~~approval ~~new~~from SAFE, ~~guidelines~~and inmay ~~the~~not ~~future;~~be ~~our~~used ~~businesses would~~to berepay ~~materially~~RMB ~~and~~loans ~~adversely~~if ~~affected.~~the ~~Moreover,~~proceeds ~~the~~of ~~laws~~such ~~and~~loans ~~regulations~~have ~~regarding~~not ~~acquisitions~~yet ofbeen ~~the~~used. ~~nutraceutical~~Violations ~~industry~~of inCircular ~~the~~142 ~~PRC~~ may ~~also~~result ~~change~~in severe penalties, ~~and~~including ~~may~~substantial ~~significantly~~fines ~~impact~~as ~~our~~set ~~ability~~forth toin ~~grow~~the ~~through acquisitions~~SAFE rules.

~~CURRENCY~~Any existing and future restrictions on currency exchange may ~~CONVERSION~~affect ~~AND~~the ~~EXCHANGE~~ability ~~RATE~~of ~~VOLATILITY~~our ~~COULD~~PRC ~~ADVERSELY~~Subsidiary ~~AFFECT~~or ~~OUR~~affiliated ~~FINANCIAL~~entity to obtain foreign ~~CONDITION~~currencies, limit our ability to utilize revenues generated in RMB to fund our business activities outside the PRC that are denominated in foreign currencies, or otherwise materially and adversely affect our business.

~~The~~We PRC government imposes control over the conversion of Renminbi into foreign currencies. Under the current unified floating exchange rate system, the People's Bank of China publishes an exchange rate, which we refer to as the People's Bank of China exchange rate, based on the previous day's dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal in foreign currency may ~~enter~~be ~~into~~exposed ~~foreign exchange transactions at exchange rates within an authorized range above or below the People's Bank of China exchange rate according~~ to ~~market~~liabilities ~~conditions.~~under ~~Pursuant to~~ the Foreign ~~Exchange~~Corrupt ~~Control~~Practices ~~Regulations~~Act ~~of the PRC issued by the State Council which came into effect on April 1, 1996,~~ and ~~the~~Chinese Regulations on the Administration of Foreign Exchange Settlement, Sale and Payment of the PRC which came into effect on July 1, 1996, regarding foreign exchange control, conversion of Renminbi into foreign exchange by Foreign Investment Enterprises, for use on current account items, including the distribution of dividends and profits to foreign investors, is permissible. Foreign Investment Enterprises are permitted to convert their afteranti-~~tax~~corruption ~~dividends and profits to foreign exchange and remit such foreign exchange to their foreign exchange bank accounts in the PRC. Conversion of Renminbi into foreign currencies for capital account items~~laws, ~~including direct investment, loans,~~ and ~~security~~any ~~investment, is still under certain restrictions.~~determination Onthat ~~January~~we ~~14,~~violated ~~1997,~~these ~~the~~laws ~~State~~could ~~Council~~have ~~amended~~a ~~the~~material ~~Foreign~~adverse ~~Exchange~~effect ~~Control Regulations and added, among other things, an important provision, which provides that the PRC government shall not impose restrictions~~ on ~~recurring~~our ~~international payments and transfers under current account items~~business.

~~Enterprises in~~We ~~the~~are ~~PRC~~subject ~~(including~~to the Foreign ~~Investment~~Corrupt ~~Enterprises)~~Practice ~~which~~Act, ~~require~~or ~~foreign~~FCPA, ~~exchange~~and ~~for~~other ~~transactions~~laws ~~relating~~that prohibit improper payments or offers of payments to ~~current~~foreign governments ~~account~~and ~~items~~their officials and political parties by U.S. persons and issuers as defined by the statute, ~~may~~for the purpose of obtaining or retaining business. We have operations, ~~without~~agreements with third parties and we make all of ~~approval~~our sales in China. The PRC also strictly prohibits bribery of government officials. Our activities in China create the ~~State~~risk ~~Administration~~of unauthorized payments or offers of ~~Foreign~~payments ~~Exchange~~by the employees, consultants, sales agents or ~~SAFE~~distributors of our company and its affiliate, ~~effect~~even though they may not always be subject to ~~payment~~our ~~from~~control. ~~their~~It ~~foreign~~is ~~exchange~~our ~~account~~policy to implement safeguards to discourage these practices by our employees, and we have implemented a policy to comply specifically with the FCPA. In spite of these efforts, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or ~~convert~~distributors of our company and ~~pay~~its affiliate atmay engage in conduct for which we might be held responsible. Violations of the ~~designated~~FCPA or Chinese anti-corruption laws may result in severe ~~foreign~~criminal ~~exchange~~or ~~banks~~civil bysanctions, ~~providing~~and ~~valid~~we ~~receipts~~may be subject to other liabilities, which could negatively affect our business, operating results and ~~proofs~~financial condition. In addition, the U.S. government may seek to hold our company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

~~MOST OF~~If ~~OUR~~we ~~ASSETS~~make ~~ARE~~equity ~~LOCATED~~compensation INgrants ~~CHINA~~to persons who are PRC citizens, ~~ANY~~they ~~DIVIDENDS~~may OFbe ~~PROCEEDS~~required ~~FROM~~to ~~LIQUIDATION~~register with SAFE. We may also face ISregulatory ~~SUBJECT~~uncertainties TOthat ~~THE~~could ~~APPROVAL~~restrict OFour ~~THE~~ability ~~RELEVANT~~to ~~CHINESE~~adopt ~~GOVERNMENT~~an equity ~~AGENCIES~~compensation plan for our directors and employees and other parties under PRC law.

~~Our~~On April 6, 2007, SAFE issued the Operating Procedures for ~~assets~~Administration ~~are~~of ~~predominantly~~Domestic ~~located~~Individuals ~~inside~~Participating ~~China~~in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company, also known as Circular 78. ~~Under~~It is not clear whether Circular 78 covers all forms of equity compensation plans or only those which provide for the ~~laws~~granting ~~governing~~of ~~foreign~~stock ~~invested~~options. ~~enterprises~~For inany ~~China,~~plans ~~dividend~~which ~~distribution~~are so covered and ~~liquidation~~are adopted by a non-PRC listed company after April 6, 2007, Circular 78 requires all participants who are ~~allowed~~PRC ~~but~~citizens ~~subject~~to register with and obtain approvals from SAFE prior to ~~special~~their participation ~~procedures~~in ~~under~~the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the ~~relevant~~necessary ~~laws~~applications and ~~rules.~~filings ~~Any~~if they ~~dividend~~participated ~~payment~~in ~~will~~an beoverseas ~~subject~~listed company's covered equity compensation plan prior to ~~the~~April ~~decision~~6, of2007. We intend to adopt an equity compensation plan in the future ~~board~~and ofmake option grants to our officers and directors, most of whom are PRC citizens. Circular 78 may require our officers and directors who receive ~~subject~~option togrants ~~foreign~~and ~~exchange~~are ~~rules~~PRC ~~governing~~citizens ~~such~~to ~~repatriation~~register with SAFE. ~~Any~~We ~~liquidation~~believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time consuming. If it is determined that any of our equity compensation plans is subject to ~~both~~Circular ~~the~~78, ~~relevant~~failure ~~government~~to ~~agency's~~comply ~~approval~~with such provisions may subject us and ~~supervision~~participants asof our equity incentive plan who are PRC citizens to fines and ~~well~~legal ~~the~~sanctions ~~foreign~~and ~~exchange~~prevent ~~control~~us from being able to grant equity compensation to our PRC employees. ~~This~~In ~~may~~that ~~generate~~case, ~~additional~~our ~~risk~~ability ~~for~~to compensate our employees and ~~investors~~directors inthrough ~~case~~equity ofcompensation ~~dividend~~would ~~payment~~be hindered and ~~liquidation~~our business operations may be adversely affected.

~~CHINA’S~~Any recurrence of severe acute respiratory syndrome ~~ECONOMIC~~(“SARS”), ~~POLICIES~~Avian ~~COULD~~Flu, ~~AFFECT~~or ~~OUR~~another ~~BUSINESS~~widespread public health problem in the PRC could adversely affect our operations.

~~Substantially~~A renewed outbreak of SARS, Avian Flu or another widespread public health problem in the PRC, where all of our ~~assets~~businesses are located ~~in China~~ and where ~~substantially~~ all of our ~~revenue~~sales ~~is derived~~occur, ~~from~~could have a negative effect on our operations. Our inbusinesses ~~China.~~are ~~Accordingly,~~dependent upon our ~~results~~ability ofto ~~operations~~continue ~~and~~to efficiently ~~prospects~~distribute ~~are~~and ~~subject,~~sell toour aproducts. ~~significant~~Such ~~extent,~~an tooutbreak ~~the~~could ~~economic,~~have ~~political~~an ~~and~~impact on our ~~legal~~operations ~~developments~~as ina ~~China.~~result of:

~~While China's~~quarantines ~~economy~~or ~~has~~closure ~~experienced a significant growth in the past twenty years, growth has been irregular, both geographically and among various sectors~~ of ~~the economy.~~our ~~The~~distribution ~~Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall economy of China~~center, ~~but~~which ~~may~~would ~~also have a negative effect on us.~~severely ~~For~~ disrupt ~~example,~~ our ~~operating results and financial condition may be adversely~~operations, ~~affected by the government control over capital investments or changes in tax regulations.~~
~~The economy of China has been transitioning from a planned economy to a more market-oriented economy. In recent years~~ the ~~Chinese~~sickness ~~government~~or ~~has~~death ~~implemented measures emphasizing the utilization~~ of ~~market~~our ~~forces~~key ~~for~~officers ~~economic reform~~ and ~~the~~ ~~reduction of state ownership of productive assets and the establishment of corporate governance in business enterprises; however~~employees, a substantial portion of productive assets in China are still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over China's economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and ~~providing preferential treatment to~~ ~~particular industries or companies.~~
~~WE MAY~~a ~~FACE~~general ~~OBSTACLES~~slowdown ~~FROM~~in ~~THE~~the ~~COMMUNIST~~PRC ~~SYSTEM IN THE PEOPLE'S REPUBLIC OF CHINA~~economy.

~~Foreign companies~~Any ~~conducting operations in The People's Republic~~ of ~~China~~the ~~face significant~~foregoing ~~political,~~events ~~economic~~or ~~and~~other ~~legal~~unforeseen ~~risks.~~consequences ~~The Communist regime in The~~of ~~People's~~public ~~Republic~~health ofproblems ~~China,~~could ~~including~~adversely aaffect ~~stifling~~our ~~bureaucracy may hinder Western investment~~operations.

WEAdverse changes in political, economic and other policies ~~MAY~~of ~~HAVE~~the ~~DIFFICULTY~~PRC ~~ESTABLISHING~~government ~~ADEQUATE~~could ~~MANAGEMENT~~have a material adverse effect on the overall economic growth of the PRC, ~~LEGAL~~which ~~AND~~could ~~FINANCIAL~~reduce the demand for our products and ~~CONTROLS~~materially INand ~~THE~~adversely ~~PEOPLE'S~~affect ~~REPUBLIC~~our OFcompetitive ~~CHINA~~position.

~~The People's~~All ~~Republic~~ of ~~China~~our ~~historically~~business ~~has~~operations ~~been~~are ~~deficient~~conducted in ~~Western~~the ~~style management~~PRC, and all ~~financial~~of ~~reporting~~our ~~concepts~~sales ~~and~~are ~~practices,~~currently asmade ~~well as~~ in ~~modern banking,~~the ~~computer and other control systems~~PRC. WeAccordingly, ~~may~~our ~~have difficulty in hiring~~business, ~~and~~financial ~~retaining~~condition, aresults ~~sufficient number~~ of ~~qualified~~operations ~~employees~~and toprospects ~~work~~are ~~in The People's~~affected ~~Republic~~significantly ofby ~~China. As a result of these factors~~economic, wepolitical ~~may~~and ~~experience~~legal ~~difficulty~~developments in ~~establishing~~ ~~management,~~the ~~legal~~PRC. ~~and~~The ~~financial controls, collecting financial data~~PRC ~~and~~economy ~~preparing~~differs ~~financial~~from ~~statements,~~the ~~books~~economies of ~~account~~most ~~and~~developed ~~corporate~~countries ~~records~~in ~~and~~many respects, ~~instituting~~including: ~~business practices that meet Western standards.~~

~~BECAUSE OUR~~the ~~ASSETS~~extent ~~AND~~of ~~OPERATIONS~~government ~~ARE LOCATED IN CHINA, YOU MAY HAVE DIFFICULTY~~involvement; ~~ENFORCING ANY CIVIL LIABILITIES AGAINST US UNDER THE SECURITIES AND OTHER LAWS OF THE UNITED STATES OR ANY STATE.~~
~~We are a holding company, and all of our assets are located in~~ the ~~People’s~~level ~~Republic~~ of ~~China.~~ ~~In addition, our directors and officers are non-residents of the United~~development; States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon these non-residents, or to enforce against them judgments obtained in United States courts, including judgments based upon the civil liability provisions of the securities laws of the United States or any state.
~~There is uncertainty as to whether courts of~~ the ~~People’s~~growth ~~Republic of China would~~rate; ~~enforce:~~
~~· Judgments of United States courts obtained against us or these non-residents based on~~ the ~~civil~~control ~~liability provisions~~ of ~~the~~foreign ~~securities laws of the United States or any state~~exchange; or
the allocation of resources;
an evolving regulatory system; and
lack of sufficient transparency in the regulatory process.

While the PRC economy has experienced significant growth in the past 20 years, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall PRC economy, but may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

The PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in the PRC are still owned by the PRC government. The continued control of these assets and other aspects of the national economy by the PRC government could materially and adversely affect our business. The PRC government also exercises significant control over PRC economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Efforts by the PRC government to slow the pace of growth of the PRC economy could result in decreased expenditures by the users of our products, which in turn could reduce demand for our products.

Moreover, the political relationship between the United States, Europe, or other Asian nations and the PRC is subject to sudden fluctuation and periodic tension. Changes in political conditions in the PRC and changes in the state of foreign relations are difficult to predict and could adversely affect our operations or cause our products to become less attractive. This could lead to a decline in our profitability.

Any adverse change in the economic conditions or government policies in the PRC could have a material adverse effect on overall economic growth and the level of healthcare investments and expenditures in the PRC, which in turn could lead to a reduction in demand for our products and consequently have a material adverse effect on our businesses.

·Because Inour ~~original~~business ~~actions~~is ~~brought~~located in the ~~People’s Republic of China~~PRC, ~~liabilities~~we ~~against us or non-residents predicated upon the securities laws of the United States or any state. Enforcement of a foreign judgment in the People’s Republic of China also~~ may behave difficulty ~~limited~~establishing oradequate ~~otherwise~~management, ~~affected~~legal byand ~~applicable~~financial ~~bankruptcy~~controls, ~~insolvency,~~which are ~~liquidation,~~required ~~arrangement,~~in ~~moratorium~~order ~~or similar laws relating~~ to orcomply ~~affecting~~with ~~creditors'~~United ~~rights~~States ~~generally~~securities ~~and will be subject to a statutory limitation of time within which proceedings may be brought~~laws.

~~THE~~PRC companies have historically not adopted a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and, computer, financial and other control systems. In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. ~~LEGAL~~As ~~SYSTEM~~a ~~EMBODIES~~result ~~UNCERTAINTIES~~of these factors, ~~WHICH~~we ~~COULD~~may ~~LIMIT~~experience ~~LAW~~difficulty ~~ENFORCEMENT~~in establishing management, legal ~~AVAILABILITY~~and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. 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. This may result in significant deficiencies or material weaknesses in our internal controls which could impact the reliability of its financial statements and prevent us from complying with the rules and regulations promulgated by the Securities Exchange Commission (the “SEC”) and the requirements of the Sarbanes-Oxley Act of 2002 (“SOX”). Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our business.

~~The~~Investors PRC legal system is a civil law system based on written statutes. Unlike common law systems, decided legal cases have little precedence. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past 27 years has significantly enhanced the protections afforded to various forms of foreign investment in China. Each of our PRC operating subsidiaries and affiliates is subject to PRC laws and regulations. However, these laws and regulations change frequently and the interpretation and enforcement involve uncertainties. For instance, we may ~~have~~experience todifficulties resort to administrative and court proceedings to enforce the legal protection that we are entitled to by law or contract. However, since PRC administrative and court authorities have significant discretion in ~~interpreting statutory and contractual terms, it may~~effecting beservice ~~difficult to evaluate the outcome~~ of ~~administrative court proceedings and the level of law enforcement that we would receive in more developed~~ legal ~~systems. Such uncertainties~~process, ~~including~~enforcing ~~the~~foreign ~~inability~~judgments ~~to enforce our contracts, could affect our business and operation. In addition, intellectual property rights and confidentiality protections in China may not be as effective as in the United States~~ or ~~other~~bringing ~~countries. Accordingly, we cannot predict the effect of future~~original ~~developments~~actions in the PRC ~~legal~~based ~~system,~~upon ~~particularly~~United ~~with~~States ~~regard to the industries in which we operate~~laws, including the ~~promulgation of new laws. This may include~~federal ~~changes~~securities ~~to existing~~ laws or ~~the~~other ~~interpretation~~foreign orlaws ~~enforcement~~against ~~thereof,~~us or ~~the preemption of local regulations by national laws. These uncertainties could limit the availability of law enforcement, including~~ our ~~ability to enforce our agreements with the government entities and other foreign investors~~management.

~~RISKS~~All of our current business operations are conducted in the ~~RELATED~~PRC. TOMoreover, ~~CORPORATE~~all ~~AND~~of ~~STOCK~~our ~~MATTERS~~directors and officers are nationals and residents of the PRC. All the assets of these persons are located outside the United States and in the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside the PRC upon these persons. In addition, uncertainty exists as to whether the PRC courts would recognize or enforce judgments of United States courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in the PRC against us or such persons predicated upon the securities laws of the United States or any state thereof.

~~OUR CORPORATE~~RISKS ~~ACTIONS~~RELATING ~~ARE~~TO ~~SUBSTANTIALLY~~INVESTMENT ~~CONTROLLED~~IN BY OUR ~~PRINCIPAL SHAREHOLDERS.~~SECURITIES

~~Our principal~~The ~~shareholders,~~limited ~~which~~trading ~~include~~volume ~~our~~in ~~officers and directors, own approximately 49% of~~ our ~~outstanding shares of common~~ stock asmay ~~of July 19, 2010.~~cause ~~These~~volatility shareholders, acting individually or as a group, could exert substantial influence over matters such as electing directors and approving mergers or other business combination transactions. In addition, because of the percentage of ownership and voting concentration in ~~these principal shareholders and their affiliated entities, elections of our board of directors will generally be within~~ the ~~control~~market ofprice ~~these shareholders. While all~~ of our ~~shareholders~~common ~~are entitled to vote on matters submitted to our shareholders for approval, the concentration of shares and voting control presently lies with these principal shareholders~~stock. As such, it would be difficult for shareholders to propose and have approved proposals not supported by management. There can be no assurances that matters voted upon by our officers and directors in their capacity as shareholders will be viewed favorably by all of our shareholders.

~~FUTURE~~Our common stock is currently traded on a limited basis on the ~~EQUITY~~OTCBB ~~TRANSACTIONS~~under the symbol, ~~INCLUDING~~"CKGT.OB". ~~EXERCISE~~The OFquotation ~~WARRANTS~~of our common stock on the OTCBB does not assure that a meaningful, ~~COULD~~consistent ~~RESULT~~and INliquid trading market ~~DILUTION~~currently exists, and in recent years, such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like us. Our common stock is thus subject to volatility. In the absence of an active trading market:

~~From time to time the Company may sell restricted stock and warrants to~~ investors ~~in private placements in negotiated transactions to raise capital. The stock~~ may ~~be sold~~have atdifficulty abuying ~~greater discount to market prices compared to a public stock offering,~~ and ~~the~~selling ~~exercise price of the warrants sometimes is at~~ or ~~lower~~obtaining ~~than~~ market ~~prices. These transactions cause dilution to existing~~ quotations; ~~shareholders.~~
market visibility for our common stock may be limited; and
lack of visibility for our common stock may have a depressive effect on the market for our common stock.

Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

Our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. 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 discourage investor interest in and limit the marketability of our common stock.

~~THE LIMITED~~NASD ~~TRADING~~sales ~~VOLUME~~practice INrequirements ~~OUR~~may ~~STOCK~~also ~~MAY~~limit ~~CAUSE~~a stockholder's ~~VOLATILITY~~ability INto ~~THE~~buy ~~MARKET~~and ~~PRICE~~sell ~~OF OUR~~our ~~COMMON STOCK~~stock.

Our common stock is currently quoted on a limited basis on the OTCBB under the symbol, "CKGT.OB." The quotation of our common stock on the OTCBB does not assure that a meaningful, consistent and liquid trading market currently exists, and in recent years, such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like us. Our common stock is thus subject to volatility and for the last two years, the price of our common stock has fluctuated between $3.00 and $0.12. In the absence of an active trading market:

· investors may have difficulty buying and selling or obtaining market quotations;

· market visibility for our common stock may be limited; and

· a lack of visibility for our common stock may have a depressive effect on the market for our common stock.

OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.

Our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. 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 tthe customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock no 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 discourage investor interest in and limit the marketability of our common stock.

NASD SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.

Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account.

Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be "penny stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

Shares eligible for future sale may adversely affect the market price of our Common stock, as the future sale of a substantial amount of our restricted stock in the public marketplace could reduce the price of our common stock.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act (“Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied a one-year holding period may, under certain circumstances, sell within any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading -volume of the class during the four calendar weeks prior to such sale. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitations, by a non-affiliate of our company that has satisfied a two-year holding period. Any substantial sale of common stock pursuant to Rule 144 or pursuant to any resale prospectus may have an adverse effect on the market price of our securities.

Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including SOX and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.

We do not foresee paying cash dividends in the near future.

We do not plan to declare or pay any cash dividends on our shares of common stock in the foreseeable future and currently intend to retain any future earnings for funding growth. As a result, investors should not rely on an investment in our securities if they require the investment to produce dividend income.

RISK FACTORS RELATED TO THIS OFFERING

Our sale of shares to Kodiak will be for less than the then-prevailing market price of our common stock, which could depress the market for and price of our common stock and existing stockholders could experience dilution upon issuance of our common stock.

We are registering an aggregate of 3,000,000 shares of common stock, which we plan to issue to Kodiak under the Investment Agreement. The sale of such shares to Kodiak could depress the market for and price of our common stock. As of April 13, 2011, there were 22,305,527 shares of our common stock issued and outstanding.

The common stock to be issued to Kodiak will be purchased at a fifteen percent (15%) discount equaling eighty five percent (85%) of the volume-weighted average price of our common stock five days immediately preceding the date of our notice to Kodiak of our election to put shares and five days immediately following such notice date pursuant to the Investment Agreement. Kodiak has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Kodiak sells the shares, the price of our common stock could decrease.

~~SHARES ELIGIBLE~~IF ~~FOR~~THE ~~FUTURE~~PER ~~SALE~~SHARE ~~MAY~~PRICE ~~ADVERSELY~~OF ~~AFFECT~~ THE ~~MARKET~~COMMON ~~PRICE~~STOCK OFTO ~~OUR~~BE ~~COMMON~~ISSUED ~~STOCK,~~TO ASKODIAK ~~THE~~IS ~~FUTURE~~SET ~~SALE~~AT OFLESS ATHAN ~~SUBSTANTIAL~~ONE ~~AMOUNT~~DOLLAR OFAND ~~OUR~~WE ~~RESTRICTED~~ELECT ~~STOCK~~TO INEXERCISE ~~THE~~OUR PUT AT ~~PUBLIC~~SUCH ~~MARKETPLACE~~A ~~COULD~~PRICE ~~REDUCE~~WE MAY NOT BE ABLE TO GENERATE ADEQUATE FUNDS FROM THE ~~PRICE~~EXERCISE OF OUR ~~COMMON STOCK~~PUT.

~~From~~We ~~time to~~are ~~time,~~registering ~~certain~~an ofaggregate ~~our stockholders may be eligible to sell all or some~~ of ~~their~~ 3,000,000 shares of common stock, bywhich ~~means~~we ofplan ~~ordinary~~to ~~brokerage~~issue ~~transactions in the open market pursuant~~ to ~~Rule~~Kodiak ~~144,~~upon ~~promulgated under~~ the ~~Securities~~exercise ~~Act~~of ~~("Rule 144"),~~our ~~subject~~Put ~~to certain limitations. In general,~~ pursuant to the ~~Rule~~Investment ~~144,~~Agreement. ~~a stockholder~~If ~~(or~~the ~~stockholders~~per ~~whose~~share ~~shares~~price ~~are~~of ~~aggregated)~~our ~~who~~common ~~has~~stock ~~satisfied a~~is ~~one-year~~determined ~~holding~~to ~~period~~be ~~may,~~less ~~under~~than ~~certain circumstances~~$1, ~~sell~~based ~~within~~on ~~any three-month period~~ a ~~number~~pre-determined offormula ~~securities~~contained ~~which does not exceed~~ in the ~~greater~~Investment ~~of 1%~~Agreement, ofand ~~the~~we ~~then~~elect ~~outstanding~~to ~~shares~~exercise ofour ~~common~~Put ~~stock~~at orsuch ~~the~~a ~~average~~price ~~weekly trading~~we ~~-volume~~would ofnot ~~the~~be ~~class~~able ~~during~~to access the ~~four~~entire ~~calendar~~one ~~weeks~~million ~~prior~~five tohundred ~~such~~thousand ~~sale. Rule 144~~dollars ~~also permits~~($1, ~~under certain circumstances~~500,000) ~~the sale of securities, without any limitations, by a non-affiliate of our company~~ that ~~has~~we ~~satisfied~~are apermitted ~~two-year holding~~to ~~period.~~Put ~~Any substantial sale of common stock pursuant~~ to ~~Rule~~Kodiak ~~144~~under orthe Investment ~~pursuant~~Agreement toand, ~~any~~consequently, ~~resale~~we ~~prospectus~~ may not have anadequate ~~adverse~~funding ~~effect~~for ~~on the market price of~~ our ~~securities~~planned operations.

If we or our independent registered public accountants cannot attest our adequacy in the internal control measures over our financial reporting, as required by Section 404 of the U.S. Sarbanes-Oxley Act, for the fiscal year ending December 31, 2010, we may be adversely affected.

As a public company, we are subject to report our internal control structure and procedures for financial reporting in our annual reports on Form 10-KSB, as a requirement of Section 404 of the U.S. Sarbanes-Oxley Act of 2002 by the U.S. Securities and Exchange Commission (the "SEC"). The report must contain an assessment by management about the effectiveness of our internal controls over financial reporting. Moreover, the independent registered public accountants of our Company must attest to and report on management's assessment of the same. Even if our management attests to our internal control measures to be effective, our independent registered public accountants may not be satisfied with our internal control structure and procedures. We cannot guarantee the outcome of the report and it could result in an adverse impact on us in the financial marketplace due to the loss of investor confidence in the reliability of our financial statements, which could negative influence to our stock market price.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and elsewhere in this prospectus constitute forward-looking statements. These statements involve risks known to us, significant uncertainties, and other factors which may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by those forward-looking statements.

You can identify forward-looking statements by the use of the words “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “proposed,” or “continue” or the negative of those terms. These statements are only predictions. In evaluating these statements, you should specifically consider various factors, including the risks outlined above. These factors may cause our actual results to differ materially from any forward-looking statement.

Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

USE OF PROCEEDS

We will not receive any proceeds from the sale of our common stock by the selling stockholders. However, we will receive proceeds from the sale of our common stock to Kodiak pursuant to the Investment Agreement. We may also receive the sale price of any common stock we sell to the selling stockholders upon exercise of outstanding warrants.

Unless otherwise indicated in the applicable prospectus supplement, we anticipate that any net proceeds from the sale of securities that we offer under this prospectus and any accompanying prospectus supplement will be used for general corporate purposes. Such general purposes may include acquisitions, investments, repayment of debt, capital expenditures, repurchase of our capital stock and any other purposes that we may specify in any prospectus supplement. We may invest the net proceeds temporarily until we use them for their stated purpose.

THE SELLING STOCKHOLDER

The following table sets forth as of ~~July~~April 1913, ~~2010~~2011, information regarding the current beneficial ownership of our common stock by the persons identified, based on information provided to us by them, which we have not independently verified. Although we have assumed for purposes of the table that the selling stockholders will sell all of the shares offered by this prospectus, because they may from time to time offer all or some of their shares under this prospectus or in another manner, no assurance can be given as to the ~~actual~~ actual number of shares that will be resold by the selling stockholder (or any of of them), or that will be held after completion of the sales. In addition, a selling stockholder may have sold or otherwise disposed of shares in transactions exempt from the registration requirements of the Securities Act or otherwise since the date he or she provided information to us. The selling stockholders are not making any representation that the shares covered by this prospectus will be offered for sale. Except as set forth below, no selling stockholder has held any position nor had any material relationship with us or our affiliates during the past three years.

Name of selling security holder

Amount of securities of the class owned by the security holder before this offering

Amount to be offered for the security holder’s account

Amount of the class to be owned by security holder after the offering is complete(1)

Percentage of the class to be owned by the security holder after the offering is complete(2)

Kodiak Capital Group, LLC(3)

Up to 1,000,000 shares

(1) Assumes that all securities registered will be sold.

	Amount of
	securities of the		Amount of the	Percentage of the
	class owned by the	Amount to be	class to be owned	class to be owned by
	security holder	offered for the	by security holder	the security holder
	before this	security holder’s	after the offering	after the offering is
Name of selling security holder	offering	account	is complete⁽¹⁾	complete⁽²⁾
Kodiak Capital Group, LLC⁽³⁾	250,000	Up to 3,000,000 shares	250,000	0%


(1)	Assumes that all securities registered will be sold.

(2)	Applicable percentage ownership is based on 22,305,527 shares of common stock outstanding as of April 13, 2011, together with securities exercisable or convertible into shares of common stock within 60 days April 13, 2011 for each stockholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of April 13, 2011 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(3)	Pursuant to Put as set forth in the Investment Agreement. The natural person with voting and dispositive power for Kodiak Capital Group LLC is Ryan Hodson.

(2) Applicable percentage ownership is based on 21,227527 shares of common stock outstanding as of July 19, 2010, together with securities exercisable or convertible into shares of common stock within 60 days July 19, 2010 for each stockholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of July 19, 2010 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(3) Pursuant to Put as set forth in the Investment Agreement. The natural person with voting and dispositive power for Kodiak Capital Group LLC is Ryan Hodson.

PLAN OF DISTRIBUTION

This prospectus includes 13,000,000 shares of common stock offered by the selling stockholder.

The selling stockholder and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

· ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;
· block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
· an exchange distribution in accordance with the rules of the applicable exchange;
· privately negotiated transactions;
· to cover short sales made after the date that this Registration Statement is declared effective by the Commission;
· broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
· a combination of any such methods of sale; and
· any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

Upon the Company being notified in writing by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such shares of common stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a selling stockholder that a donee or pledgee intends to sell more than 500 shares of common stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the selling stockholder and/or the purchasers. Each selling stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such selling stockholder’s business and, at the time of its purchase of such securities such selling stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

The Company has advised each selling stockholder that it may not use shares registered on this Registration Statement to cover short sales of common stock made prior to the date on which this Registration Statement shall have been declared effective by the Commission. In addition, the Company has advised each selling stockholder that the Commission currently takes the position that coverage of short sales “against the box” prior to the effective date of the registration statement of which this prospectus is a part would be a violation of Section 5 of the Securities Act, as described in Item 65, Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief Counsel, Division of Corporate Finance.

If a selling stockholder uses this prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The selling stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling stockholders in connection with resales of their respective shares under this Registration Statement.

The Company is paying all fees and expenses incident to the registration of the shares, excluding brokerage commissions or underwriter discounts. The selling stockholders, alternatively, may sell all or any part of the shares offered in this prospectus through an underwriter. No selling stockholder has entered into any agreement with a prospective underwriter and there is no assurance that any such agreement will be entered into.

The Company has agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act pursuant to the Investment Agreement.

DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 200,000,000 shares of common stock, par value $0.001 per share, and 200,000,000 shares of preferred stock, par value $0.001 per share. As of ~~July 16~~April 13, ~~2010~~2011, 2122,~~227~~305,527 shares of common stock were issued and outstanding and ~~50,000~~ no shares of Series A Convertible Preferred Stock were issued and outstanding. In addition, at such date, 35,~~150~~100,000 shares of common stock were reserved for issuance upon the issuance of up to 13,000,000 shares of common stock to Kodiak pursuant to the Investment Agreement and registered under this registration statement, the conversion of the Series A Convertible Preferred Stock and the exercise of outstanding common stock purchase warrants and common stock purchase options.

Common Stock

Voting, Dividend and Other Rights. Each outstanding share of common stock entitles the holder to one vote on all matters presented to the shareholders for a vote. Holders of shares of common stock have no cumulative voting, preemptive, subscription or conversion rights. All shares of common stock to be issued pursuant to this registration statement will be duly authorized, fully paid and non-assessable. Our Board of Directors determines if and when distributions may be paid out of legally available funds to the holders. To date, we have not declared any dividends with respect to our common stock. Our declaration of any cash dividends in the future will depend on our Board of Directors’ determination as to whether, in light of our earnings, financial position, cash requirements and other relevant factors existing at the time, it appears advisable to do so. We do not anticipate paying cash dividends on the common stock in the foreseeable future. However, while the Series A Convertible Preferred Stock is outstanding, no dividends shall be payable with respect to the common stock.

Rights Upon Liquidation. Upon liquidation, subject to the right of any holders of the preferred stock to receive preferential distributions, each outstanding share of common stock may participate pro rata in the assets remaining after payment of, or adequate provision for, all our known debts and liabilities.

Majority Voting. The holders of a majority of the outstanding shares of common stock constitute a quorum at any meeting of the shareholders. A plurality of the votes cast at a meeting of shareholders elects our directors. The common stock does not have cumulative voting rights. Therefore, the holders of a majority of the outstanding shares of common stock can elect all of our directors. In general, a majority of the votes cast at a meeting of shareholders must authorize shareholder actions other than the election of directors. Most amendments to our certificate of incorporation require the vote of the holders of a majority of all outstanding voting shares.

Preferred Stock

Authority of Board of Directors to Create Series and Fix Rights. Under our certificate of incorporation, as amended, our Board of Directors can issue up to 200,000,000 shares of preferred stock from time to time in one or more series. The Board of Directors is authorized to fix by resolution as to any series the designation and number of shares of the series, the voting rights, the dividend rights, the redemption price, the amount payable upon liquidation or dissolution, the conversion rights, and any other designations, preferences or special rights or restrictions as may be permitted by law. Unless the nature of a particular transaction and the rules of law applicable thereto require such approval, our Board of Directors has the authority to issue these shares of preferred stock without shareholder approval. Our Board of Directors has not designated any shares of the authorized but unissued preferred stock.

Series A Convertible Preferred Stock

We authorized 1,250,000 shares of preferred stock, designated as Series A Convertible Preferred Stock, $0.001 par value per share, ofall of which ~~1,200,000 shares~~ have been converted into common stock ~~and~~as ~~50,000~~of ~~shares~~the ~~are~~date ~~currently issued~~of ~~and~~this ~~outstanding~~registration statement.

Voting, Dividend and Other Rights. The holders of Series A Convertible Preferred Stock have no voting rights. The Series A Convertible Preferred Stock is not entitled to receive any dividends.

Rights Upon Liquidation. Upon liquidation, each outstanding share of Series A Convertible Preferred Stock shall be entitled to receive an amount equal to $0.60 in the assets remaining after payment of, or adequate provision for, all our known debts and liabilities before any distribution or payment is made to any securities junior to the Series A Convertible Preferred Stock.

Conversion Rights. Each shares of Series A Convertible Preferred Stock shall be initially convertible into one share of common stock at the option of the holders at any time, subject to certain adjustments and limitations.

Warrants

As of the date of this registration statement, there are outstanding warrants to purchase up to 750,000 shares of common ~~sock~~stock at the initial exercise price of $1.00 per share, 500,000 shares of common stock at an initial exercise price of $0.9375 per share and warrants to purchase up to 600,000 shares of common stock at an initial exercise price of $1.25 per share. Pursuant to the terms of such warrants, the exercise price of such warrants is subject to certain adjustments.

Options

As of the date of this registration statement, there are outstanding options to purchase up to 250,000 shares of common stock at the exercise price of $1.49 per share.

Nevada Anti-Takeover Law And Certain Charter And Bylaw Provisions

We are subject to the provisions of the Nevada private corporation law, which are anti-takeover provisions. In general, the provisions of Sections 78.411 -444 prohibit a publicly held Nevada corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the "business combination" or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns or within three years prior to the determination of interested stockholder status, did own, 10% or more of a corporation's voting stock. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

These provisions are intended to enhance the likelihood of continuity and stability in the composition of the board and in the policies formulated by the board and to discourage some types of transactions that may involve actual or threatened change of control of our company. These provisions are designed to reduce our vulnerability to an unsolicited proposal for a takeover that does not contemplate the acquisition of all of our outstanding shares or an unsolicited proposal for the potential restructuring or sale of all or a part of our company. However, these provisions could discourage potential acquisition proposals and could delay or prevent a change in control of CKGT. They may also have the effect of preventing changes in our management.

Our articles of incorporation and bylaws do not exclude us from these restrictions.

Registration Rights

In connection with the issuance of our common stock to Kodiak, the Company is required to file with the SEC this registration statement on Form S-1 registering the shares of our common stock issued to Kodiak. The Company has agreed to use commercially reasonable efforts to maintain the effectiveness of the registration statement, of which this prospectus is part, until the earlier of the date on which (i) Kodiak has sold all of the shares of our common stock issued or issuable pursuant to the Investment Agreement; (ii) Kodiak has sold all of the shares of our common stock issued or issuable pursuant to the Investment agreement without registration in compliance with Rule 144 of the 1933 Act; or (iii) Kodiak has no right to acquire any additional shares of our common stock pursuant to the Investment Agreement. We cannot assure you that we will be able to keep this registration statement continuously effective for the required period.

Piggyback Registration Rights

Pursuant to a certain Preferred Stock Purchase Agreement between the Company and T Squared Investments LLC dated July 16, 2008, if we propose to register any shares of our common stock under the Securities Act in connection with a public offering, upon request, we are required to include in the registration statement, which covers such securities we have proposed to register, warrants held by T Squared Investments LLC to purchase up to 1,100,000 shares of the Company’s common stock. T Squared Investments LLC has elected not to have such warrants included in this registration statement.

Transfer Agent And Register

The transfer agent and registrar for our common stock is Interwest Transfer Co. Inc., telephone number (801) 272-9294.

Market Information

Our common stock price is quoted on the OTC Bulletin Board, or OTCBB, under the symbol “CKGT.”

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or any of its subsidiaries.

DESCRIPTION OF BUSINESS

Corporate History

As used in this report, “we”, “us”, “our”, “CKGT”, “our Company”, “the Company”, or “China Kangtai” refers to China Kangtai Cactus Bio-Tech Inc. and all of its subsidiaries and affiliated companies.

Our Company was initially incorporated as InvestNet, Inc. (“InvestNet”) on March 16, 2000 under the laws of the State of Nevada. Prior to June 3, 2005, the Company’s operations consisted of real time software and IT solutions which the Company held through its subsidiaries, Champion Agents Limited (which wholly owned DSI Computer Technology Company Limited) and Interchance Limited. Due to the fact that the Company was unable to generate sufficient cash flows from operations, obtain funding to sustain operations nor reduce or stabilize expenses to the point where it could have realized a net positive cash flow, management and the board of directors determined that it was in the best interests of the stockholders to seek a strategic alternative so that the Company could continue to operate. On May 13, 2005, InvestNet entered into a series of agreements to effect a “reverse merger transaction” via a share exchange and through the conversion of a convertible promissory note, as described below, with China Kangtai Cactus Bio-tech Company Limited (“BVI China Kangtai”), a British Virgin Islands (“BVI”) incorporated on November 26, 2004.

These documents included a Stock Purchase Agreement, pursuant to which InvestNet issued 30,000,000 shares to a stockholder of BVI China Kangtai for $300,000. Additionally, InvestNet entered into an Agreement and Plan of Reorganization, pursuant to which the stockholders of BVI China Kangtai exchanged 12% of BVI China Kangtai’s outstanding shares for 110,130,615 shares of InvestNet. Additionally, InvestNet issued a Convertible Promissory Note to BVI China Kangtai or its designees in the amount of $8,070,000 plus accrued interest at a rate of 5% per annum or convertible at the option of the holder(s) in the event that InvestNet effected a one for seventy reverse split of InvestNet’s common stock into the remaining 88% of the outstanding shares of BVI China Kangtai (the “Convertible Note”). The Company did effect a one for seventy reverse split of all of its outstanding shares of common stock and changed its name (to “China Kangtai Cactus Bio-Tech Inc.”) and trading symbol on the OTC Bulletin Board (to “CKGT”) on August 25, 2005. The holders of the Convertible Note converted the Convertible Note a day later on August 26, 2005 into 14,248,395 shares of common stock of the Company. As the result of the share exchange and conversion of the Convertible Note, the Company completed a “reverse merger transaction” whereby InvestNet acquired 100% of BVI China Kangtai, which wholly owns Harbin Hainan Kangda Cacti Hygienical Foods Co., Ltd. (“Harbin Hainan Kangda”).17

These documents included a Stock Purchase Agreement, pursuant to which InvestNet issued 30,000,000 shares to a stockholder of BVI China Kangtai for $300,000. Additionally, InvestNet entered into an Agreement and Plan of Reorganization, pursuant to which the stockholders of BVI China Kangtai exchanged 12% of BVI China Kangtai’s outstanding shares for 110,130,615 shares of InvestNet. Additionally, InvestNet issued a Convertible Promissory Note to BVI China Kangtai or its designees in the amount of $8,070,000 plus accrued interest at a rate of 5% per annum or convertible at the option of the holder(s) in the event that InvestNet effected a one for seventy reverse split of InvestNet’s common stock into the remaining 88% of the outstanding shares of BVI China Kangtai (the “Convertible Note”). The Company did effect a one for seventy reverse split of all of its outstanding shares of Common Stock and changed its name (to “China Kangtai Cactus Bio-Tech Inc.”) and trading symbol on the OTC Bulletin Board (to “CKGT”) on August 25, 2005. The holders of the Convertible Note converted the Convertible Note a day later on August 26, 2005 into 14,248,395 shares of Common Stock of the Company. As the result of the share exchange and conversion of the Convertible Note, the Company completed a “reverse merger transaction” whereby InvestNet acquired 100% of BVI China Kangtai, which wholly owns Harbin Hainan Kangda Cacti Hygienical Foods Co., Ltd. (“Harbin Hainan Kangda”).

Harbin Hainan Kangda is presently our main operating subsidiary. Harbin Hainan Kangda is in the business of selling and producing cactus and cactus related products in the PRC as more fully described below. In connection with the “reverse merger transaction”, we completely sold all the Company’s real time software and IT solutions operations by selling all of the stock held by the Company in its prior wholly owned subsidiaries, Champion Agents Limited (which wholly owned DSI Computer Technology Company Limited) and Interchance Limited to V-Capital Limited, a Republic of Mauritius corporation which is controlled by a former director of InvestNet.

On June 3, 2005, in connection with the reorganization of the Company and the acquisition of BVI China Kangtai and its wholly owned subsidiary, Harbin Hainan Kangda, the Company’s executive officers and directors significantly changed. Specifically, Norman Koo resigned as a director, Chief Executive Officer and President of the Company; Terence Ho resigned as a director, Chief Financial Officer, and Treasurer of the Company; Vivian Szeto resigned as a director (However, Ms. Szeto’s resignation from the Board of Directors was contingent on the Company completing its filing and mailing requirements of its Schedule 14f-1 which occurred on July 22, 2005 and so, from June 3, 2005 to July 22, 2005 she served as the Company’s sole director) and Secretary of the Company; Johnny Lu resigned as a director of the Company; and Mantin Lu resigned as a director of the Company.

In contemplation of the aforementioned resignations, also on June 3, 2005, the Board of Directors appointed in accordance with Section 3.04 of the Company’s Bylaws, Jinjiang Wang, Chengzhi Wang, Hong Bu, Jiping Wang and Song Yang as members of the Company’s Board of Directors, subject to the fulfillment of the filing and mailing requirements, including the 10 day waiting period of its Schedule 14f-1 that was sent to all stockholders of the Company pursuant to section 14(f) of the Securities Exchange Act of 1934 which occurred on July 22, 2005 and appointed the following officers to serve immediately: Jinjiang Wang, President; Chengzhi Wang, General Manager; Hong Bu, Chief Financial Officer and Treasurer; Fengxi Lang, Secretary; Changfu Wang, Vice General Manager; Zhimin Zhan, Vice General Manager; and Lixian Zhou, Assistant General Manager of the Company.

On July 20, 2005, InvestNet’s sole director, Vivian Szeto, and a majority of the Company’s stockholders unanimously approved and ratified a one for seventy reverse split (the “Reverse Split”) of the Company’s common stock and the amendment and restatement of the Company’s Articles of Incorporation to effect a name change of the Company from “Investnet, Inc.” to “China Kangtai Cactus Bio-Tech Inc.”. The Reverse Split became effective on August 25, 2005; 20 days after the Company sent an Information Statement to all of its stockholders and after the filing of the Amended and Restated Articles of Incorporation with the Secretary of State of Nevada. As a result of the Reverse Split, the number of issued and outstanding shares of common stock of the Company, now named China Kangtai Cactus Bio-Tech Inc., was reduced from a total of 200,000,000 shares outstanding to 2,857,143 shares outstanding. A day after the Reverse Split on August 26, 2005, the Convertible Note was converted by its holders(s) into 14,248,395 shares of the Company, which increased the total outstanding shares of the Company to 17,105,625 shares. The Company’s trading symbol was changed by the OTC Bulletin Board Stock Market (“OTCBB”) to “CKGT” to better reflect the Company’s new name. The Company has also changed its Web site to www.xrz.cn.

On June 26, 2006, the Company acquired a 100% equity interest in Guangdong Taishan Kangda Cactus Hygienical Food Co., Ltd. (“Taishan Kangda”), a company with limited liability formed under the laws of the People’s Republic of China for $1,574,000 in cash. Taishan Kangda’s assets include large areas of cactus plantation and production facilities in Guangdong Province in southeast China. The acquisition allows the Company to establish production facilities closer to its existing cactus plantations in Guangdong Province in order to reduce transportation cost and to distribute its products more effectively in southeast China.

The Company currently has three 100% owned subsidiaries: China Kangtai Cactus Bio-Tech Company Limited, a British Virgin Islands company (Kangtai BVI”) ; Harbin Hainan Kangda Cacti Hygienical Foods Co., Ltd., a PRC company (“Harbin Hainan Kangda”); and Taishan Kangda.18

Kangtai BVI is a holding company and does not have any operations. Harbin Hainan Kangda handles all of the production, research and development, sales and marketing of our products derived from edible cactus plants, fruits and extracts. Taishan Kangda handles all of the cultivation and harvest of cactus plants and the production of our cactus raw materials.

Overview

The Company is principally engaged in the production, R&D, sales and marketing of products derived from cacti. The Company’s product lines include cactus nutraceuticals, cactus nutritional food and drinks, as well as cactus raw and intermediate materials.

The Company engages with, by co-operative production agreements, local pharmaceutical, food and beverage manufacturers to produce its products. This strategy allows the Company to fill the orders quickly with short ~~production~~ production runs and to reduce the requirements in fixed assets investment. The ~~Company~~ Company currently has entered into co-production agreements with five processors in in China. They are Harbin Bin County Hualan Dairy Factory, Harbin Ice Lantern Noodle Factory, Tsingtao Brewry (Harbin) Inc., Harbin Diwang Pharmacy Co., Ltd. (a GMP certified processor), and Mudanjiang Kangwei Health Food Company, Ltd. ~~and~~ ~~Harbin Meijia Bio-Tech Co., Ltd.~~ Pursuant to these contracts, the Company provides raw materials, quality control guidelines and technical support while the processors provide other materials, processing facilities and labor to manufacture products for the Company. These processors are required to follow strictly the Company’s guidelines and instructions for production. The Company inspects all final products. The Company currently has long term agreements with all five processors which ~~automatically~~may ~~renew~~be renewed at expiration in 2012 ~~for one year terms unless terminated by either party 30 day prior to the expiration of the agreements~~.

In October 2007, the Company has signed a new agreement with Harbin Meijia Bio-Tech Co., Ltd.

All of the above co-operative production agreements have been renewed during January and March of 2008.

The Company has also established its own cactus beverage and fruit wine production facilities. The Company’s cactus beverage product category includes cactus beer, cactus fruit wine (including the brand name of Overlord Scourge Flower Imperial Wine), cactus palm juices and cactus fruit drinks.

Cacti have been proven to contain the following elements by the Chinese Center for Disease Control and Prevention in an analysis report issued on October 29, 2003:

1. Protein and amino acids 2. Organic fat and acids 3. Carbohydrates 4. Vitamins 5. Minerals 6. Microelements

2. Organic fat and acids

3. Carbohydrates

4. Vitamins

5. Minerals

6. Microelements

The Company’s nutraceutical products containing cactus extracts include Cactus Protein Nutrient, Cactus Calcium Peptide Soft Capsule, and Cactus Shuxin Capsule.

Cactus Protein Nutrient

Cactus Protein Nutrient is produced with protein and agglomerate element. It has been proven to be effective on stomachaches, tardiness gastritis, digestibility canker and duodenum canker by the Research Institute of the Traditional Chinese Medicine of Heilongjiang Province.

Cactus Calcium Peptide Soft Capsule

Cactus Calcium Peptide Soft Capsule is made of cactus, active albumen peptide of soybean and liquid calcium. It has the following characteristics:

A) Several nutritional components that can be easily absorbed; and

B) It contains an albumen peptide of soybean which can enhance the absorption of calcium, phosphor and other mineral elements, consequently raising the calcium in the body and fighting fatigue.

Cactus Shuxin Capsule

Cactus Shuxin Capsule is made with cactus and haws extracts. It has been proven to have an effect on raising the flow capacity of coronary artery blood, alleviating drowsiness and improving red cell’s oxygen carrying capability by the Research Institute of the Traditional Chinese Medicine of Heilongjiang Province.

The revenue generated from sales of nutraceutical products was ~~approximately~~ approximately $1012,~~722~~989,~~568~~289 in fiscal ~~2009~~year 2010, or about 4036% of the total net sales.

The revenue generated from sales of cactus food, beverage and wine was approximately $917,~~702~~172,~~993~~306 in ~~fiscal~~year ~~2009~~2010, or about 3647%. The remaining 2417% of the sales is cactus raw and intermediate materials.

The Company currently has ~~four~~five product categories which are nutraceuticals, beverages, raw and intermediate materials, ~~and~~cactus ~~packaged~~feed ~~foods~~and cactus cigarettes. The table below sets forth revenue derived from each product category and the percentage of total revenue each product category accounts for in ~~2009~~2010:

Product Categories	Sales revenue in 2009 (in US$)			Percentage of Total Revenue in 2009
			Percentage
Nutraceuticals		10,722,568			40	%
	Sales revenue		of Total Revenue
Beverages		9,318,655			35	%
Product Categories	in 2010 (in US$)		in 2010
Raw & Intermediate Materials		3,485,604			13	%
Nutraceuticals	12,989,289		36%
Packaged Foods		384,337			1	%
Beverages	12,588,707		35%
Cactus Feed		2,309,059			10	%
Raw & Intermediate Materials	2,947,646		8%
Cactus cigarettes		317,133			1	%
Cactus Feed	4,583,599		13%
Total Revenue		26,537,356
Cactus cigarettes	2,910,622		8%
Other	9,687		-
Total Revenue	36,029,550		100%

The following table sets forth further breakdown of the Nutraceuticals by specific products and the percentage each product accounts for in ~~2009~~2010:

Name of Nutraceutical Products		Sales revenue in 2009(in US$)			Percentage of Total Revenue in 2009
				Percentage
Cactus Calcium Peptide Soft Capsule			2,191,772			8	%
Name of Nutraceutical Products		Sales (in US$)		of Total Revenue
Cactus Protein Nutrient			3,105,938			12	%
Cactus Calcium Peptide Soft Capsule	$	4,079,726		11%
Cactus Calcium Peptide Soft Capsule for Children			2,347,819			9	%
Cactus Protein Nutrient		2,578,349		7%
Cactus Shuxin Capsule			3,077,039			11	%
Cactus Calcium Peptide Soft Capsule for Children		4,100,906		11%
Total			10,722,568			40	%
Cactus Shuxin Capsule		2,204,237		6%
Other		26,071		1%
Total	$	12,989,288		36%

The Company has its own R&D facility, the Heilongjiang Sino-Mexico Cactus Development and Utilization Institute, which is certified by ~~Heilongjiang~~ Heilongjiang Science & Technology Committee. The Institute has independently developed many patented cactus-based nutraceuticals and nutritional food and drink product formulas and production processes. ~~Spending for R&D for was $102,627 for fiscal 2009 and $12,397 for fiscal 2008.~~

The Company manufactures and sells the following products launched between January 2001 and ~~October~~September 2009. Currently our products have maintained satisfactory levels of acceptance by distributors and customers. The table below sets forth our product lines and the launch date of each product line.

2220

Line		Cactus Related Products		Varieties		Brand	Sub-Brand	Launch Date
					Launch
Nutraceutical		Cactus Calcium Peptide Soft Capsule		One		Kangda Cactus	Magic Baby	Jan. 2001
Line	Cactus Related Products	Varieties	Brand	Sub-Brand	Date
Nutraceutical	Cactus Calcium Peptide Soft Capsule	~~Cactus Calcium Peptide Soft Capsule for Children~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2001	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2003~~
Nutraceutical	Cactus Calcium Peptide Soft Capsule for Children	~~Cactus Shuxin Capsule~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2003	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2001~~
Nutraceutical	Cactus Shuxin Capsule	~~Cactus Tangkang Capsule~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2001	~~Kangda Cactus~~	~~Magic Baby~~	~~Jul. 2004~~
Nutraceutical	Cactus Tangkang Capsule	~~Cactus Delicious Vinegar for Noble Lady~~One	Kangda Cactus	~~One~~Magic Baby	Jul. 2004	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2001~~
Nutraceutical	Cactus Delicious Vinegar for Noble Lady	~~Cactus Protein Nutrient~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2001	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2002~~
Nutraceutical	Cactus Protein Nutrient	~~Cactus Fruit Health Oral Liquid~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2002	~~Kangda Cactus~~	~~Magic Baby~~	~~Aug. 2004~~
Beverage		Cactus Prickly Pear Wine		Five		Kangda Cactus	Magic Baby	Oct. 2003
Nutraceutical	Cactus Fruit Health Oral Liquid	One	Kangda Cactus	Magic Baby	Aug. 2004
Beverage	Cactus Prickly Pear Wine	~~Cactus Overlord Scourge Flower Imperial Wine~~Five	Kangda Cactus	~~One~~Magic Baby	Oct. 2003	~~Kangda Cactus~~	~~Magic Baby~~	~~Apr. 2003~~
Beverage	Cactus Overlord Scourge Flower Imperial Wine	~~Cactus Fruit Wine~~One	Kangda Cactus	~~One~~Magic Baby	Apr. 2003	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2005~~
Beverage	Cactus Fruit Wine	~~Cactus Tang Gong Tian Bao Liquor~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2005	~~Kangda Cactus~~	~~Magic Baby~~	~~Jun. 2004~~
Beverage	Cactus Tang Gong Tian Bao Liquor	~~Cactus Double Flowers Tea~~One	Kangda Cactus	~~Several~~Magic Baby	Jun. 2004	~~Kangda Cactus~~	~~Magic Baby~~	~~Oct. 2001~~
Beverage	Cactus Double Flowers Tea	~~Cactus Beer~~Several	Kangda Cactus	~~One~~Magic Baby	Oct. 2001	~~Kangda Cactus/ Tsingtao Co-Brand~~	~~N/A~~	~~Jan. 2005~~
Beverage	Cactus Beer	~~Cactus Juice Beverage~~One	Kangda Cactus/ Tsingtao Co-Brand	~~Two~~N/A	Jan. 2005	~~Kangda Cactus~~	~~Magic Baby~~	~~Nov. 2006~~
Beverage	Cactus Juice Beverage	~~Cactus Iced Black Tea~~Two	Kangda Cactus	~~One~~Magic Baby	Nov. 2006	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2003~~
Beverage	Cactus Iced Black Tea	~~Cactus Iced Green Tea~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2003	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2003~~
Beverage	Cactus Iced Green Tea	~~Cactus Fruit Dry Red Wine~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2003	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2005~~
Beverage	Cactus Fruit Dry Red Wine	~~Cactus Fruit Juice Beverage~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2005	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2006~~
Beverage	Cactus Fruit Juice Beverage	~~Cactus Honeysuckle Beverage~~One	Kangda Cactus	~~One~~Magic Baby	Jan. 2006	~~Kangda Cactus~~	~~Magic Baby~~	~~Jan. 2003~~
Packaged Food		Cactus Noodles		Several		Kangda Cactus	Magic Baby	Sep. 2004
Beverage	Cactus Honeysuckle Beverage	One	Kangda Cactus	Magic Baby	Jan. 2003
Packaged Food	Cactus Noodles	~~Cactus Perserved Bag Vegetables~~Several	Kangda Cactus	~~Two~~Magic Baby	Sep. 2004	~~Kangda Cactus~~	~~Magic Child~~	~~Jan. 2001~~
R&I Materials		Cactus Palm Leaves		Several		Kangda Cactus	Milpa-Alta and Pyramid	Jan. 2001
Packaged Food	Cactus Perserved Bag Vegetables	Two	Kangda Cactus	Magic Child	Jan. 2001
R&I Materials	Cactus Palm Leaves	~~Cactus Dry Powder~~Several	Kangda Cactus	~~Several~~Milpa-Alta and Pyramid	Jan. 2001	~~Kangda Cactus~~	~~Milpa-Alta~~	~~Jan. 2004~~
Animal Feed		Cactus fish feed		One		Kangda Cactus	Kang Tai Bao	Jul. 2008
R&I Materials	Cactus Dry Powder	Several	Kangda Cactus	Milpa-Alta	Jan. 2004
Animal Feed	Cactus fish feed	~~Cactus cattle feed~~One	Kangda Cactus	~~One~~Kang Tai Bao	Jul. 2008	~~Kangda Cactus~~	~~Kang Tai Bao~~	~~Jul. 2008~~
Animal Feed	Cactus cattle feed	~~Cactus hog feed~~One	Kangda Cactus	~~One~~Kang Tai Bao	Jul. 2008	~~Kangda Cactus~~	~~Kang Tai Bao~~	~~Oct. 2009~~
Cigarette		Cactus Cigarette		Two		Kangda Cactus	Shengcao	Sep. 2009
Animal Feed	Cactus hog feed	One	Kangda Cactus	Kang Tai Bao	Oct. 2009
Cigarette	Cactus Cigarette	Two	Kangda Cactus	Shengcao	Sep. 2009

InWe ~~order to~~did ~~quickly~~not ~~penetrate~~launch ~~the~~any ~~markets~~new inproduct ~~China,~~lines ~~enhance~~in ~~the efficiency of distributions~~2010, ~~lower sales costs~~ and ~~administrative~~have ~~overheads, starting August~~been ~~2006,~~focusing ~~the~~on ~~Company~~increasing ~~reformed its~~ sales ~~and distribution models and gradually disposed its own domestic distribution network~~ of ~~approximately~~our ~~200~~existing ~~self-owned, franchised chain and Kangtai branded stores in Harbin, Beijing, Guangzhou and other cities in China. The Company has adopted the strategies of distributions and sales of its~~ products primarily through various types and levels of provincial and municipal distributors and agents in Dalian, Heilongjiang, Harbin, Beijing, Guangzhou, Tianjin, Shenzhen, Jilin, Hebei, Liaoning, Shanxi, Hunan, Gansu and Shandong in China. ~~The Company’s major revenue breakdown by region in China for the 2009 fiscal year is as follows:~~

23In order to quickly penetrate the markets in China, enhance the efficiency of distributions, lower sales costs and administrative overheads, starting August 2006, the Company has reformed its sales and distribution models and gradually disposed its own domestic distribution network of approximately 200 self-owned, franchised chain and Kangtai branded stores in Harbin, Beijing, Guangzhou and other cities in China. The Company has adopted the strategies of distributions and sales of its products primarily through various types and levels of provincial and municipal distributors and agents in Dalian, Heilongjiang, Harbin, Beijing, Guangzhou, Tianjin, Shenzhen, Jilin, Hebei, Liaoning, Shanxi, Hunan, Gansu and Shandong in China. The Company’s major revenue breakdown by region in China for the 2010 fiscal year is as follows:

		US$
Region		Sales( in U.S.		Percentage in
Heilongjiang		$	7,678,840
		Dollars)		Revenue
Jilin		$	797,438
Heilongjiang	$	9,866,031		27%
Shandong		$	1,950,825
Jilin	$	755,375		2%
Beijing		$	3,789,993
Shandong	$	1,291,733		4%
Guangdong		$	4,878,831
Beijing	$	5,001,193		14%
Liaoning		$	740,510
Guangdong	$	4,724,854		13%
Shanxi		$	806,762
Liaoning	$	1,177,811		3%
Hunan		$	837,216
Shanxi	$	1,393,739		4%
Gansu		$	1,005,715
Hunan	$	1,762,199		5%
Other		$	4,051,226
Gansu	$	1,493,667		4%
Other	$	8,562,948		24%
Total	$	36,029,550		100%

Harbin Huadingwei Trading Company, Ltd., Fujian Tianyi Economic and Trading Company, Ltd., and Jilin Yanji Economic and Trading Company, Ltd. are our top three distributors. Together, they account for 19% of our total sales.21

Competition

The cactus product industry in China is not highly competitive, and no published data is available regarding China Kangtai’s relative position in the markets in which it operates. Although no major competitor currently competes against the Company across its entire product line, competitive products are available from a number of different vendors offering features similar to those of China Kangtai’s products. There can be no assurance that one or more of these competitors will not develop products that are equal or superior to the products the Company markets. In addition, many potential competitors for China Kangtai’s products have in-house capabilities to develop cactus products that can provide some or all of the functionality of China Kangtai’s products. Our top five competitors are Anhui Haozhou Xingbang Cactus Co., Hunan Yongzhou Sino-Mexico Cactus Development Co., Ltd., Henan Luxin Cactus Co., Ltd., Zhengshou Milpa-Alta Cactus Co., Ltd., and Ningxia Milpa-Alta Edible Cactus Development Co., Ltd.

The Company believes that there are distinguishing competitive factors in the selection of its cactus products. These include price/performance characteristics, marketing and sales expertise, R&D expertise and patents protections, management proprietary knowledge and experiences on cactus production, ownership of large cactus plantations, product benefit and functions, and reliability and integration of cactus into a variety of other products. The Company believes that it competes favorably with regard to these factors.

A major competitive asset for the Company is that it offers quality assurance of its products from the raw material stage all the way to the final products stage.

We are currently the leading cactus grower and cactus related products producer in China. We have a cactus farm covering over 387 acres ~~and~~of land. We are also equipped with an active research and development department which currently holds 18 patents and is seeking 12 new ones in various product categories. ~~The patents, which we currently hold will begin to expire in 2022.~~ Our products are sold in supermarkets, food stores, hotels and restaurants though our growing distribution network in 12 provinces and two municipalities in China. We have a total of 2731 product lines compare to our top five competitors which combined have a total of about 30 product lines. In In addition, our competitive advantages include the following:

Control from the source:

• 3 species of Mexican Cacti
• Seed cloning
• Farm ownership
• Planting
• Growing without chemicals
• Harvesting

Product innovation and research:

• Strong team and advisors
24Strategic partners
•R&D ~~Strategic partners~~Institute
•Research ~~R&D~~facilities ~~Institute~~

• Research facilities

Manufacturing and production:

• Processing facilities
• Co-operative processing partners
• Quality control monitoring
• Quality packaging

Sales and distribution:

• A network of regional distributors
• Third party distributors
• Seminar and conference orders
• Repeat purchase group customers

The Company believes it is in compliance in all material respects with all laws, rules, regulations and requirements that affect its business. Further, the Company believes that compliance with such laws, rules, regulations and requirements does not impose a material impediment on its ability to conduct business.

Customers

Currently a majority of our sales are derived from customers in the PRC. Additionally, one of our customers accounts for a sizeable portion of our net revenue. ~~Specifically,~~ Harbin Huadingwei Trading Company, Ltd., ~~represented~~Fujian ~~approximately~~Tianyi Economic ~~18%~~and ofTrading ~~our~~Company, ~~total~~Ltd., ~~sales in 2009~~ and itJilin ~~accounted~~Yanji ~~for~~Economic ~~approximately~~and ~~13%~~Trading ofCompany, ~~our~~Ltd. ~~total~~are ~~sales in 2008. No other customer accounted for more than 10% of~~ our ~~total revenue~~top ~~during~~three ~~any of these periods~~distributors. ~~In 2007~~Together, ~~Harbin~~they ~~Huadingwei~~account ~~Trading Company, Ltd. accounted~~ for 2216% of our total ~~revenue~~ sales.

Supplier Concentration

Certain of the raw materials and components used by us in the manufacture of our products are available from a limited number of suppliers. Shortages could occur in these essential materials and components due to an interruption of supply or increased demand in the industry. If we were unable to procure certain of such materials or components, we would be required to reduce our manufacturing operations, which could have a material adverse effect on our results of operations.

For the ~~three~~ ~~months~~years ended ~~March~~ December 31, 2010 and 2009, four suppliers represented approximately 46 47%, 51% respectively, of the total purchases of the Company. As of ~~March~~ December 31, 2010 and 2009, approximately 8% and 5%, respectively, of the Company’s accounts payable were due to these suppliers.

For the years ended December 31, 2009, 2008 and 2007, four suppliers represented approximately 51%, 53%, 55%, respectively, of the total purchases of the Company. As of December 31, 2009 and 2008, approximately 5% and 3%, respectively, of the Company’s accounts payable were due to these suppliers.

Employees

AsAt ~~of July~~December 1531, 2010, the Company ~~had~~has a total of 132 full time employees and generally enjoys good employer-employee relationship. In addition, the Management of the Company expects to continue to use consultants, attorneys, and accountants as necessary, to complement services rendered by its employees. The table below sets forth the number of our full time employees by department ~~and~~ and location:

DEPARTMENT	NUMBER	LOCATION
Administration	18	Harbin
Sales	25	Harbin
Production	47	Harbin
Baisha Base (cactus crop growing and production)	25	Taishan
Shalan Base (cactus crop growing and production)	10	Taishan
Research and Development	7	Harbin
Total	132

DEPARTMENT	NUMBER	LOCATION
Administration	10	Harbin
Sales	25	Harbin
Production	52	Harbin
Baisha Base (cactus crop growing and production)	27	Taishan
Shalan Base (cactus crop growing and production)	8	Taishan
Research and Development	10	Harbin
Total	132

Administrative Offices

China Kangtai’s registered statutory office is located at CSC Services of Nevada, Inc., 502 East John Street, Suite E, Carson City, Nevada 89706. The Company’s operations office is located at 99 Taibei Road, Limin Economic and Technological Development Zone, Harbin, Heilongjiang Province, P. R. China. Zip Code: 150025 and its telephone number is (86) 451 57351189.

Reports to Security Holders

China Kangtai is not required to deliver an annual report to security holders and will not automatically deliver a copy of the annual report to its security holders unless a request is made for such delivery. The Company files all of its required reports and other information with the Securities and Exchange Commission (the “Commission”).

The public may read and copy any materials that are filed by China Kangtai with the Commission at the Commission’s Public Reference Room at 100 F Street, NE, Room 2521, Washington, D. C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The statements and forms filed by InvestNet with the Commission have also been filed electronically and are available for viewing or copy on the Commission maintained Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address for this site can be found at http://www.sec.gov.

Governmental Regulations

GMP or Good Manufacturing Practice certifications are awarded by the State Food and Drug Administration of China to processors which meet the safety and quality assurance standards set by the State Food and Drug Administration of China. The processors the Company uses which have been awarded the GMP certification are Harbin Diwang Pharmacy Co., Ltd. and Harbin Meijia Bio-Tech Co., Ltd.

The Chinese government requires all nutraceutical products related manufacturers to obtain Food Production Permit for their nutraceutical manufacturing facilities. China Kangtai obtained its Food Production Permit from relevant governmental regulatory bodies in September 2005. Other than the Food Production Permit requirements, there was no significant change in the regulatory environment in China.

Description of Property

China Kangtai’s operations office, ~~production~~is ~~facilities are~~ located at 99 Taibei Road, Limin Economic and Technological Development Zone, Harbin, Heilongjiang Province, P. R. China, Zip Code: 150025 and its telephone number is (86) 451 57351189. ~~The Company’s R&D facility is located in Harbin, Heilongjiang Province, P. R. China.~~ In addition, the Company has over 387 acres of cactus farming bases ~~in Taishan~~, production ~~Guangdong~~facilities ~~Province,~~and P.an R.&D facility in China. ~~The~~Among ~~Company~~the ~~also~~387 ~~has~~acres of ~~production~~cactus ~~facilities~~farming, ~~which~~142 acres are ~~used~~owned toby ~~produce~~the ~~cactus-base~~Company, ~~food~~ and ~~placed~~the inother 245 acres are ~~Harbin~~leased ~~Meijia~~and ~~Bio-Tech~~the ~~Co.,~~land ~~Ltd.~~use ~~which~~rights iswill ~~our~~expire ~~cooperative processor~~on March 31, 2038.

Legal Proceedings

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of the security holders of the Company during the fourth quarter of the fiscal year ended December 31, ~~2009~~ 2010.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market for Common Stock

Since August 25, 2005, our ~~common~~Common ~~stock~~Stock has been quoted on the ~~OTC~~ OTC Bulletin Board under the symbol “CKGT.OB.” Prior to that, our ~~common~~Common Stock ~~stock~~ was quoted on the OTC Bulletin Board under the symbol “IVNE.OB.” The following table lists the high and low bid price for our ~~common~~Common ~~stock~~Stock as quoted, in U.S. dollars, by the OTC Bulletin Board during each quarter within the last two fiscal years and the first ~~two~~quarter ~~quarters~~ of ~~2010~~2011. These quotations ~~reflect~~ reflect inter-dealer prices, without retail mark-up, markdown, or commission and may ~~not~~ not represent actual transactions.

Year	Quarter Ended	High		Low	~~Low~~
2010	June 30	$	1.40		$	1.32
2011	March 31	$ 1.06		$ 0.52
	March 31	$	2.14		$	2.10
2010	December 31	$ 1.42		$ 0.00
2009	December 31	$	2.71		$	2.60
	September 30	$ 1.45		$ 0.02
	September 30	$	1.48		$	1.40
	June 30	$ 2.65		$ 1.10
	June 30	$	0.75		$	0.73
	March 31	$ 2.96		$ 1.90
	March 31	$	0.29		$	0.20
2009	December 31	$ 2.71		$ 2.60
2008	December 31	$	0.51		$	0.12
	September 30	$ 1.48		$ 1.40
	September 30	$	0.83		$	0.31
	June 30	$ 0.75		$ 0.73
	June 30	$	0.73		$	0.53
	March 31	$ 0.29		$ 0.20
	March 31	$	0.92		$	0.65

Record Holders

As ~~July 19~~of April 13, ~~2010~~2011 there were ~~approximately~~80 78 shareholders of record holding a total of 21 22,~~227~~305,527 shares of common stock.

The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.

Dividends

CKGT has not declared any cash dividends since inception and does not anticipate paying any dividends in the foreseeable future. The payment of dividends is within the discretion of the board of directors and will depend on CKGT’s earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit CKGT’s ability to pay dividends on its common stock other than those generally imposed by applicable state law.

2724

Stock Re-Purchases

We did not make any re-purchases of shares of our common stock during the fourth quarter of fiscal ~~2009~~2008 and we do not currently have any publicly-announced repurchase plans in effect.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Certain statements in this registration statement, including statements in the following discussion which are not statements of historical fact, are what are known as “forward looking statements,” which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as “plans,” “intends,” “will,” “hopes,” “seeks,” “anticipates,” “expects” and the like often identify such forward looking statements, but are not the only indication that a statement is a forward-looking statement. Such forward looking statements include statements concerning our plans and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present and future operations will or may produce revenues, income or profits. Numerous factors and future events could cause the Company to change such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits. Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this registration statement on Form S-1 and in the Company’s other filings with the Securities and Exchange Commission. No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes and the other financial information appearing elsewhere in this report. CKGT’s fiscal year end is December 31.

CKGT’s short-term strategy is to realize net cash flow from operations and financing activities to be used to expand marketing efforts in China and research and development. CKGT is committed to ensuring that its products remain at the forefront of providing a variety of quality cactus based ~~nutraceuticals,~~ nutriceuticals, nutritional food from cactus, and beverages from cactus, including but not limited to beer and wine derived from cactus. The realization of net cash flows in the near term will require a significant increase in CKGT’s revenues without a substantial increase in expenses. Financing activities will focus on equity financing. Once CKGT has additional positive net cash flow, its longer-term strategy is to expand marketing efforts beyond China into other ~~Asian~~ Asian markets based on anticipated increases in marketing spending over the next several years in South Korea, Singapore, Taiwan and other southeastern Asian ~~countries~~ ~~and Taiwan region~~countries.

CKGT’s business development strategy is prone to significant risks and uncertainties certain of which can have an immediate impact on its efforts to realize positive net cash flow and deter future prospects of revenue growth.

CKGT’s financial condition and results of operations depend primarily on the revenue generated from the sale of its products and its ability to control the cost of sales. CKGT has a limited history of generating revenue which cannot be viewed as an indication of continued growth and a recent historical record of incurring losses. Should CKGT be unable to consistently generate revenue through the successful implementation of its business model and reduce or stabilize expenses to the point where it can realize a net cash flow such failure will have a short-term impact on CKGT’s ability to continue its business operations.

Results of Operations

~~Three~~The ~~Months~~Year Ended ~~March~~December 31, 2010 Compared to the ~~Three Months~~ Year Ended ~~March~~December 31, 2009

Comparison of Sales for the Years Ended December 31, 2010 and 2009

		Three Months Ended March 31,
								% of
		2010				2009			% of changes
Sales by Categories		2010			2009			changes
Sales by categories
Nutraceuticals	$	12,989,289		$	10,722,568			21%
Nutraceuticals		$	1,805,747			$	1,362,351			32.55	%
Beverages		12,588,707			9,318,655			35%
Beverages			1,398,701				981,332			42.53	%
Cactus Feed		4,583,599			2,309,059			99%
Raw & intermediate materials		2,947,646	~~1,633,575~~		3,485,604		~~604,833~~	-15%		~~170.09~~	%
Packaged foods			-				123,592			-
Cactus cigarettes		2,910,622			317,133			818%
Cactus cigarettes			212,638				-			-
Packaged foods		-			384,337			-100%
Cactus feed			468,373				257,844			81.65	%
Other		9,687						--%
Total Sales	$	$36,029,550	~~5,519,034~~	$	26,537,356	$	~~3,329,952~~	36%		~~65.74~~	%

Sales for the three months ended March 31, 2010 totaled $5,519,034, an increase of $2,189,082, or 66% compared to the sales of $3,329,952 for the three months ended March 31, 2009. The increase in sales is attributable to the fact that the Company’s products are efficiently marketed and well accepted by consumers. The sale of our raw and intermediate materials products was $1,633,575, an increase of $1,028,742, or 170% as compared to the sales of $604,833 in the same period of 2009. Increased raw and intermediate materials sales accounted for 47% of total increased sales. The sale of nutraceuticals products was $1,805,747 in the three months ended March 31, 2010, an increase of $443,396, or 33%, as compared to the sales of $1,362,351 in the same period of 2009. The sale of beverages products was $1,398,701 in the three months ended March 31, 2010, an increase of $417,369, or 43%, as compared to the sales of $981,332 in the same period of 2009.25

Sales for the year ended December 31, 2010 totaled $36,029,550, an increase of $9,492,194, or 36% compared to the sales of $26,537,356 in 2009. The increase in sales is attributable to the fact that the Company’s products are efficiently marketed and well accepted by consumers, such in the case with our nutraceuticals and beverages products. The sale of nutraceuticals products was $12,989,289 in 2010, an increase of $2,266,721, or 21%, compared to $10,722,568 in 2009. The sale of beverages products was $12,588,707 in 2010, an increase of $3,270,052, or 35%, compared to $9,318,655 in 2009. The increase in sales also resulted from our new acquired patents and new products. The sale of our cactus feed products was $4,583,599 in 2010, an increase of $2,274,540, or 99%, compared to $2,309,059 in 2009. The sale of cactus cigarettes products was $2,910,622 in 2010, an increase of $2,593,489, or 818%, compared to $317,133 in 2009. The sales from our raw and intermediate materials products was $2,947,646 in 2010, a decrease of $537,958, or 15%, compared to $3,485,604 in 2009. The sales from our packaged products was $0 in 2010, compared to $384,337 in 2009.The decrease in raw and intermediate materials and packaged foods products resulted from the changes in our product mix.

Cost of Sales

Cost of sales totaled $422,~~039~~475,~~862~~015 ~~for~~in ~~the three months ended March 31,~~ 2010, an increase of of $16,~~947~~458,~~076~~581, or 9340%, as compared to $216,~~092~~016,~~786~~434 in ~~the~~2009. ~~same~~The ~~quarter~~increase in cost of sales ~~2009~~resulted from the increase in sales. The gross profit rate was 2738% for the year ~~three months~~ ended ~~March~~December 31, 2010, a decrease 10 of 2 percentage points as compared to 37 40% in ~~the same quarter of~~ 2009. The increase in cost of sales and decrease in gross profit rates were ~~was~~ primarily attributable to the ~~increased~~increase in sales of our ~~raw~~cactus ~~and intermediate materials~~feed products. The gross profit rate is about 1116% for ~~our~~cactus ~~raw~~feed ~~and intermediate materials~~ products.

Operating Expenses

Operating expenses for the ~~three~~year ~~months~~ ended ~~March~~December 31, 2010 totaled $~~298~~2,~~515~~237, ~~representing~~959, aan ~~decrease~~increase of $581,~~121~~244,567, or 16125%, compared to $~~356~~993,~~636~~392 ~~for~~in ~~the~~2009. The ~~three~~increase in operating expenses was mainly due to an increase of $141,830 in ~~months~~research ~~ended~~and ~~March~~development 31expense; an increase of $360,807 ~~2009~~in amortization of intangible assets; and an increase of $929,935 in other general and administrative expenses. Other general and administrative expenses consist of advertising, rent and utilities, salaries and wages, professional fees, US public company related expenses and other expenses. The ~~decrease~~increase in ~~operating~~other general and administrative expenses was ~~mainly~~ attributable to aan ~~negative~~increase ~~adjustment~~ of $3197,~~146~~274 in toadvertising ~~provision~~expense, ~~for~~$315,489 ~~allowances~~in legal fees, ~~returns~~ and ~~doubtful~~$268,219 ~~accounts~~in consulting fees.

Other Income and Expenses

Other income (net) for the ~~three~~year ~~months~~ ended ~~March~~December 31, 2010 totaled ~~$1,502,767, an~~ ~~increase of~~ $13,~~253~~531,~~338~~546, compared to ~~$249,429~~other ~~for~~expenses ~~the~~(net) ~~same~~of ~~period~~$7,483,984 ofin 2009. The increased net other income mainly resulted from the income from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values. ~~(See~~Such ~~Note~~income 11totaled to$3,586,155 ~~Financial~~in ~~Statements).~~2010, ~~Such~~compared ~~income~~to ~~totaled~~an expense of $17,~~515~~926,~~915~~182 infrom the ~~first~~revaluation ~~quarter~~in ~~of 2010~~2009.

Income from Operations

Income from operations totaled $111,~~180~~316,~~657~~576 in ~~the three months ended March 31,~~ 2010, an ~~increase~~ increase of $~~300~~1,~~127~~789,046, or 3419%, as compared to $~~880~~9,527,530 in ~~the same period of~~ 2009. The increase ~~resulted~~in ~~mainly~~our income from ~~increased~~operations ~~sales~~resulted ~~and~~mainly ~~decreased~~from ~~operating expenses~~the asincrease ~~discussed~~in ~~above~~sales.

Net Income

Net income totaled $211,~~352~~790,~~638~~975 for the ~~three~~year ~~months~~ ended ~~March~~December 31, 2010, asan ~~compared to~~increase ~~the~~of ~~net~~$11,310,850, ~~income~~compared ofto $~~956~~480,~~673~~125 in ~~the same period of~~ 2009. The increase in ~~net~~ net income was caused partially by the income and loss from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values. ~~(See~~Absent ~~Note~~the 11gain toof ~~Financial~~$3,586,155 ~~Statements).~~in ~~Absent this income~~2010, the Company would have had a net income of $~~836~~8,~~723~~204,820 inand basic and diluted earnings per common share would have been $0.39 and $0.39 for the ~~first~~year ~~quarter~~ended ofDecember ~~2010~~31, as ~~compared~~2010. toAbsent ~~net~~the ~~income~~revaluation loss of $~~693~~7,~~948~~926,182 in 2009, the ~~same~~Company ~~period~~would inhave had ~~2009;~~a net income of $8,406,307, and basic and diluted earnings per ~~share~~common share would have been $0.0446 and $0.~~04,~~43 for the ~~three~~year ~~months~~ ended ~~March~~December 31, ~~2010 and~~ 2009~~, respectively~~.

The year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

Sales

	2009		2008		% of changes
Sales by categories
Nutraceuticals	$	10,722,568	$	10,125,570		5.90	%
Beverages		9,318,655		5,395,341		72.72	%
Raw & intermediate materials		3,485,604		3,800,383		-8.28	%
Packaged foods		384,337		119,285		222.20	%
Cactus cigarettes		317,133		-		-
Cactus feed		2,309,059		860,004		168.49	%
Total Sales	$	26,537,356	$	20,300,583		30.72	%

Sales for the year ended December 31, 2009 totaled $26,537,356, an increase of $6,236,773, or 30.72% compared to the sale of $20,300,583 for the year ended December 31, 2008. The increase in sales is attributable to the fact that the Company’s products are efficiently marketed and well accepted by consumers. The sale of our beverage products was $9,318,655, an increase of $3,923,314, or 72.72% as compared to the sale of $5,395,341in 2008. Increased beverage sales accounted for 63% of total increased sales. The sale of cactus feed products was $2,309,059, an increase of $1,449,055, or 168.49%, as compared to the sale of $860,004 in 2008. Increased cactus feed sales accounted for 23% of total increased sales.

Cost of Sales

Cost of sales totaled $16,016,434 in 2009, an increase of $3,709,131, or 30.14% as compared to $12, 307,303 in 2008. The increase of cost of sales was in line with the increase of our sales in 2009. The gross profit rate was 39.65% in 2009. It was about same as compared to the gross profit rate of 39.37% in 2008.

Operating Expenses

	2009		2008
Operating Expenses
Selling expenses	$	249,083	$	214,285
Provision for reserve for allowances, return and doubtful accounts		26,897		136,125
Research and development		102,627		12,397
Depreciation and amortization expenses		252,715		285,700
Public company related professional and other expenses		193,835		262,735
Other general and administrative expenses		168,235		268,797
Total Operating Expenses	$	993,392	$	1,180,039

Operating expenses for the year ended December 31, 2009 totaled $993,392, representing a decrease of $186,647, or 16%, compared to $1,180,039 for the year ended December 31, 2008. The decrease in operating expenses was mainly attributable to decrease in public company related professional and other expenses and other general and administrative expenses.

Public company related professional and other expenses consist of audit, legal, investor relations and other filing expenses.

During 2009, public company related professional and other expenses totaled $193,835, decreased by $68,900 as compared to $262,735 in 2008. The decrease is mainly attributable to a decrease of $51,000 in legal fees and $13,256 in fees related to investor relations.

Other Income and Expenses

Other general and administrative expenses consist of auto expenses, bad debts expense, office, rent and utilities, salaries and wages and others. Other general and administrative expenses totaled $168,235 in 2009, a decrease of $100,562, or 37% as compared to $268,797 in 2008. The decrease is mainly attributable to a decrease of $58,517 in stock option expense incurred from $90,635 in 2008 to $32,118 incurred in 2009 and a decrease of $26,680 incurred for shares issued by the Company in 2008 to obtain a waiver of liquidated damages and liability.

During 2009, the Company recorded a gain of $495,348 on disposal of property, plant and equipment as compared a loss of $14,323 in 2008.

Income from Operations

Income from operations totaled $9,527,530 in 2009, an increase of $2,714,289, or 40%, as compared to $6,813,241 in 2008.

It was mainly resulted from increased sales and decreased operating expenses as discussed above.

Net Income

Net income totaled $480,125 in 2009 as compared to the net income of $5,681,500 in 2008. The decrease of net income was caused mainly by the expense from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values. (See Note 10 to Financial Statements). Absent this expense, the Company would have a net income of $8,406,307; basic earnings per share $0.46 and diluted earnings per share $0.43 in 2009.

Liquidity and Capital Resources

AsWe ~~of March 31, 2010 and December 31, 2009, we~~ had cash and cash equivalents of $2,~~029~~630,~~000~~035 and $2,918,~~000~~068 as of December 31, 2010 and 2009, respectively. Our funds are kept in financial institutions located in China, which do not provide insurance for amounts on deposit. Moreover, we are subject to the regulations of the PRC which restrict the transfer of cash from China, except under certain specific circumstances. Accordingly, such funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $410,~~529~~648,~~341~~228 and $~~856~~7,~~907~~749,649 for the ~~three months~~years ended ~~March~~December 31, 2010 and 2009, respectively. The increase in net cash provided by operating activities in 2010 was due to the increase ofin ~~our~~revenues ~~sales~~ and ~~collections~~the of$7,495,852 positive change in other receivables ($3,747,926 ~~totaling~~increase in 2009; $3,747,926, ~~which~~decrease ~~related~~in to2010), ~~sale~~offset partially by ofthe ~~land~~$6,663,197 ~~use~~negative ~~rights~~change ~~and~~in ~~certain~~accounts ~~equipment~~receivable in($1,532,934 decrease in 2009; $5,130,263 increase in 2010).

Net cash provided by operating activities was $7,749,649 and $9,676,505 for the year ended December 31, 2009 and 2008, respectively. The decrease in net cash provided by operating activities in 2009 was due to the increase of other receivable in the amount of $3,747,926 resulted from the buy and sale of land use rights and certain equipment in 2009.

Net Cash Used in Investing Activities

Net cash used in investing activities was $613,~~056~~275,~~182~~539 and $29,~~930~~460,~~200~~214 for the ~~three~~year ~~months~~ ended ~~March~~December 31, 2010 and 2009, respectively. ~~In January~~ During 2010, the Company purchased a livestock feed patent in the amount of $78,~~927~~199,~~511~~ 158 (RMB 54,112,700)~~. The~~, ~~Company~~tobacco ~~paid~~trademarks of $61,~~299~~698,~~500~~842 in(RMB ~~cash.~~11,212,000), ~~During~~land ~~the~~use rights ~~three~~of ~~months~~$1,159,237 ~~ended~~(RMB ~~March 31~~7, ~~2009~~650,720) ~~the~~and ~~Company~~property, ~~deposited~~plant and equipment in the amount of $2,~~930~~462,~~200~~438 ~~pursuant~~(RMB to16,251,568). ~~the~~The ~~Assets~~amount ~~Purchase~~used ~~Agreement~~in investing activities ~~entered~~was onoffset ~~March~~by 25the collection of $244,136 from related party. During 2009, ~~for~~the Company purchased Taishan Basha land use rights in the amount of $9,710,926 (RMB 66,376,800).

Net cash used by investing activities was $9,460,214 in 2009, compared to $7,184,232 in 2008. On August 25, 2009, the Company acquired land use rights of state-owned land located in Langbei Village, Baisha Town covering an area of 181,854 square meters, with a useful life of 50 years starting from the issue date of the land use right certificate. The purchase price for the Taishan Baisha land use rights of 66,376,800 RMB ($9,710,926) was paid in full as of December 31, 2009.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $~~594~~1,~~958~~613,636 and $0255,042 for the ~~three~~years ~~months~~ ended ~~March~~ December 31, 2010 and 2009, respectively. ~~During~~ ~~the three months ended March 31,~~During 2010, the Company received net proceeds of $125,000 from cash exercise of stock options, ~~and~~ net proceeds of $~~475~~750,000 from exercise of B warrants, and net proceeds of $743,678 from the sale of common stock to an investor. The Company ~~repaid~~ repaid $5,042 to a related party. During 2009, the Company received proceeds of $250,000 from exercise of 333,334 A warrants and $5,042 from a related party.

Net cash provided by financing activities was $255,042 in 2009, compared to $720,922 in 2008. During 2008, the Company received net proceeds of $720,922 from the sale of Series A preferred stock. During 2009, the Company received deposits of $250,000 for exercise 333,334 shares of warrant A.

The Company’s operations for the year ended December 31, 2009 resulted in comprehensive income of $259,429. The Company has funded its cash needs from revenue.

Note Payable to a Financial Institution

The note payable $916,696 (6,050,000 RMB) is due to a PRC provincial government financial institution which made the loan to the Company to promote the commercial cultivation of cactus. The loan was made to the Company on an interest-free and unsecured basis and is repayable on demand. Imputed interest is calculated at 6% per annum on the amount due. Total imputed interest recorded as additional paid-in capital amounted to $1353,~~295~~630 and $1353,~~296~~ 219 for the ~~three~~years ~~months~~ ended ~~March~~ December 31, 2010 and 2009, respectively ~~and $53,219 and $52,326 for the years 2009 and 2008, respectively~~.

Estimated Liability for Equity-Based Financial Instruments with Characteristics of Liabilities

Effective January 1, 2009, in accordance with EITF Issue No. 07-05, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock”, the Company reclassified the fair values at January 1, 2009 of of the outstanding Series A Convertible Preferred Stock and the warrants ~~comprising~~ comprising the March 21, 2008 and the July 16, 2008 sales of units (see ~~Note 10 to the~~ ~~Consolidated~~ Financial Statements ~~for~~Note ~~quarter ended March 31, 2010~~11) from stockholders’ equity to liabilities, as follows:

		Shares / Warrants			Fair Value	~~Fair Value~~
Series A Convertible Preferred Stock	$	1,150,000	~~1,150,000~~	$	333,500	$	~~333,500~~
A warrants		1,250,000	~~1,250,000~~		122,000		~~122,000~~
B warrants		1,500,000	~~1,500,000~~		120,150		~~120,150~~
C warrants		500,000	~~500,000~~		47,950		~~47,950~~
D warrants		600,000	~~600,000~~		47,640		~~47,640~~
Total warrants		3,850,000	~~3,850,000~~		337,740		~~337,740~~
Total Financial Instruments	$	5,000,000	~~5,000,000~~	$	671,240	$	~~671,240~~

Since at January 1, 2009 the carrying value of the outstanding financial instruments was $690,000, the Company recognized a cumulative effect adjustment resulting from a change in accounting principle of $18,760, or a net of $671,240. Accordingly, the unappropriated retained earnings balance at December 31, 2008 was increased from $11,604,285 to $11,623,045, as adjusted, on January 1, 2009.

The characteristics which require classification of the Series A Preferred Stock and warrants as liabilities are the Company’s obligations to reduce the conversion price of the Series A Preferred Stock and the exercise price of the warrants in the event that the Company sells, grants, or issues any shares, options warrants, or any convertible instrument at a price below the $0.60 current conversion price of the Series A Preferred Stock or the current exercise prices of the warrants. As a result, the Company remeasures the fair values of these financial instruments each quarter, adjusts the liability balances, and reflects changes in operations as “income (expense) from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values”.

~~At March 31, 2010, the fair values of the financial instruments consisted of:~~27

	Shares / Warrants		Fair Value
Series A Convertible Preferred Stock		50,000	$	107,000
A warrants		-		-
B warrants		1,025,000		1,352,385
C warrants		500,000		710,950
D warrants		600,000		759,360
Total warrants		2,125,000		2,822,695
Total Financial Instruments		2,175,000	$	2,929,695

At December 31, 2010 and 2009, the fair values of the financial instruments consisted of:

Below is a reconciliation of the change in the fair values of the financial instruments from January 1, 2009 through March 31, 2010.

	2010		2009
	Shares / Warrants	Fair Value	Shares / Warrants	Fair Value

Series A Convertible Preferred Stock	50,000 $	51,500	50,000 $	135,500

A warrants	-	-	-	-
B warrants	750,000	153,975	1,500,000	2,839,500
C warrants	500,000	171,550	500,000	992,500
D warrants	600,000	144,180	600,000	1,090,860
Total warrants	1,850,000	469,705	2,600,000	4,922,860

Total Financial Instruments	1,900,000 $	521,205	2,650,000 $	5,058,360

	Shares / Warrants			Fair Value
Balance, January 1, 2009		5,000,000		$	671,240
Revaluation credited to operations		-			(262,725	)
Balance, March 31, 2009		5,000,000			408,515
Revaluation charged to operations		-			1,761,440
Balance, June 30, 2009		5,000,000			2,169,955
Conversion of Series A Preferred Stock to Common Stock		(416,667	)		(666,667	)
Revaluation charged to operations		-			2,738,135
Balance, September 30, 2009		4,583,333			4,241,423
Conversion of Series A Preferred Stock to Common Stock		(683,333	)		(1,282,500	)
Exercise of A warants		(1,250,000	)		(1,589,895	)
Revaluation charged to operations		-			3,689,332
Balance, December 31, 2009		2,650,000			5,058,360
Exercise of B warrants		(475,000	)		(612,750	)
Revaluation credited to operations		-			(1,515,915	)
Balance, March 31, 2010		2,175,000		$	2,929,695

Below is a reconciliation of the change in the fair values of the financial instruments from January 1, 2009 through December 31, 2010.

Accordingly, a total of $2,929,695 was recorded as estimated liabilities for equity-based financial instruments with characteristics of liabilities in the balance sheet as of March 31, 2010. $1,515,915 was recognized as income from valuation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values in the income statement for the three months ended March 31, 2010, and $7,926,182 was recognized as expense from valuation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values in the income statement for the year ended December 31, 2009.

	Shares / Warrants			Fair Value
Balance, January 1, 2009	5,000,000		$	671,240
Revaluation credited to operations	-			(262,725	)
Balance, March 31, 2009	5,000,000			408,515
Revaluation charged to operations	-			1,761,440
Balance, June 30, 2009	5,000,000			2,169,955
Conversion of Series A Preferred Stock to Common Stock	(416,667	)		(666,667	)
Revaluation charged to operations	-			2,738,135
Balance, September 30, 2009	4,583,333			4,241,423
Conversion of Series A Preferred Stock to Common Stock	(683,333	)		(1,282,500	)
Exercise of A warants	(1,250,000	)		(1,589,895	)
Revaluation charged to operations	-			3,689,332
Balance, December 31, 2009	2,650,000			5,058,360
Exercise of B warrants	(475,000	)		(612,750	)
Revaluation credited to operations	-			(1,515,915	)
Balance, March 31, 2010	2,175,000			2,929,695
Exercise of B warrants	(275,000	)		(338,250	)
Revaluation credited to operations	-			(1,435,280	)
Balance, June 30, 2010	1,900,000			1,156,165
Revaluation credited to operations	-			(505,305	)
Balance, September 30, 2010	1,900,000			650,860
Revaluation credited to operations	-			(129,655	)
Balance, December 31, 2010	1,900,000		$	521,205

~~CKGT~~The ~~has~~Series A Convertible Preferred Stock was valued based on nothe ~~defined~~trading ~~benefit~~price ~~plan~~of orthe ~~contractual~~Company’s ~~commitment~~common stock. The warrants were valued using the Black-Scholes option pricing model with ~~any~~a 100% expected volatility assumption regarding the trading price of ~~its~~the ~~officers~~Company’s ~~or directors~~common stock.

CKGT has no current plans for the purchase or sale of any plant or equipment, outside of normal items to be utilized by office personnel.

CKGT has no current plans to make any significant changes in the number of employees.

Impact of Inflation

CKGT believes that inflation has had a negligible effect on operations over the past three years. CKGT believes that it can offset inflationary increases in operating costs by increasing prices.

Off-Balance Sheet Arrangements

We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Critical Accounting Policies

In Note ~~3 to the reviewed consolidated financial statements for the quarter ended March 31, 2010 and Note~~ 2 to the audited consolidated financial statements for ~~the~~ the years ended December 31, ~~2009~~2010 and ~~2008~~2009 included in ~~this~~our annual report filed with SEC, the Company discusses those accounting policies that are considered to be be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States of America. The Company applies the following critical accounting policies related to revenue recognition in the preparation of its financial statements.

General

The Company’s Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions.

CKGT applies the following critical accounting policies related to revenue recognition in the preparation of its financial statements.

Revenue Recognition

Sales of products are recognized when title to the product and risk of loss transfer to the customer (which depends on the customer) provided that: there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectibility is deemed probable. Sales terms provide for passage of title either at the time shipment is made or at the time of the delivery of product and generally do not include any customer right of return. Shipping and handling costs are included as a component of cost of sales.

Fair Value of Financial Instruments

In connection with the determination of estimated liability for equity-based financial instruments with characteristics of liabilities (see Note 11 to consolidated financial statements), the Company used the Black-Scholes option pricing model and the following assumptions: expected volatility of 100%, and risk-free interest rate of 2%.

Foreign Currency Translation

The consolidated financial statements of the Company are translated pursuant to Accounting Standard Codification (“ASC”) 830, “Foreign Currency Matters.” The Company’s subsidiaries, Harbin Hainan Kangda and Guangdong Taishan Kangda, are located and ~~operated~~operate in China. The Chinese Yuan is the functional currency. The financial statements of China Kangtai are translated to U.S. dollars using period-end exchange rates for assets and liabilities, and average exchange rates for revenues, costs and expenses. Translation adjustments are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Transaction gains or losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the consolidated results of operations.

Recently Adopted Accounting Standards

In February 2010, the Company adopted an amendment to previously adopted accounting guidance on subsequent event disclosure, which established standards of accounting for and disclosure of events or transactions that occur after the balance sheet date but before financial statements are issued or available to be issued. Under the amended guidance, the Company is no longer required to disclose the date through which subsequent events have been evaluated. The adoption of this requirement did not have a material impact on the Company’s financial condition or results of operations.

~~Recent~~We adopted the accounting principles established by ASU ~~Accounting~~2009-17, ~~Pronouncements~~Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, effective January 1, 2010. This ASU requires an ongoing reassessment and replaces the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity (“VIE”) with a primarily qualitative analysis. The qualitative analysis is based on identifying the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance (the “power criterion”) and the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE (the “losses/benefit criterion”). The party that meets both these criteria is deemed to have a controlling financial interest. The party with the controlling financial interest is considered to be the primary beneficiary and as a result is required to consolidate the VIE. The adoption of this new guidance did not have a material effect on our financial statements.

In December 2007, the FASB issued and, in April 2009, amended a new business combinations standard codified within ASC 805, which changed the accounting for business acquisitions. Accounting for business combinations under this standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. The adoption of this standard did not have a material impact on the Company’s results of operations or financial condition.29

~~In April 2009,~~Recently ~~the~~Issued ~~FASB~~Accounting ~~issued~~Standards an accounting standard which provides guidance on (1) estimating the fair value of an asset or liability when the volume and level of activity for the asset or liability have significantly declined and (2) identifying transactions that are not orderly. The standard also amended certain disclosure provisions for fair value measurements and disclosures in ASC 820 to require, among other things, disclosures in interim periods of the inputs and valuation techniques used to measure fair value as well as disclosure of the hierarchy of the source of underlying fair value information on a disaggregated basis by specific major category of investment. The standard was effective prospectively beginning April 1, 2009. The adoption of this standard did not have a material impact on the Company’s results of operations or financial condition.

In April 2009, the FASB issued an accounting standard which modifies the requirements for recognizing other-than-temporarily impaired debt securities and changes the existing impairment model for such securities. The standard also requires additional disclosures for both annual and interim periods with respect to both debt and equity securities. Under the standard, impairment of debt securities will be considered other-than-temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell). The standard further indicates that, depending on which of the above factor(s) causes the impairment to be considered other-than-temporary, (1) the entire shortfall of the security’s fair value versus its amortized cost basis or (2) only the credit loss portion would be recognized in earnings while the remaining shortfall (if any) would be recorded in other comprehensive income. The standard requires entities to initially apply its provisions to previously other-than-temporarily impaired debt securities existing as of the date of initial adoption by making a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The cumulative-effect adjustment potentially reclassifies the noncredit portion of a previously other-than-temporarily impaired debt security held as of the date of initial adoption from retained earnings to accumulated other comprehensive income. The adoption of this standard did not have a material impact on the Company’s results of operations or financial condition.

In April 2009, the FASB issued an accounting standard regarding interim disclosures about fair value of financial instruments. The standard essentially expands the disclosure about fair value of financial instruments that were previously required only annually to also be required for interim period reporting. In addition, the standard requires certain additional disclosures regarding the methods and significant assumptions used to estimate the fair value of financial instruments. The adoption of this standard did not have a material impact on the Company’s results of operations or financial condition.

In May 2009, the FASB issued a new accounting standard regarding subsequent events. This standard incorporates into authoritative accounting literature certain guidance that already existed within generally accepted auditing standards, with the requirements concerning recognition and disclosure of subsequent events remaining essentially unchanged. This guidance addresses events which occur after the balance sheet date but before the issuance of financial statements. Under the new standard, as under previous practice, an entity must record the effects of subsequent events that provide evidence about conditions that existed at the balance sheet date and must disclose but not record the effects of subsequent events which provide evidence about conditions that did not exist at the balance sheet date. For the Company, this standard was effective beginning April 1, 2009 and adoption of this standard did not have a material impact on the Company’s results of operations or financial condition

In June 2009, the FASB issued a new standard regarding the accounting for transfers of financial assets amending the existing guidance on transfers of financial assets to, among other things, eliminate the qualifying special-purpose entity concept, include a new unit of account definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarify and change the derecognition criteria for a transfer to be accounted for as a sale, and require significant additional disclosure. The standard is effective for new transfers of financial assets beginning January 1, 2010. The Company is currently evaluating the impact of this standard, but does not expect to have a material impact on the Company’s results of operations or financial condition.

In June 2009, the FASB issued an accounting standard that revised the consolidation guidance for variable-interest entities. The modifications include the elimination of the exemption for qualifying special purpose entities, a new approach for determining who should consolidate a variable-interest entity, and changes to when it is necessary to reassess who should consolidate a variable-interest entity. The standard is effective January 1, 2010. The Company is currently evaluating the impact of this standard, but does not expect it to have a material impact on the Company’s results of operations or financial condition.

In June 2009, the Financial Accounting Standards Board (FASB) issued a standard that established the FASB (ASC) and amended the hierarchy of generally accepted accounting principles (GAAP) such that the ASC became the single source of authoritative nongovernmental U.S. GAAP. The ASC did not change current U.S. GAAP, but was intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All previously existing accounting standard documents were superseded and all other accounting literature not included in the ASC is considered non-authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through Accounting Standards Updates (ASUs). The Company adopted the ASC. This standard did not have an impact on the Company’s consolidated results of operations or financial condition. However, throughout the notes to the consolidated financial statements references that were previously made to various former authoritative U.S. GAAP pronouncements have been changed to coincide with the appropriate section of the ASC.

In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, a entity may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value. This ASU is effective October 1, 2009. Adoption of this standard did not have a material impact on the Company’s results of operations or financial condition.

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions. The ASU is effective January 1, 2011. The Company is currently evaluating the impact of this standard on the Company’s results of operations and financial condition.

In January 2010, the Financial Accounting Standards Board issued guidance which expands the required disclosures about fair value measurements. This guidance requires disclosures about transfers of investments between levels in the fair value hierarchy and disclosures relating to the reconciliation of fair value measurements using significant unobservable inputs (level 3 investments). This guidance is effective for the Company as of January 1, 2011. The adoption of this guidance will not have a material impact on its financial condition or results of operations.

In April 2010, the FASB issued ASU 2010-13, “Compensation-Stock Compensation (Topic 718) - Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades - a consensus of the FASB Emerging Issues Task Force,” or ASU 2010-13. ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this update do not expand the recurring disclosures required by Topic 718. Disclosures currently required under Topic 718 are applicable to a share-based payment award, including the nature and the term of share-based payment arrangements. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this guidance will not have a material impact on its financial condition or results of operations.

Certain other accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers currently serving the Company are as follows:

Name	Age	Positions Held
Jinjiang Wang	6162	President, Chief Executive Officer and Chairman of the Board of Directors
Chengzhi Wang	4041	General Manager and a Director
Hong Bu	3637	Chief Financial Officer and a Director
Jiping Wang	4950	Director
Song Yang	3637	Director

The directors named above will serve until the next annual special meeting of the Company’s stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. There is no arrangement or understanding between any of the directors or officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer.

The directors and officers will devote their time to the Company’s affairs on an “as needed” basis, which, depending on the circumstances, could amount to as little as two hours per month, or more than forty hours per month, but more than likely will fall within the range of five to ten hours per month. All of the Company’s officers are full time employees of the Company.

Biographical Information

Jinjiang Wang ~~has~~was ~~served~~appointed as the Chairman of the Board, President and Chief Executive Officer of ~~the~~CKGT ~~Company since~~on June 3, 2005 and appointed a director of ~~the~~CKGT ~~Company~~on ~~since~~ July 22, 2005. Since 1998, Mr. Wang has served as a director and Chairman of the board of the Company’s subsidiary, Harbin Hainan Kangda. Mr. Wang ~~has~~was ~~over~~born ~~20 years of experience~~ in ~~management,~~the ~~production~~Heilongjiang ~~development~~Province ~~and sales. He is a founder~~ of ~~Harbin~~ ~~Hainan Kangda and a pioneer of~~ the ~~now established edible cactus trade of China~~P.R.C. Mr. Wang graduated from Northeast Agricultural University with a degree in Agriculture & Forest Engineering. Mr. Wang ~~was~~has ~~selected~~over to20 ~~serve~~years asof experience in amanagement, ~~director~~production ~~based~~development onand ~~his~~sales. ~~prior~~He ~~experience~~is a founder of Harbin Hainan Kangda and ~~knowledge~~a pioneer of the ~~industry~~ now established edible cactus trade of China.

Chengzhi Wang ~~has~~was ~~served~~appointed as the ~~Company’s~~General ~~director~~Manager ~~since~~CKGT on ~~July~~June 3, 2005 and asappointed ~~the~~a ~~General~~director ~~Manager~~ of CKGT ~~since June~~on July 22, 2005. Mr. Wang also serves as a director and general manager of the Company’s subsidiary, Harbin Hainan Kangda and has held these positions since 1998. Mr. Wang ~~has~~was ~~over~~born ~~five years experience~~ in ~~management, production and~~ ~~sales.~~Heilongjiang HeProvince ~~is a founder~~ of ~~Harbin Hainan Kangda and a pioneer in~~ the ~~edible cactus trade of the~~ P.R.C. Mr. Wang graduated from Architectonics Department of Harbin Institute of Technology with an engineer degree. Mr. Wang ~~was~~has ~~selected~~over tofive ~~serve~~years asexperience ain ~~director~~management, ~~because~~production ofand ~~his~~sales. ~~prior~~Mr. ~~experience~~Wang ~~and~~is ~~knowledge~~a founder of Harbin Hainan Kangda and a pioneer in the ~~industry~~edible cactus trade of the P.R.C.

Hong Bu has served as the Company’s director since July 2005 and the Chief Financial Officer of CKGT since June 2005. From 1998 to 2005 Ms. Bu served as senior accountant of Harbin Hainan Kangda. Ms. Bu has over five years of experience as Harbin Hainan Kangda’s senior accountant. Ms. Bu was a founder of Harbin Hainan Kangda and a pioneer in the edible cactus trade of the P.R.C. Ms. Bu graduated with a degree in Finance from the Finance and Economics Institute of Harbin. She is a CPA (certified public accountant). Ms. Bu was selected to serve as a director because of her prior experience and knowledge of the industry.30

~~Jiping~~Hong ~~Wang has~~Bu ~~served~~ was appointed as Chief Financial Officer of CKGT on June 3, 2005 and appointed a director of ~~the~~CKGT ~~Company~~on ~~since~~ July 22, 2005. ~~Since~~From ~~1979,~~1998 to 2005 Ms. ~~Wang~~Bu ~~has~~ served as an ~~officer~~senior accountant of ~~Heilongjian~~Harbin ~~Food~~Hainan ~~Control and Drought Prevention Center~~Kangda. Ms. ~~Wang~~ Bu graduated with a degree in Finance from the ~~Economic~~Finance ~~Managerial~~and ~~Cadre’s~~Economics Institute of Harbin. She is a CPA (certified public accountant). Ms. ~~Wang~~Bu ~~was~~has ~~selected~~over tofive ~~serve~~years of experience as aHarbin ~~director~~Hainan ~~because~~Kangda’s ofsenior ~~her~~accountant. ~~prior~~Ms. Bu was a founder ~~experience~~of Harbin Hainan Kangda and ~~knowledge~~a pioneer in the ~~industry~~edible cactus trade of the P.R.C.

~~Song~~Jiping ~~Yang has~~Wang ~~served~~was appointed as a director of ~~the~~CKGT ~~Company~~on ~~since~~ July 22, 2005. ~~Ms. Yang~~Since ~~has~~1979 ~~over 15 years of experience in the Government Administrative Department. From 2000 to 2004,~~ Ms. ~~Yang~~Wang has served as aan ~~financing~~officer ~~manager~~ of Heilongjian ~~Securities~~Food ~~Corporation. Ms. Yang~~Control ~~was~~and aDrought ~~founder~~Prevention ofCenter. ~~Harbin~~Ms. ~~Hainan~~Wang ~~Kangda~~was ~~and~~born ~~a pioneer~~ in ~~the~~Heilongjiang Province; ~~edible cactus trade of the~~ P.R.C. Ms. ~~Yang~~Wang graduated from ~~Heilongjiang_University~~ ~~with~~the aEconomic ~~degree~~Managerial ~~in Economics. Ms. Yang was selected to~~Cadre’s ~~serve~~Institute ~~as a director because~~ of ~~her prior experience and knowledge of the industry~~Harbin.

Song Yang was appointed as a director of CKGT on July 22, 2005. Ms. Yang has over 15 years of experience in the Government Administrative Department. From 2000 to 2004 Ms. Yang served as a financing manager of Heilongjian Securities Corporation. Ms. Yang was a founder of Harbin Hainan Kangda and a pioneer in the edible cactus trade of the P.R.C. Ms. Yang has not served as an officer and director of any other public companies over the last five years.

Family Relationships

Our Chairman, President and CEO, Mr. Jinjiang Wang, is the father of our General Manager, Mr. Chengzhi Wang. ~~Our~~and our CFO, Ms. Hong Bu, is the wife of Mr. Chengzhi Wang and daughter in law of Mr. Jinjiang Wang. Other than the ~~relationship~~ relationships described above, there are no family relationships between or among any of our current directors, executive officers or persons nominated or charged by the Company to become directors or executive officers.

Board Leadership Structure

The Board of Directors believes that Mr. Wang’s service as both Chairman of the Board and Chief Executive Officer is in the best interest of the Company and its stockholders. Mr. Wang possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its business and is thus best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical matters. His combined role enables decisive leadership, ensures clear accountability, and enhances the Company’s ability to communicate its message and strategy clearly and consistently to the Company’s shareholders, employees, customers and suppliers.

Involvement in Certain Legal Proceedings

None of our directors or executive officers ~~has~~, during the past ~~ten~~ ten years:

38a) Had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; b) Has been convicted in a criminal proceeding or subject to a pending criminal proceeding; c) Has been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; and d) Has been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

(a) Had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

(b) Been convicted in a criminal proceeding or subject to a pending criminal proceeding;

(c) Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; and

(d) Been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Board Committees

The board of directors has established an audit committee. The audit committee is comprised of Jinjiang Wang and Chengzhi Wang. The audit committee has yet to adopt a definitive charter though it typically reviews, acts on, and reports to the board of directors with respect to various auditing and accounting matters. The matters typically considered by CKGT’s audit committee include recommendations as to the performance of its independent auditors, the scope of the annual audits, fees to be paid to the independent auditors, and internal accounting and financial control policies and procedures. Certain stock exchanges currently require companies to adopt a formal written charter that establishes an audit committee that specifies the scope of an audit committee’s responsibilities and the means by which it carries out those responsibilities. In ~~order~~We todo benot ~~listed~~have ~~on any of these exchanges, CKGT would be required to adopt~~ a ~~definitive~~financial ~~charter~~expert ~~for~~serving ~~its~~on ~~audit~~our ~~committee. The board of directors has not yet~~audit ~~established a compensation~~ committee ~~or a nominating committee~~.

~~Directors currently~~In ~~are~~order ~~not~~to ~~reimbursed~~be ~~for~~listed ~~out-of-pocket~~on ~~costs~~a ~~incurred~~stock inexchange, ~~attending meetings~~CKGT ~~and~~would nobe required ~~director~~to ~~receives~~adopt ~~any~~a ~~compensation~~definitive charter for ~~services~~its ~~rendered~~audit ~~as a director~~committee. ~~CKGT~~The ~~does~~board of directors has not ~~anticipate~~yet ~~adopting~~established a ~~provision~~compensation ~~for~~committee ~~compensating directors~~or ina ~~the future~~nominating committee.

~~Compliance With Section 16(a) of the Exchange Act.~~31

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers and directors, and persons who own more that 10% of the Company’s capital stock, to file reports of ownership and changes of ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. Executive officers, directors and greater than 10% shareholders are required to furnish the Company with copies of all Forms 3, 4 and 5 they file.

~~Based solely~~In on2010, ~~the~~Jinjiang ~~Company’s~~Wang, ~~review of~~ the ~~copies~~President, ofCEO ~~such~~and ~~forms~~a ~~it has received~~director, and ~~written~~Song ~~representations~~Yang, ~~from~~a ~~certain~~director ~~reporting~~of ~~persons,~~ the Company ~~believes that~~gifted ~~all~~a total of ~~its~~428,572 ~~executive officers~~ and ~~directors~~600,000 shares, ~~complied~~respectively ~~with~~to ~~all Section 16(a) filing~~members ~~requirements~~of ~~applicable~~the toCompany's ~~them~~management ~~with one exception~~team. AThe ~~Form 3~~beneficial ownership ~~for~~changes ~~Chengzhi~~as ~~Wang,~~ a ~~director~~result of ~~the~~these ~~Company,~~two ~~was~~transactions have not been reported ~~inadvertently~~under ~~filed~~Form a4 ~~day~~or ~~late~~Form in5 ~~connection~~as ~~with~~required ~~the~~by ~~Company’s~~Section ~~reorganization transaction~~16 ~~occurring~~of inthe ~~June 2005~~Exchange Act.

Code of Ethics

CKGT has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-B of the Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons performing similar functions. CKGT has filed a copy of its Code of Ethics as Exhibit 14 to its Form 10-KSB for the fiscal year ended 2003. Further, CKGT’s Code of Ethics is available in print, at no charge, to any security holder who requests such information by contacting CKGT.

Indemnification of Directors and Officers

Our articles of incorporation limit the liability of directors to the maximum extent permitted by Nevada law. This limitation of liability is subject to exceptions including intentional misconduct, obtaining an improper personal benefit and abdication or reckless disregard of director duties. Our articles of incorporation and bylaws provide that we may indemnify our directors, officers, employees and other agents to the fullest extent permitted by law. Our bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether the bylaws would permit indemnification. We currently do not have such an insurance policy.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

EXECUTIVE COMPENSATION

The following table provides summary compensation information for the years ~~2009~~2010 and ~~2008~~ 2009 concerning cash and non-cash compensation paid or accrued by the Company to or on behalf of the chief executive officer:

Summary Compensation Table

Name and Principal Position	Year	Salary ($)(1)		Bonus ($)		Stock Award(s) ($)			Option Award(s) ($)	Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Non-qualified Compensation Earnings ($)	All other Compensation ($)		Total ($)
														Change in
Jinjiang Wang,	2009	$	17,556	-			-		-		-	-	-		$	17,556
														Pension
President, Chief Executive	2008	$	14,630	-			-		-		-	-	-		$	14,630
												Non-Equity		Value and
Officer and Chairman
												Incentive		Non-qualified
Chengzhi Wang,	2009	$	14,045	-			-		-		-	-	-		$	14,045
								Stock		Option		Plan		Compensation			All other
General Manager	2008	$	11,118	-			-		-		-	-	-		$	11,118
Name and Principal			Salary		Bonus			Award(s)		Award(s)		Compensation		Earnings			Compensation		Total
Hong Bu,	2009	$	14,045	-			-		-		-	-	-		$	14,045
Position	Year		($)(1)		($)			($)		($)		($)		($)			($)		($)
Chief Financial Officer	2008	$	11,118	-			-		-		-	-	-		$	11,118
Jinjiang Wang, President, Chief Executive Officer and Chairman	2010 2009	$$	32,358 17,556		- -					- -		- -		- -			- -	$$	32,358 17,556
Chengzhi Wang, General Manager	2010 2009	$$	26,336 14,045		- -					- -		- -		- -			- -	$$	26,336 14,045
Hong Bu, Chief Financial Officer	2010 2009	$$	26,336 14,045		- -					- -		- -		- -			- -	$$	26,336 14,045

⁽¹⁾Converted from RMB at the exchange rate of 1RMB=US$0.1463

No executive officer received compensation in excess of $100,000 during the fiscal years ended December 31, ~~2009~~2010 and ~~2008~~2009. In addition, members of the Board of Directors did not receive compensation for their services during the fiscal years ending December 31, ~~2009~~2010 and ~~2008~~2009.

Director Compensation

Directors currently are not reimbursed for out-of-pocket costs incurred in attending meetings and no director receives any compensation for services rendered as a director. CKGT does not anticipate adopting a provision for compensating directors in the future.

Employment Contracts

We have the following agreements with our named executive officers.

Hong Bu

On June 3, 2010, we entered into a Contract of Employment, pursuant to which we pay Ms. Bu RMB 4,000 per month. This agreement is for a term of five years expiring June 3, 2015. However, either party may terminate this agreement at anytime upon 30 days’ advanced notice.

Chengzhi Wang

On June 3, 2010, we entered into a Contract of Employment, pursuant to which we pay Mr. Wang RMB 4,000 per month. This agreement is for a term of five years expiring June 3, 2015. However, either party may terminate this agreement at anytime upon 30 days’ advanced notice.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND CORPORATE GOVERNANCE

There are no transactions since the beginning of the Company’s last fiscal year, or any currently proposed transaction, to which the Company was or is a party in which the amount involved exceeds $120,000 and in which any director, executive officer, five percent (5%) stockholder or any member of the immediate family or any of the foregoing persons had or will have a direct or indirect material interest.

The Board of Directors has determined that none of the Company’s current directors are independent directors within the meaning set forth in the rules of NASDAQ as currently in effect.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of ~~July~~April 16[11], ~~2010~~2011, the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5.0% or more of the outstanding Common Stock of the Company. Also included are the shares held by all executive officers and directors as a group.

Title of Class		Name and Address of Owner		Amount and Nature of Ownership	Percent of Class(1)
Title of		Amount and Nature	Percent of
Executive Officers and Directors
Class	Name and Address of Owner	of Ownership	Class(1)
Common Stock		Jinjiang Wang The 4th Group, 21st Residents’ Committee Xinhua Street, Boli Town, Boli County Heilongjiang Province P.R.C.		4,372,818 Direct		20.5	%
Executive Officers and Directors
Common Stock	Jinjiang Wang The 4th Group, 21st Residents’ Committee Xinhua Street, Boli Town, Boli County Heilongjiang Province P.R.C.	~~Chengzhi Wang No. 98 Xiangshun Street Xiangfang District~~4, ~~Harbin~~372,818 ~~P.R.C.~~Direct(2)	19.6%	~~3,892,970 Direct~~		~~18.3~~	%
Common Stock	Chengzhi Wang No. 98 Xiangshun Street Xiangfang District, Harbin, P.R.C.	~~Hong Bu No. 99 Taibei Road Limin Economy and Technology Developing District~~3, ~~Harbin~~892,970 ~~P.R.C.~~Direct	17.5%	~~750,046 Direct~~		~~3.5]~~	%
Common Stock	Hong Bu No. 99 Taibei Road Limin Economy and Technology Developing District, Harbin, P.R.C.	~~Jiping Wang No. 99 Taibei Road Limin Economy and Technology Developing District~~750,046 ~~Harbin, P.R.C.~~Direct	3.3%	~~700,734 Direct~~		~~3.3~~	%
Common Stock	Jiping Wang No. 99 Taibei Road Limin Economy and Technology Developing District, Harbin, P.R.C.	~~Song Yang No. 99 Taibei Road Limin Economy and Technology Developing District~~700,734 ~~Harbin, P.R.C.~~Direct	3.1%	~~726,688 Direct~~		~~3.4~~	%
Common Stock	Song Yang No. 99 Taibei Road Limin Economy and Technology Developing District, Harbin, P.R.C.	~~All~~126,688 ~~Directors and Executive Officers as a Group (5 persons)~~Direct	*	~~10,443,256 Direct~~		~~49.1~~	%
5% Holder
Common Stock	All Directors and Executive Officers as a Group (5 persons)	9,843,256 Direct	44.1%
Common Stock		T Squared Investments LLC. 1325 Sixth Avenue, Floor 28 New York, NY 10019		1,900,000 Direct (2)		8.9	%
5% Holder
Common Stock	T Squared Investments LLC. 1325 Sixth Avenue, Floor 28 New York, NY 10019	1,850,000 Direct(3)	8.2%

(1) Applicable percentage ownership is based on 21,227,527 shares of common stock outstanding as of July 16, 2010, together with securities exercisable or convertible into shares of common stock within 60 days of July 16, 2010 for each stockholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of July 16, 2010 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.______________

(1)	Applicable percentage ownership is based on 22,305,527 shares of common stock outstanding as of April 13, 2011 together with securities exercisable or convertible into shares of common stock within 60 days of April 13, 2011 for each stockholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days April 13, 2011 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(2)	Jinjiang Wang has been the President of the Company since June 3, 2005. He has been and is the President of Harbin Hainan Kangda since 2000. Jinjiang Wang acquired 165,182 shares of the Company pursuant to the Reorganization Agreement on June 3, 2005. A day after the Reverse Split on August 26, 2005, the Convertible Note was converted by its holders(s) into 14,248,395 shares of the Company and Mr. Jinjiang Wang acquired 4,207,636 shares from 14,248,395 shares of the Company.

(3)	1,850,000 shares of common stock are issuable upon the exercise of warrants which are immediately exercisable. Pursuant to the Preferred Stock Purchase Agreements and Common Stock Purchase Warrants by and between the Company and the T Squared Investments LLC (“T Squared”) dated March 21, 2008 and July 16, 2008, T Squared is not entitled to exercise any warrant which will result in beneficial ownership by T Squared and its affiliates of more than 4.9% of the outstanding shares of the Company’s common stock.

~~(2)~~DISCLOSURE OfOF ~~which~~COMMISSION ~~50,000~~POSITION ~~shares~~OF ofINDEMNIFICATION ~~common~~FOR SECURITIES ~~stock~~ACT are issuable upon conversion of 50,000 shares of Series A Convertible Preferred Stock at the election of the holder at any time and 1,900,000 shares of common stock are issuable upon the exercise of warrants which are immediately exercisable. Pursuant to the Preferred Stock Purchase Agreements and Common Stock Purchase Warrants by and between the Company and the T Squared Investments LLC (“T Squared”) dated March 21, 2008 and July 16, 2008, T Squared is not entitled to exercise any warrant which will result in beneficial ownership by T Squared and its affiliates of more than 4.9% of the outstanding shares of the Company’s common stock.LIABILITIES

DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT

LIABILITIES

The Company’s directors and executive officers are indemnified as provided by the Nevada Revised Statutes and the Company’s Bylaws. Under the Nevada Revised Statutes, director immunity from liability to a company or its shareholders from monetary liabilities applies automatically unless it is specifically limited by a company's articles of incorporation. Our articles of incorporation limit the liability of directors to the maximum extent permitted by Nevada law. This limitation of liability is subject to exceptions including intentional misconduct, obtaining an improper personal benefit and abdication or reckless disregard of director duties. Our articles of incorporation and bylaws provide that we may indemnify our directors, officers, employees and other agents to the fullest extent permitted by law. Our bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether the bylaws would permit indemnification. We currently do not have such an insurance policy.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

LEGAL MATTERS

The legality of the issuance of the shares offered in this prospectus will be passed upon for us by ~~The~~Chiang ~~Crone~~ Law ~~Group~~Office, ~~San Francisco, California~~P. ~~The Crone Law Group holds an option to purchase 250,000 shares of common stock at an initial exercise price of $1~~C.~~49 per share and 208~~,~~115~~ ~~shares~~San ~~of common~~Jose, ~~stock~~California.

EXPERTS

The consolidated financial statements of our company as of December 31, ~~2009~~2010 and ~~2008~~ 2009 included in this prospectus have been audited by Michael T. Studer, CPA, P.C., independent registered public accountants, as stated in its report appearing herein and elsewhere in this prospectus, and have been so included in reliance upon the report of this firm given upon their authority as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-1 (including exhibits) under the Securities Act, with respect to the shares to be sold in this offering. This prospectus does not contain all the information set forth in the registration statement. For further information with respect to our company and the common stock offered in this prospectus, reference is made to the registration statement, including the exhibits filed thereto, and the financial statements and notes filed as a part thereof. With respect to each such document filed with the SEC as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matter involved.

We file quarterly and annual reports, proxy statements and other information with the SEC. You may read and copy any document that we file at the public reference facilities of the SEC in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from the SEC’s website at http://www.sec.gov.

4235

Index to Financial Statements

Interim Financial Statement
Audited Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009 (audited)		F-1
Report of Independent Registered Public Accounting Firm	F-1
Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2010 and 2009 (unaudited)		F-2
Consolidated Balance Sheets as of December 31, 2010 and 2009	F-2
Condensed Statements of Stockholders' Equity (unaudited)		F-3
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2010 and 2009	F-3
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited)		F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2010 and 2009	F-4
Notes to the Condensed Consolidated Financial Statements (unaudited)		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009	F-5
Audited Financial Statements
Notes to Consolidated Financial Statements	F-6
Report of Independent Registered Public Accounting Firm		F-23
Consolidated Balance Sheets as of December 31, 2009 and 2008		F-24
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2009 and 2008		F-25
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2009 and 2008		F-26
Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008		F-27
Notes to Consolidated Financial Statements		F-28

4336

~~PART I—FINANCIAL~~REPORT ~~INFORMAION~~OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~Item~~To 1.the ~~Financial~~Board of Directors and Stockholders of China Kangtai ~~Statements~~Cactus Bio-Tech Inc.

~~China~~I have audited the accompanying consolidated balance sheets of China Kangtai Cactus Bio-Tech Inc. and ~~Subsidiaries~~subsidiaries (the “Company”) as of December 31, 2010 and 2009 and the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audits.

~~Condensed~~I conducted my audits in accordance with the standards of the ~~Consolidated~~Public ~~Balance~~Company ~~Sheets~~Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

	March 31,		December 31,
	2010		2009
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	2,029,202	$	2,918,068
Accounts receivable, net of allowance for doubtful accounts of $976,827 and $1,006,597, respectively		3,735,529		2,283,257
Inventories		1,052,703		2,440,904
Prepaid expenses		75,322		1,265
Other receivables		10,569		3,992,562
Total Current Assets		6,903,325		11,636,056
Property, plant and equipment, net of accumulated depreciation of $2,232,189 and $2,112,093, respectively		5,642,847		5,750,876
Other Assets
Intangible assets, net of accumulated amortization of $1,088,788 and $1,054,531, respectively		8,209,962		316,300
Land use rights, net of accumulated amortization of $567,743 and $473,151, respectively		17,912,471		17,981,834
Total Assets	$	38,668,605	$	35,685,066
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	279,503	$	311,417
Note payable		886,325		885,115
Taxes payable		563,558		789,141
Payable to seller of patent		1,628,011		-
Other payable		-		5,042
Total Current Liabilities		3,357,397		1,990,715
Estimated liability for equity-based financial instruments with characteristics of liabilities:
Designated as Series A convertible Preferred Stock (50,000 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively)		107,000		135,500
Warrants		2,822,695		4,922,860
Total		2,929,695		5,058,360
Total Liabilities		6,287,092		7,049,075
Commitments and Contingencies		-		-
Stockholders' Equity
Preferred stock, par value $.001 per share; authorized 200,000,000 shares; issued and outstanding: 50,000 and 50,000 shares, respectively		-		-
Common stock, par value $.001 per share; authorized 200,000,000 shares, issued or issuable and outstanding: 20,740,762 and 20,024,024 shares, respectively		20,741		20,024
Additional paid-in capital		12,321,404		11,003,276
Retained earnings
Appropriated		4,030,658		3,881,804
Unappropriated		13,107,495		10,903,711
Accumulated other comprehensive income (Foreign currency translation adjustments)		2,901,215		2,827,176
Total stockholders' equity		32,381,513		28,635,991
Total Liabilities and Stockholders' Equity	$	38,668,605	$	35,685,066

In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of China Kangtai Cactus Bio-Tech Inc. and subsidiaries as of December 31, 2010 and 2009 and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

~~The accompanying~~/S/ ~~notes~~Michael ~~are~~T. anStuder ~~integral~~CPA ~~part~~P.C. ofMichael ~~these~~T. ~~financial statements~~Studer CPA P.C.

Freeport, New York

March 31, 2011

F-1

FINANCIAL STATEMENTS China Kangtai Cactus Bio-Tech Inc. and Subsidiaries Consolidated Balance Sheets As of December 31, 2010 and 2009

Condensed Consolidated Statements of Income and Comprehensive Income

		2010		2009
ASSETS
Current Assets
Cash and cash equivalents	$	2,630,035	$	2 ,918,068
Accounts receivable, net of allowances for doubtful accounts of $1,004,027 and $1,006,597, respectively		7,416,090		2,283,257
Inventories		1,385,531		2,440,904
Prepaid expenses		1,644		1,265
Other receivables		500		3,992,562
Total Current Assets		11,433,800		11,636,056
Property, plant and equipment, net of accumulated depreciation of $2,637,629 and $2,112,093, respectively		7,928,050		5,750,876

Other Assets
Land use rights, net of accumulated amortization of $881,720 and $473,151, respectively		19,390,976		17,981,834
Intangible assets, net of accumulated amortization of $1,601,418 and $1,054,531, respectively		9,714,809		316,300
Total Assets	$	48,467,635	$	35,685,066
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	306,025	$	311,417
Note payable		916,696		885,115
Taxes payable		1,551,198		789,141
Other payable		-		5,042
Total Current Liabilities		2,773,919		1,990,715

Estimated liability for equity-based financial instruments with characteristics of liabilities:
Designated as Series A convertible Preferred Stock (50,000 shares issued and outstanding at December 31, 2010 and 2009, respectively)		51,500		135,500
Warrants		469,705		4,922,860
Total		521,205		5,058,360
Total Liabilities		3,295,124		7,049,075
Commitments and Contingencies		-		-

Stockholders' Equity
Preferred stock, par value $.001 per share; authorized 200,000,000 shares; issued and outstanding:
50,000 and 50,000 shares, respectively		-		-
Common stock, par value $.001 per share; authorized 200,000,000 shares, issued or issuable and outstanding: 22,255,527 and 20,024,024 shares, at December 31, 2010 and 2009, respectively		22,256		20,024
Additional paid-in capital		14,259,777		11,003,276
Retained earnings
Appropriated		5,253,700		3,881,804
Unappropriated		21,322,790		10,903,711
Accumulated other comprehensive income (Foreign currency translation adjustments)		4,313,988		2,827,176
Total stockholders' equity		45,172,511		28,635,991
Total Liabilities and Stockholders' Equity	$	48,467,635	$	35,685,066

~~(Unaudited)~~The accompanying notes are an integral part of these consolidated financial statements.

	For the Three Months Ended
	March 31,
	2010			2009
Net Sales	$	5,519,034		$	3,329,952
Cost of Sales		(4,039,862	)		(2,092,786	)
Gross Profit		1,479,172			1,237,166
Operating Expenses
Selling expenses		24,611			36,329
Provision for reserve for allowances, returns and doubtful accounts		(31,146	)		-
General and administrative expenses		242,202			257,600
Depreciation		19,033			18,889
Amortization of land use rights		9,534			9,535
Amortization of intangible assets		34,281			34,283
Total operating expenses		298,515			356,636
Income from Operations		1,180,657			880,530
Other Income (Expense)
Interest income		147			-
Imputed interest expense		(13,295	)		(13,296	)
Income from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values		1,515,915			262,725
Total Other Income (Expenses)		1,502,767			249,429
Income before Income Tax		2,683,424			1,129,959
Income tax expense		(330,786	)		(173,286	)
Net Income Attributable to Common Stockholders	$	2,352,638		$	956,673
Net Income Per Common Share
Basic	$	0.12		$	0.05
Diluted	$	0.11		$	0.05
Weighted Average Number of Common Shares Used to Compute Earnings per Common Share:
Basic		20,326,260			17,885,625
Diluted		21,699,317			19,035,625
Comprehensive Income:
Net income	$	2,352,638		$	956,673
Foreign currency translation adjustment		74,039			(30,891	)
Comprehensive Income	$	2,426,677		$	925,782

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

F-2

China Kangtai Cactus Bio-Tech Inc. and Subsidiaries Consolidated Statements of Income and Comprehensive Income For the Years Ended December 31, 2010 and 2009

Condensed Consolidated Statements of Stockholders' Equity

		2010			2009
Net Sales	$	36,029,550		$	26,537,356
Cost of Sales		(22,475,015	)		(16,016,434	)
Gross Profit		13,554,535			10,520,922

Operating Expenses
Selling expenses		117,615			249,083
(Reduction) in provision for reserve for allowances, returns and doubtful accounts		(29,708	)		26,897
Research and development		141,830			-
General and administrative expenses		1,394,632			464,697
Depreciation		77,097			77,323
Amortization of land use rights		38,459			38,165
Amortization of intangible assets		498,034			137,227
Total operating expenses		2,237,959			993,392
Income from Operations		11,316,576			9,527,530
Other Income (Expense)
Interest income		687			69
Imputed interest expense		(53,630	)		(53,219	)
Income (expense) from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values		3,586,155			(7,926,182	)
Net (loss) gain on disposal of property and equipment		(1,666	)		495,348
Total Other Income (Expenses)		3,531,546			(7,483,984	)
Income before Income Tax		14,848,122			2,043,546
Income tax expense		(3,057,147	)		(1,563,421	)
Net Income Attributable to Common Stockholders	$	11,790,975		$	480,125

Net Income Per Common Share
Basic	$	0.56		$	0.03
Diluted	$	0.56		$	0.02

Weighted Average Number of Common Shares Used to Compute Earnings per Common Share:
Basic		20,987,497			18,304,775
Diluted		21,188,102			19,469,714

Comprehensive Income:
Net income	$	11,790,975		$	480,125
Foreign currency translation adjustment		1,486,812			(220,696	)
Comprehensive Income	$	13,277,787		$	259,429

											Additional			Unappropriated			Appropriated		Accumulated other
	Preferred Stock $0.001 par value						Common Stock $0.001 par value				paid-in			retained			retained		comprehensive
	Shares			Amount			Shares		Amount		capital			earnings			earnings		income			Total
Balance at December 31, 2007		-		$	-			17,739,625	$	17,740		6,607,848		$	7,082,943		$	1,844,937	$	1,738,626		$	17,292,094
Sale of Series A preferred stock		1,250,000			1,250			-		-		719,672			-			-					720,922
Deemed dividends		-			-			-		-		322,750			(322,750	)		-					-
Issuance of shares in consideration for the waiver of liquidated damages		-			-			46,000		46		26,634			-			-		-			26,680
Conversion of Series A preferred stock		(100,000	)		(100	)		100,000		100		0			-			-		-			-
Stock option expense		-			-			-		-		90,635						-					90,635
Imputed interest on note payable		-			-			-		-		52,326			-			-		-			52,326
Transfer to statutory and staff welfare reserves		-			-			-		-		0			(837,408	)		837,408		-			-
Net income for the year ended December 31, 2008															5,681,500								5,681,500
Currency translation adjustment		-			-			-		-		0			-			-		1,309,246			1,309,246
Balance at December 31, 2008 (as restated)		1,150,000			1,150			17,885,625		17,886		7,819,865			11,604,285			2,682,345		3,047,872			25,173,403
January 1, 2009 cumulative effect of change in accounting principle:
Reclassification of Series A Preferred Stock and A, B, C, and D Warrants from stockholder's equity to liabilities, including revaluation at fair value of $18,760		(1,150,000	)		(1,150	)						(688,850	)		18,760								(671,240	)
Balance at January 1, 2009 after cumulative effect adjustment		-			-			17,885,625		17,886		7,131,015			11,623,045			2,682,345		3,047,872			24,502,163
Conversion of Series A preferred stock		-			-			1,100,000		1,100		1,948,067			-			-		-			1,949,167
Cashless exercise of A warrants		-			-			598,006		598		1,290,630			-			-		-			1,291,228
Cash exercise of A warrants		-			-			333,334		333		548,334			-			-		-			548,667
Exercise of stock option		-			-			107,059		107		32,011			-			-		-			32,118
Imputed interest on note payable		-			-			-		-		53,219			-			-		-			53,219
Transfer to statutory and staff welfare reserves		-			-			-		-		-			(1,199,459	)		1,199,459		-			-
Net income for the year ended December 31, 2009		-			-			-		-		-			480,125			-		-			480,125
Currency translation adjustment		-			-			-		-		-			-			-		(220,696	)		(220,696	)
Balance at December 31, 2009		-			-			20,024,024		20,024		11,003,276			10,903,711			3,881,804		2,827,176			28,635,991
Cashless exercise of options		-			-			76,738		77		(77	)		-			-		-			-
Stock issued for consulting services		-			-			40,000		40		92,760			-			-		-			92,800
Exercise of B warrants		-			-			475,000		475		1,087,275			-			-		-			1,087,750
Exercise of $1.00 options		-			-			125,000		125		124,875			-			-		-			125,000
Imputed interest on note payable		-			-			-		-		13,295			-			-		-			13,295
Transfer to statutory and staff welfare reserves		-			-			-		-		-			(148,854	)		148,854		-			-
Net income for the three months ended March 31, 2010 (Unaudited)		-			-			-		-		-			2,352,638			-		-			2,352,638
Currency translation adjustment		-			-			-		-		-			-			-		74,039			74,039
Balance at March 31, 2010 (Unaudited)		-		$	-			20,740,762	$	20,741	$	12,321,404		$	13,107,495		$	4,030,658	$	2,901,215		$	32,381,513

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

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

F-3

China Kangtai Cactus Bio-Tech Inc. and Subsidiaries Consolidated Statements of Stockholders' Equity For the Years Ended December 31, 2010 and 2009

Condensed Consolidated Statements of Cash Flows

	Preferred Stock $0.001 parvalue					Common Stock $0.001 par
																		Accumulated
										Additional			Unappropriated			Appropriated		other
								value		paid-in			retained			retained		comprehensive
	Shares			Amount		Shares		Amount		capital			earnings			earnings		income			Total

Balance at December 31, 2008	1,150,000		$	1,150		17,885,625	$	17,886	$	7,819,865		$	11,604,285		$	2,682,345	$	3,047,872		$	25,173,403

January 1, 2009 cumulative effect of Change in accounting principle: Reclassification of Series A Preferred Stock and A, B, C, and D Warrants from stockholder's equity to liabilities, including revaluation at fair value of $18,760	(1,150,000	)		(1,150	)					(688,850	)		18,760								(671,240	)
Balance at January 1, 2009 after cumulative effect adjustment	-			-		17,885,625		17,886		7,131,015			11,623,045			2,682,345		3,047,872			24,502,163
Conversion of Series A preferred stock	-			-		1,100,000		1,100		1,948,067			-			-		-			1,949,167
Cashless exercise of A warrants	-			-		598,006		598		1,290,630			-			-		-			1,291,228
Cash exercise of A warrants	-			-		333,334		333		548,334			-			-		-			548,667
Exercise of stock option	-			-		107,059		107		32,011			-			-		-			32,118
Imputed interest on note payable	-			-		-		-		53,219			-			-		-			53,219
Transfer to statutory and staff welfare reserves	-			-		-		-		-			(1,199,459	)		1,199,459		-			-
Net income for the year ended December 31, 2009	-			-		-		-		-			480,125			-		-			480,125
Currency translation adjustment	-			-		-		-		-			-			-		(220,696	)		(220,696	)
Balance at December 31, 2009	-			-		20,024,024		20,024		11,003,276			10,903,711			3,881,804		2,827,176			28,635,991
Stock issued in connection with investment agreement (Note 15)	-			-		1,000,000		1,000		784,678			-			-		-			785,678
Cost incurred relating to stock issued in connection with investment agreement (Note15)	-			-		-		-		(42,000	)		-			-		-			(42,000	)
Stock issued for financing cost	-			-		15,000		15		13,035			-			-		-			13,050
Cashless exercise of stock options	-			-		238,503		239		(239	)		-			-		-			-
Stock issued for consulting services	-			-		103,000		103		231,997			-			-		-			232,100
Exercise of B warrants	-			-		750,000		750		1,700,250			-			-		-			1,701,000
Exercise of $1.00 stock options	-			-		125,000		125		124,875			-			-		-			125,000
Stock option expense	-			-		-		-		390,275			-			-		-			390,275
Imputed interest on note payable	-			-		-		-		53,630			-			-		-			53,630
Transfer to statutory and staff welfare reserves	-			-		-		-		-			(1,371,896	)		1,371,896		-			-
Net income for the years ended December 31, 2010	-			-		-		-		-			11,790,975			-		-			11,790,975
Currency translation adjustment	-			-		-		-		-			-			-		1,486,812			1,486,812
Balance at December 31, 2010	-		$	-		22,255,527	$	22,256	$	14,259,777		$	21,322,790		$	5,253,700	$	4,313,988		$	45,172,511

~~(Unaudited)~~The accompanying notes are an integral part of these consolidated financial statements.

	For the Three Months Ended March 31,
	2010			2009
Cash Flows from Operating Activities
Net income	$	2,352,638		$	956,673
Adjustments to reconcile net income
to net cash provided by operating activities:
(Gain) from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values		(1,515,915	)		(262,725	)
Issuance of shares in consideration for consulting services		92,800			-
Provision for allowances, returns and doubtful accounts		(31,146	)		-
Depreciation - cost of sales		98,176			98,823
Depreciation - operating expenses		19,033			18,889
Amortization of land use rights -cost of sales		85,143			-
Amortization of land use rights- operating expenses		9,534			9,535
Amortization of intangible assets		34,281			34,283
Imputed interest		13,295			13,296
Collections of other receivables		3,747,926			-
Changes in operating assets and liabilities:
Accounts receivable, net		(1,422,502	)		(1,391	)
Inventories		1,388,201			243,388
Prepaid expenses		(74,057	)		(286	)
Other receivables		(10,569	)		-
Accounts payable and accrued liabilities		(31,914	)		(35,690	)
Taxes payable		(225,583	)		(217,888	)
Net cash provided by operating activities		4,529,341			856,907
Cash Flows from Investing Activities
Purchase of patent		(6,299,500	)		-
Purchase of fixed assets		(1,318	)		-
Collection of amount previously advanced to related party		244,636			-
Deposit for purchase of land use rights and property and equipment		-			(2,930,200	)
Net cash (used for) investing activities		(6,056,182	)		(2,930,200	)
Cash Flows from Financing Activities
Repayment to related party		(5,042	)		-
Cash exercise of options		125,000			-
Exercise of B warrants		475,000			-
Net cash provided by financing activities		594,958			-
Effect of exchange rate changes on cash and cash equivalents		43,017			23,148
Decrease in cash and cash equivalents		(888,866	)		(2,050,145	)
Cash and cash equivalents, beginning of period		2,918,068			4,398,897
Cash and cash equivalents, end of period	$	2,029,202		$	2,348,752
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Cost of patent acquired	$	7,927,511
Less, purchase price paid in cash		6,299,500
Obligation payable to seller of patent	$	1,628,011
Supplemental disclosures of cash flow information:
Interest paid	$	-		$	-
Income taxes paid	$	535,681		$	391,174

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

F-4

~~CHINA KANGTAI~~China ~~CACTUS~~Kangtai ~~BIO~~Cactus Bio-~~TECH~~Tech ~~INC~~Inc. ~~AND~~and ~~SUBSIDIARIES~~Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2010 and 2009

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		2010			2009
Cash Flows from Operating Activities
Net income	$	11,790,975		$	480,125
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) expense from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values		(3,586,155	)		7,926,182
Issuance of shares in consideration for various services		245,150			-
Issuance of options in consideration for legal services		390,275			-
Cashless exercise of stock options charged to operations		-			32,118
Imputed interest		53,630			53,219
Provision for (reduction in) allowances, returns and doubtful accounts		(29,708	)		26,897
Net loss (gain) on disposal of property, plant and equipment		-			(495,348	)
Depreciation - cost of sales		396,028			392,999
Depreciation - operating expenses		77,097			77,322
Amortization of land use rights -cost of sales		343,456			146,200
Amortization of land use rights- operating expenses		38,459			38,165
Amortization of intangible assets		498,034			137,227
Loss on disposal of property and equipment		1,665			-
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(5,130,263	)		1,532,934
Decrease in inventories		1,055,373			935,731
Increase in prepaid expenses		(379	)		(260	)
Decrease (increase) in other receivables		3,747,926			(3,747,926	)
Decrease in accounts payable and accrued liabilities		(5,392	)		(4,222	)
Increase in taxes payable		762,057			218,286
Net cash provided by operating activities		10,648,228			7,749,649
Cash Flows from Investing Activities
Purchase of intangible assets		(9,898,000	)		-
Purchase of land use rights		(1,159,237	)		(9,710,926	)
Purchase of property, plant and equipment		(2,462,438	)		-
Net proceeds from disposals of property, plant and equipment		-			495,348
Collection from (advance to) related party		244,136			(244,636	)
Net cash (used for) investing activities		(13,275,539	)		(9,460,214	)
Cash Flows from Financing Activities
Proceeds from related party		-			5,042
Proceeds from investor		785,678			-
Cost in connection with investment		(42,000	)		-
Repayment to related party		(5,042	)		-
Cash exercise of options		125,000			250,000
Exercise of B warrants		750,000			-
Net cash provided by financing activities		1,613,636			255,042
Effect of exchange rate changes on cash and cash equivalents		725,642			(25,306	)
Decrease in cash and cash equivalents		(288,033	)		(1,480,829	)
Cash and cash equivalents, beginning of period		2,918,068			4,398,897
Cash and cash equivalents, end of period	$	2,630,035		$	2,918,068

Supplemental disclosures of cash flow information:
Interest paid	$	-		$	-
Income taxes paid	$	2,367,469		$	1,419,189

~~MARCH~~The ~~31,~~accompanying notes are an integral part of these ~~2010~~consolidated financial statements.

~~(UNAUDITED)~~F-5

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010 AND 2009

NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS

China Kangtai Cactus Bio-Tech Inc. (“US China Kangtai”) was incorporated in Nevada on March 16, 2000 as InvestNet, Inc. (“InvestNet”).

China Kangtai Cactus Bio-tech Company Limited (“BVI China Kangtai”) was incorporated in the British Virgin Islands (“BVI”) on November 26, 2004. Harbin Hainan Kangda Cacti Hygienical Foods Co., Ltd. (“Harbin Hainan Kangda”), a company with limited liability, was incorporated in the People’s Republic of China (“PRC”) on December 30, 1998.

US China Kangtai and BVI China Kangtai are investment holding companies and Harbin Hainan Kangda’s principal activities are planting and developing new types of cactus, producing and trading in cactus health foods and related products in the PRC.

In 2004, BVI China Kangtai acquired Harbin Hainan Kangda. In 2005, US China Kangtai acquired BVI China Kangtai.

On September 26, 2006, Harbin Hainan Kangda acquired a 100% equity interest in Guangdong Taishan Kangda Cactus Hygienical Food Co., Ltd. (“Taishan Kangda”), a PRC company with limited liability previously owned by two stockholders, for $1,475,000 in cash. Taishan Kangda grows and sells cactus.

US China Kangtai, BVI China Kangtai, Harbin Hainan Kangda and Taishan Kangda are hereafter collectively referred to as the “Company”.

The accompanying ~~unaudited condensed~~ consolidated financial statements include the financial statements of US China Kangtai and its 100% owned subsidiaries, BVI China Kangtai, Harbin Hainan Kangda and Taishan Kangda. All significant inter-company accounts and transactions have been eliminated in consolidation.

NOTE 2 –- ~~INTERIM~~SUMMARY ~~FINANCIAL STATEMENTS~~OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited condensed financial statements as of March 31, 2010 and for the three months ended March 31, 2010 and 2009 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited condensed financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of March 31, 2010 and the results of operations and cash flows for the periods ended March 31, 2010 and 2009. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three months ended March 31, 2010 is not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2010. The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited condensed financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2009 as included in our report on Form 10-K, as filed with the SEC on April 15, 2010.

F-5

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States and are expressed in US dollars.

Use of estimates

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

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities, note payable, taxes payable and other payable. The fair value of these financial instruments approximate their carrying amounts reported in the consolidated balance sheets due to the short term maturity of these instruments and based on interest rates of comparable instruments.

F-6

Foreign Currency Translation

The functional currency of US China Kangtai and BVI China Kangtai is the United States dollar. The functional currency of Harbin Hainan Kangda and Taishan Kangda is the Chinese Renminbi (“RMB”). The reporting currency of the Company is the United States dollar.

Harbin Hainan Kangda and Taishan Kangda assets and liabilities were ~~are~~ translated into United States dollars at period-end exchange rates (, $0.~~14650~~15152 and $0.14630, at ~~March~~ December 31, 2010 and ~~December 31,~~ 2009, respectively). ~~Harbin~~ ~~Hainan~~Harbin Hainan Kangda and Taishan Kangda revenues and expenses ~~are~~were translated into ~~United~~ United States dollars at weighted average exchange rates, ~~for the periods (~~$0.~~14650~~14774 and $0.14661 , for the ~~three~~years ~~months~~ ended ~~March~~December 31, 2010 and 2009, respectively). ~~Resulting~~ Resulting translation adjustments ~~are~~were recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

Transaction gains or losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are included in the consolidated results of operations. There ~~are~~were no material foreign currency transaction gains or losses for ~~three~~ ~~months~~the years ended December ~~March~~31, 2010 and 2009.

Cash and Cash Equivalents

Cash and cash equivalents ~~at December 31, 2009 and 2008~~ consist of cash on hand and ~~demand~~ demand deposit accounts with banks. The Company considers all highly liquid ~~instruments~~ instruments with maturities of three months or less at the time of issuance to be cash equivalents.

Accounts receivable

The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. A reserve for allowances and doubtful accounts is established and recorded based on historical experience and the aging of the related accounts receivable.

F-6

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

Inventories

Inventories of cactus stock include trees and palms whose cost consists of seeds and an allocation of fertilizers, direct labor and overhead costs such as depreciation, rent, freight and fuel, among others. Inventories of cactus stock are stated at the lower of cost or market value, cost being calculated on the weighted average basis.

Other raw materials are stated at the lower of cost or market value, cost being determined on a first in, first out method.

Work in progress and finished goods are stated at the lower of cost or market value, cost being determined on a first in, first out method.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is calculated on a straight-line basis over the estimated useful lives of the respective assets (40 years for buildings, 12 years for plant equipment and machinery, 10 years for motor vehicles, and 8 years for furniture and office equipment).

Intangible and Other Long-Lived Assets

Intangible and other long-lived assets are stated at cost, less accumulated amortization and impairments. Land use rights are being amortized on a a straight-line basis over the remaining term of the related agreements, which range from 30 to 50 years. Other intangible assets consist of patents, ~~and~~ licenses and trademarks. Patents, licenses and ~~licenses~~trademarks are amortized over their expected useful economic lives, which range from 10 to 2015 years.

The Company reviews its long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. The Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets.

F-7

Revenue Recognition

The Company recognizes revenue upon delivery of the products, at which time title passes to the customer provided that: there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and ~~collectibility~~ collectability is deemed probable.

Advertising Costs

Advertising costs are expensed as incurred. ~~There~~Advertising expenses ~~were~~totaled no$258,545 ~~significant~~and ~~advertising~~$161,271 ~~expenses~~ for the ~~three~~years ~~months~~ ended ~~March~~December 31, 2010 and 2009, respectively.

F-7

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

Research and Development

Research and development costs related to both present and future products are expensed as incurred. ~~There~~Research ~~were~~and nodevelopment ~~significant~~costs ~~expenses~~totaled $141,830 ~~relating to research~~ and ~~development~~ $102,627 for the ~~three~~years ~~months~~ ended ~~March~~December 31, 2010 and 2009, respectively.

Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation- Stock Compensation”.

In addition to requiring supplemental disclosures, ~~FASB~~ ASC 718, Compensation – Stock Compensation, addresses the accounting for share-based payment transactions in which a company receives goods or services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. FASB Accounting Standards Codification (“ASC”) 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.

References to the issuances of restricted stock refer to stock of a public company issued in private placement transactions to individuals who are eligible to sell all or some of their shares of restricted ~~common~~Common ~~stock~~ Stock pursuant to Rule 144, promulgated under the Securities Act of 1933 (“Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a stockholder who is not an affiliate and has satisfied a six-month holding period may sell all of his restricted stock without restriction, provided that the Company has ~~current~~ current information publicly available. Rule 144 also permits, under certain circumstances, the sale of restricted stock, without any limitations, by a non-affiliate of the Company that has satisfied a one-year holding period.

Income Taxes

Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements by applying enacted statutory tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

Net Income Per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period.

Diluted net income per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options, warrants, and convertible preferred stock) outstanding. Dilutive securities having an anti-dilutive effect on diluted net income per common share are excluded from the calculation.

F-8

~~CHINA~~The following table provides a reconciliation of common shares ~~KANGTAI~~used ~~CACTUS~~in ~~BIO-TECH~~the ~~INC.~~basic ~~AND~~net ~~SUBSIDIARIES~~income per common share and diluted net income per common share computations for the years ended December 31, 2010 and 2009.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	2010	2009

Weighted average shares outstanding - basic	20,987,497	18,304,775
Series A convertible preferred stock	50,000	910,000
Incremental common shares from stock options and warrants	150,605	254,939
Weighted average shares outstanding - diluted	21,188,102	19,469,714

~~MARCH~~The Company uses the treasury stock method to account for the dilutive effect of unexercised stock options and warrants in diluted net income per common share. Anti-dilutive common shares related to stock options and warrants excluded from the computation of diluted net income per common share were 0 and 2,350,000, respectively, for the years ended December 31, 2010 and 2009.

(UNAUDITED)

The following table provides a reconciliation of common shares used in the net income per basic share and net income per diluted share computations for the three months ended March 31, 2010 and 2009.

	March 31,
	2010		2009
	(Unaudited)		(Unaudited)
Weighted average shares outstanding – basic		20,326,260		17,885,625
Series A convertible preferred stock		50,000		1,150,000
Incremental common shares from stock options and warrants		1,323,057		-
Weighted average shares outstanding - diluted		21,699,317		19,035,625

The Company uses the treasury stock method to account for the dilutive effect of unexercised stock options and warrants in net income per diluted share. Antidilutive common shares related to stock options and warrants excluded from the computation of net income per diluted share were approximately 0 and 4,250,000 for the three months ended March 31, 2010 and 2009, respectively.

Segment Information

The Company operates in ~~only~~ one segment, the sale of products made from cactus plants. The Company sells to two customer groups; health foods comprising cactus liquor and juice and sale of cactus powder to pharmaceutical companies for use in medical products.

Statement of Cash Flows

In accordance with ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

~~NOTE~~Recently 4Adopted ~~- INVENTORIES~~Accounting Standards

~~Inventories~~In February 2010, the Company adopted an amendment to ~~consist~~previously adopted accounting guidance on subsequent event disclosure, which established standards of: accounting for and disclosure of events or transactions that occur after the balance sheet date but before financial statements are issued or available to be issued. Under the amended guidance, the Company is no longer required to disclose the date through which subsequent events have been evaluated. The adoption of this requirement did not have a material impact on the Company’s financial condition or results of operations.

	March 31,			December 31,
	2010			2009
	(Unaudited)
Cactus stock	$	826,194		$	2,149,643
Other raw materials and work-in-process		37,841			28,158
Finished goods		289,128			311,761
Total		1,153,163			2,489,562
Less: allowance for market adjustments to inventories		(100,460	)		(48,658	)
Net	$	1,052,703		$	2,440,904

We adopted the accounting principles established by ASU 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, effective January 1, 2010. This ASU requires an ongoing reassessment and replaces the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity (“VIE”) with a primarily qualitative analysis. The qualitative analysis is based on identifying the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance (the “power criterion”) and the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE (the “losses/benefit criterion”). The party that meets both these criteria is deemed to have a controlling financial interest. The party with the controlling financial interest is considered to be the primary beneficiary and as a result is required to consolidate the VIE. The adoption of this new guidance did not have a material effect on our financial statements.

Recently Issued Accounting Standards

F-9

~~CHINA~~In April 2010, the FASB issued ASU 2010-13, “Compensation-Stock ~~KANGTAI~~Compensation ~~CACTUS~~(Topic ~~BIO~~718) -~~TECH~~ ~~INC~~Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades - a consensus of the FASB Emerging Issues Task Force,” or ASU 2010-13. ~~AND~~ASU ~~SUBSIDIARIES~~2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this update do not expand the recurring disclosures required by Topic 718. Disclosures currently required under Topic 718 are applicable to a share-based payment award, including the nature and the term of share-based payment arrangements. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this guidance will not have a material impact on its financial condition or results of operations.

~~NOTES~~Certain TOother accounting pronouncements have been issued by the ~~CONDENSED~~FASB ~~CONSOLIDATED~~and ~~FINANCIAL~~other ~~STATEMENTS~~standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.

~~MARCH~~NOTE 313 – SIGNIFICANT ACQUISITIONS OF PROPERTY, PLANT AND ~~2010~~EQUIPMENT AND OTHER ASSETS

In December 2009, Haiban Hainan Kangda completed the acquisition of land use rights for 50 years to property located in Langbei Village Baisha Town, Guangdong Province, PRC, covering an area of 181,854 square meters pursuant to an Asset Purchase Agreement dated August 25, 2009 with the local government. The purchase price for the land use rights was 66,376,800 RMB (~~UNAUDITED~~$10,057,413 translated at the December 31, 2010 exchange rate), which commencing January 1, 2010 is being amortized on a straight line basis over the 50 years term of the rights. See Note 7.

~~NOTE~~In 5May –2010, ~~OTHER~~Haiban Hainan Kangda completed the acquisition of ~~RECEIVABLES~~various patents relating to cactus use in manufacturing cattle, hog and fish feed pursuant to a Patent Transfer Agreement dated January 20, 2010 with Heilongjiang Institute of Biological Development. The purchase price for the patents was 54,112,700 RMB ($8,199,156 translated at the December 31, 2010 exchange rate), which commencing April 10, 2010 is being amortized on a straight line basis over the 15 year term of the patents. See Note 8.

~~Other~~In December 2010, Harbin Hainan Kangda completed the ~~receivables~~acquisition atof ~~March~~certain 31assets (consisting of land use rights for 50 years to property located in Raoping County, ~~2010~~Guangdong Province, PRC covering an area of 12,144 square meters, three buildings, machinery and equipment used in the manufacture of cigarettes, and eight trademarks relating to cigarettes) pursuant to an Asset Purchase Agreement dated June 28, 2010 with Dadi Tobacco Trade Center. The total purchase price was 35,000,000 RMB ($5,303,200 translated at the December 31, ~~2009~~2010 ~~consist~~exchange ofrate), which the Company allocated to the assets based on appraisals as follows:

		March 31,				December 31,
		In RMB			In USD
		2010				2009
Buildings	¥	3,643,480		$	552,060
		(Unudited)
Plant equipment and machinery		12,493,800			1,893,061
Land Center of Qitaihe		$	-			$	3,116,843
Total property,plant and equipment		16,137,280			2,445,121
QitaiheTianhe Pharmaceutical Co. Ltd			-				631,083
Land use rights		7,650,720			1,159,237
Due from related party			10,569				244,636
Trademarks		11,212,000			1,698,842
Total	¥	$35,000,000	~~10,569~~	$	5,303,200	$	~~3,992,562~~

The trademarks expire in September 2014. The Company expects that it will renew these trademarks in March 2014 (PRC trademark law requires renewal of trademarks a half year earlier before the expiration date). Accordingly, these trademarks will have another 10 year period of validity and will expire in March of 2024.

Commencing January 1, 2011, the buildings will be depreciated on a straight line basis over their 40 years estimated useful life, the plant equipment and machinery will be depreciated on a straight line basis over their 12 years estimated useful life, the land use rights will be amortized on a straight line basis over the 50 years term of the rights and the trademarks will be amortized on a straight line basis over their 10 years expected useful lives.

F-10

NOTE 4 - INVENTORIES

At December 31, 2010 and 2009, inventories consisted of:

		2010			2009

Cactus stock	$	936,517		$	2,149,643
Other raw materials and work-in-process		38,520			28,158
Finished goods		451,307			311,761
Total		1,426,344			2,489,562
Less: allowance for market adjustments to inventories		(40,813	)		(48,658	)
Net	$	1,385,531		$	2,440,904

NOTE 5 - OTHER RECEIVABLES

Other receivables at December 31, 2010 and 2009 consisted of:

		2010		2009

Land Center of Qitaihe	$	-	$	3,116,843
QitaiheTianhe Pharmaceutical Co. Ltd		-		631,083
Due from related party		500		244,636
Total	$	500	$	3,992,562

Disposal of property, plant and equipment

On March 25, 2009, Harbin Hainan Kangda entered into an Asset Purchase Agreement (the “Agreement”) with Qitaihe Kangwei Biotechnology Co., Ltd. (“Seller”). Under the terms of the Agreement, the Company was to acquire (i) land use rights of state-owned land located in Shuguang Village of Xinxing District in Qitaihe City, covering an area of 49 thousand square meters, with a use life of 43 years, (ii) housing ownership of 5,606.20 square meters in Shuguang Village of Xinxing District in Qitaihe City, HeiLongJiang Province and (iii) fixed assets consisting of machinery, equipment and facilities (including equipment, information, file data, spare parts and office supplies) located on the acquired premises. The land use rights, housing ownership and fixed assets were collectively referred to as the “Assets”. Total purchase price under the Agreement was RMB 37,000,000 ($5,413,100).

On December 19, 2009, the Company entered into a draft agreement with the Government of Qitaihe City and agreed to give up all the rights acquired from the above purchase to the Qitaihe local government for rebuilding the city of Qitaihe. In return for forfeiting the properties purchased, the Company received a total of RMB 36,304,461 (approximately US$5.3 million) as compensation from the City of Qitaihe. The agreement of forfeiting was signed on January 27, 2010.

On December 20, 2009, the Company sold certain equipment it had previously acquired to an unrelated third party in the amount of RMB 4,313,620 (approximately $631,000).

As a result of transactions described in the preceding ~~two~~ three paragraphs, the Company recognized a net gain of RMB 3,378,675 ($495,348) on the “Disposal of property, plant and equipment,” which was included within “Other Income (Expense)” in the Statement of Operations for the year ended December 31, 2009.

The balance due from Land Center of Qitaihe and proceeds receivable from sale of equipment were collected in the first quarter 2010.

F-11

Due from related party

At ~~March~~ December 31, 2010 and ~~at December 31,~~ 2009, due from related party, Mr. Chengzhi Wang, the General Manager and Director of the Company, ofwas $~~10,659~~500 and $244,636, respectively, and was interest free and due on demand.

F-10

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

~~Property~~At December 31, 2010 and 2009, property, plant and equipment, net ~~consist~~consisted of:

		March 31,				December 31,
		2010			2009
		2010				2009
Buildings	$	3,577,039		$	2,920,766
		(Unaudited)
Plant equipment and machinery		6,700,946			4,642,249
Buildings		$	2,924,758			$	2,920,766
Motor vehicles		277,385			288,816
Plant equipment and machinery			4,648,595				4,642,249
Furniture and office equipment		10,309			11,138
Motor vehicles			289,211				288,816
Total		10,565,679			7,862,969
Furniture and office equipment			12,471				11,138
Less accumulated depreciation		(2,637,629	)		(2,112,093	)
Total			7,875,035				7,862,969
Net	$	7,928,050		$	5,750,876
Less accumulated depreciation			(2,232,188	)			(2,112,093	)
Net		$	5,642,847			$	5,750,876

Depreciation expense was $~~117~~473,~~209~~125 and $~~117~~470,~~712~~321 for the ~~three months~~ years ended ~~March~~December 31, 2010 and 2009, respectively, of which $98396,~~176~~028 and $98392,~~823,~~ 999 were included in cost of sales, respectively.

NOTE 7 - LAND USE RIGHTS

~~Land~~At December 31, 2010 and 2009, land use rights, net ~~consist~~ consisted of:

		March 31,				December 31,
		2010			2009
		2010				2009
Harbin Hainan Kangda	$	19,370,887		$	17,584,244
		(Unaudited)
Taishan Kangda		901,809			870,741
Harbin Hainan Kangda		$	17,608,282			$	17,584,244
Total		20,272,696			18,454,985
Taishan Kangda			871,932				870,741
Less accumulated amortization		(881,720	)		(473,151	)
Total			18,480,214				18,454,985
Net	$	19,390,976		$	17,981,834
Less accumulated amortization			(567,743	)			(473,151	)
Net		$	17,912,471			$	17,981,834

On August 25, 2009, Harbin Hainan Kangda entered into an Asset Purchase Agreement (the “Agreement”) with the Local Government of Baisha Town, Taishan City, Guangdong Province (“Seller”). Under the terms of the Agreement, the Company was to acquire land use rights of state-owned land located in Langbei Village, Baisha Town covering an area of 181,854 square meters, with a useful life of 50 years starting from the issue date of the land use right certificate. The purchase price for the Taishan Basha land use rights of 66,376,800 RMB ($10,057,413 translated at the December 31, 2010 exchange rate) was paid in full as of December 31, 2009. Commencing January 2010, amortization of the cost is being charged to operations.

~~The purchase~~Amortization ~~price~~of ~~for the Taishan Basha~~ land use rights ofwas 66$381,~~376,800~~915 ~~RMB (~~and $9184,~~710,926)~~365 ~~was~~for the ~~paid~~years inended ~~full as of~~ December 31, 2010 and 2009., ~~Commencing~~respectively, ~~January~~of ~~2010~~which $343,456 and ~~amortization~~$146,200, ofrespectively, ~~the~~were ~~cost~~included isin ~~being~~cost ~~charged~~of togoods ~~operations~~sold.

~~Amortization of~~The ~~land~~expected ~~use~~amortization ~~rights~~of ~~was~~the ~~$94,677~~above ~~and~~land ~~$9,535~~use rights for each of the ~~three~~five ~~months~~succeeding ~~ended~~years ~~March~~ending December 31, ~~2010~~ and ~~2009,~~in ~~respectively,~~the ~~of which $85~~aggregate,~~143~~ ~~and~~are ~~$0, respectively, were~~as ~~included~~follows: ~~in cost of goods sold.~~

F-11

Year Ending		Amortization
December 31,		Amount
2011	$	414,872
2012		414,872
2013		414,872
2014		414,872
2015		414,872
Thereafter		17,316,616
Total	$	19,390,976

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

The expected amortization of the above land use rights for each of the five succeeding years ending March 31, and in the aggregate, is as follows:

Year Ending March 31,	Amount (Unaudited)
2011	$	414,970
2012		414,970
2013		414,970
2014		414,970
2015		414,970
Thereafter		15,837,567
Total	$	17,912,417

NOTE 8 - INTANGIBLE ASSETS

Intangible assets, net consist of:

	March 31,			December 31,
	2010			2009
	(Unaudited)
Patents and licenses	$	9,298,750		$	1,370,831
Less accumulated amortization		(1,088,788	)		(1,054,531	)
Net	$	8,209,962		$	316,300

In January 2010, the Company purchased a group of cactus patents for cattle, hog and fish feed for $7,927,511 (RMB 54,112,700) under a “Patent Transfer Agreement” which provided for the Company to make 4 installment payments to the transferor of the patent, as follows: 25% at the end of January 2010; 25% at the end of March 2010; 20% at the end of June 2010; and 30% at the end of August 2010.

The agreement also placed certain requirements on the Transferor concerning timely providing the materials necessary so that title to the patent could promptly be received by the Company. In addition, the agreement imposes liquidated damages fees to the Company if it fails to make payment to the Transferor whom has the right to rescind the contract and return of all materials related to the patent, or if the Company is late in paying an amount, in particular if it is 2 months tardy. There were liquidated damages fees imposed on the Transferor if they were tardy as well.

The Company has paid $6,299,500 in cash, which amount exceeded payments required by the agreement through March 31, 2010, resulting in a $1,628,011 balance due which is reflected in the Balance Sheet at March 31, 2010 as a liability “Payable to the Seller of the Patent.” The additional payments were the result of an informal agreement between the Transferor and the Company based upon a timely delivery of materials by the Transferor to facilitate the transfer of title to the Company, which occurred on April 21, 2010. The patent period granted under PRC governmental authority commenced on April 10, 2010 and expires on April 10, 2025. The Company expects to pay the remainder amount to the Transferor during the remainder of May 2010. Prior to the Patent Transfer Agreement the Company had been using the patents on an experimental basis since 2008.

F-12

~~CHINA KANGTAI~~NOTE ~~CACTUS~~8 ~~BIO~~-~~TECH~~ ~~INC.~~INTANGIBLE ~~AND SUBSIDIARIES~~ASSETS

~~NOTES TO~~At ~~CONDENSED~~December ~~CONSOLIDATED~~31, ~~FINANCIAL~~2010 ~~STATEMENTS~~and 2009, intangible assets, net consisted of:

MARCH 31, 2010

		2010			2009

Patents and licenses	$	9,617,385		$	1,370,831
Trademarks		1,698,842			-
Total		11,316,227			1,370,831
Less accumulated amortization		(1,601,418	)		(1,054,531	)
Net	$	9,714,809		$	316,300

In January 2010, the Company purchased a group of cactus patents for cattle, hog and fish feed for $8,199,156 (~~UNAUDITED~~RMB 54,112,700) under a “Patent Transfer Agreement” which provided for the Company to make 4 installment payments to the transferor of the patent, as follows: 25% at the end of January 2010; 25% at the end of March 2010; 20% at the end of June 2010; and 30% at the end of August 2010.

~~Patent~~The agreement also placed certain requirements on the ~~amortization~~Transferor ~~expense~~concerning ~~was~~timely ~~$34,281~~providing ~~and~~the ~~$34~~materials necessary so that title to the patent could promptly be received by the Company. In addition,~~283~~ the agreement provided for penalties on the ~~three~~Company ~~months~~if ~~ended~~it ~~March~~failed to make timely payments to 31the transferor, ~~2010~~whom in such event had the right to rescind the contract and have ~~2009,~~returned ~~respectively~~all materials related to the patent. The agreement provided for penalties on the transferor if they were tardy as well.

The Company paid $6,515,360 (RMB 43,000,000) in cash, which ~~expected~~amount ~~amortization~~exceeded payments required by the agreement, through March 31, 2010. The additional payments were the result of an informal agreement between the Transferor ~~above~~and ~~intangible~~the ~~assets~~Company ~~for~~based ~~each~~upon a timely delivery of materials by the Transferor ~~five~~to facilitate the transfer of title to the Company, which occurred on ~~succeeding~~April ~~years~~21, ~~ending~~2010. ~~March~~The 31patent period granted by the PRC governmental authority commenced on April 10, 2010 and expires on April 10, 2025. The Company paid the remaining $1,683,796 (RMB 11,112,700) to the Transferor in May 2010. Prior to the ~~aggregate~~Patent Transfer Agreement, isthe asCompany had been using the patents on an ~~follows:~~experimental basis since 2008.

Year Ending March 31,	Amount (Unaudited)
2011	$	335,415
2012		533,603
2013		438,222
2014		396,376
2015		396,376
Thereafter		6,109,970
Total	$	8,209,962

The three patents were created pursuant to a Research and Development Agreement entered into between the Chief Executive Officer and Director of the Company (20.5% Company Stockholder) , the General Manager and Director of the Company (18.3% Company Stockholder) and the Heilongjiang Institute of Biological Development (the “Institute”) on March 20, 2003, whereby the Institute completed the research to develop the patents and bore the costs of developing them and the aforementioned Company individuals were to register these patents and transfer their title to the Institute. That transfer took place on September 16, 2005, with no further consideration paid by the Institute. The Company purchased the 3 patents in 2010 from the Institute, a privately held Chinese entity engaged in similar ongoing patent research for other Chinese entities. The Institute has no common ownership with the Company’s Officer/Director or General Manager/Director (significant Company stockholders), or their families, or others employed by the Company or stockholders in it.

Intangible assets amortization expense was $498,034 and $137,227 for the years ended December 31, 2010 and 2009, respectively.

The expected amortization of the above intangible assets for each of the five succeeding years ending December 31, and in the aggregate, is as follows:

Year Ending		Amortization
December 31,		Amount
2011	$	680,660
2012		680,660
2013		680,660
2014		680,660
2015		680,660
Thereafter		6,311,509
Total	$	9,714,809

F-13

NOTE 9 - NOTE PAYABLE

Note payable ~~consists~~at December 31, 2010 and 2009 consisted of:

		March 31,				December 31,
		2010			2009
		2010				2009
Note payable to a financial institution, interest free, unsecured and due on demand	$	916,696		$	885,115
		(Unaudited)
Note payable to a financial institution, interest free, unsecured and due on demand		$	886,325			$	885,115

NOTE 10 – TAXES PAYABLE

Taxes payable consist of:

		March 31,				December 31,
		2010			2009
		2010				2009
PRC corporation income tax	$	1,216,942		$	527,264
		(Unaudited)
Value added tax payable		118,276			74,419
PRC corporation income tax		$	322,369			$	527,264
Consumption tax		213,856			151,751
Value added tax payable			88,389				74,419
Other taxes		2,124			35,707
Consumption tax			152,117				151,751
Total	$	1,551,198		$	789,141
Other taxes			683				35,707
Total		$	563,558			$	789,141

F-13

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

NOTE 11 – ESTIMATED LIABILITY FOR EQUITY-BASED FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF LIABIILTIES

Effective January 1, 2009, in accordance with EITF Issue No. 07-05, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock”, the Company reclassified the fair values at January 1, 2009 of the outstanding Series A Convertible Preferred Stock and the warrants comprising the March 21, 2008 and the July 16, 2008 sales of units (see Note 12) from stockholders’ equity to liabilities, as follows:

	Shares /
	Warrants		Fair Value

Series A Convertible Preferred Stock	1,150,000	$	333,500

A warrants	1,250,000		122,000
B warrants	1,500,000		120,150
C warrants	500,000		47,950
D warrants	600,000		47,640
Total warrants	3,850,000		337,740

Total Financial Instruments	5,000,000	$	671,240

At March 31, 2010, the fair values of the financial instruments consisted of:

	Shares / Warrants		Fair Value
	(Unaudited)		(Unaudited)
Series A Convertible Preferred Stock		50,000	$	107,000
A warrants		-		-
B warrants		1,025,000		1,352,385
C warrants		500,000		710,950
D warrants		600,000		759,360
Total warrants		2,125,000		2,822,695
Total Financial Instruments		2,175,000	$	2,929,695

F-14

~~CHINA~~The characteristics which require classification of the Series ~~KANGTAI~~A ~~CACTUS~~Preferred ~~BIO-TECH~~Stock ~~INC~~and warrants as liabilities are the Company’s obligations to reduce the conversion price of the Series A Preferred Stock and the exercise price of the warrants in the event that the Company sells, grants, or issues any shares, options, warrants, or any convertible instrument at a price below the $0.60 ~~AND~~current ~~SUBSIDIARIES~~conversion price of the Series A Preferred Stock or the current exercise prices of the warrants. As a result, the Company remeasures the fair values of these financial instruments each quarter, adjusts the liability balances, and reflects changes in operations as “income (expense) from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values”.

~~NOTES TO~~At ~~CONDENSED~~December ~~CONSOLIDATED~~31, ~~FINANCIAL~~2010 ~~STATEMENTS~~and 2009, the fair values of the financial instruments consisted of:

MARCH 31, 2010

	2010			2009
	Shares / Warrants		Fair Value	Shares / Warrants		Fair Value

Series A Convertible Preferred Stock	50,000	$	51,500	50,000	$	135,500
B warrants	750,000		153,975	1,500,000		2,839,500
C warrants	500,000		171,550	500,000		992,500
D warrants	600,000		144,180	600,000		1,090,860
Total warrants	1,850,000		469,705	2,600,000		4,922,860
Total Financial Instruments	1,900,000	$	521,205	2,650,000	$	5,058,360

~~(UNAUDITED)~~Below is a reconciliation of the change in the fair values of the financial instruments from January 1, 2009 through December 31, 2010.

Below is a reconciliation of the change in the fair values of the financial instruments from January 1, 2009 through March 31, 2010.

	Shares /
	Warrants			Fair Value
Balance, January 1, 2009	5,000,000		$	671,240
Revaluation credited to operations	-			(262,725	)
Balance, March 31, 2009	5,000,000			408,515
Revaluation charged to operations	-			1,761,440
Balance, June 30, 2009	5,000,000			2,169,955
Conversion of Series A Preferred Stock to Common Stock	(416,667	)		(666,667	)
Revaluation charged to operations	-			2,738,135
Balance, September 30, 2009	4,583,333			4,241,423
Conversion of Series A Preferred Stock to Common Stock	(683,333	)		(1,282,500	)
Exercise of A warants	(1,250,000	)		(1,589,895	)
Revaluation charged to operations	-			3,689,332
Balance, December 31, 2009	2,650,000			5,058,360
Exercise of B warrants	(475,000	)		(612,750	)
Revaluation credited to operations	-			(1,515,915	)
Balance, March 31, 2010	2,175,000			2,929,695
Exercise of B warrants	(275,000	)		(338,250	)
Revaluation credited to operations	-			(1,435,280	)
Balance, June 30, 2010	1,900,000			1,156,165
Revaluation credited to operations	-			(505,305	)
Balance, September 30, 2010	1,900,000			650,860
Revaluation credited to operations	-			(129,655	)
Balance, December 31, 2010	1,900,000		$	521,205

	Shares / Warrants			Fair Value
Balance, January 1, 2009		5,000,000		$	671,240
Revaluation credited to operations		-			(262,725	)
Balance, March 31, 2009		5,000,000			408,515
Revaluation charged to operations		-			1,761,440
Balance, June 30, 2009		5,000,000			2,169,955
Conversion of Series A Preferred Stock to Common Stock		(416,667	)		(666,667	)
Revaluation charged to operations		-			2,738,135
Balance, September 30, 2009		4,583,333			4,241,423
Conversion of Series A Preferred Stock to Common Stock		(683,333	)		(1,282,500	)
Exercise of A warants		(1,250,000	)		(1,589,895	)
Revaluation charged to operations		-			3,689,332
Balance, December 31, 2009		2,650,000			5,058,360
Exercise of B warrants (Unaudited)		(475,000	)		(612,750	)
Revaluation credited to operations (Unaudited)		-			(1,515,915	)
Balance, March 31, 2010 (Unaudited)		2,175,000		$	2,929,695

The Series A Convertible Preferred Stock was valued based on the trading price of the Company’s common stock. The warrants were valued using the Black-Scholes option pricing model with a 100% expected volatility assumption regarding the trading price of the Company’s common stock.

~~The Series A Convertible Preferred Stock is valued based on the trading price of the Company’s common stock. The warrants are valued using the Black~~F-~~Scholes option pricing model with a 100% volatility assumption regarding the trading price of the Company’s common stock.~~15

NOTE 12 - SERIES A CONVERTIBLE PREFERRED STOCK

On March 21, 2008, the Company entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with T Squared Investments LLC (the “Investor”) to sell in a private placement to the Investor for an aggregate purchase price of $500,000, (i) 833,333 shares of the Company’s newly designated Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) for $0.60 per share (the “Shares”), (ii) warrants to purchase up to 1,250,000 shares of Company common stock exercisable for a period of three years at an exercise price of $0.75 per share (the “A Warrants”) or an aggregate exercise price of $937,500 if all of the A Warrants were exercised, and (iii) warrants to purchase up to 1,500,000 shares of Company common stock exercisable for a period of three years at an exercise price of $1.00 per share (the “B Warrants”), or an aggregate exercise price of $1,500,000 if all the B Warrants were exercised. The Company issued the Shares, the A Warrants and B Warrants on the same day. Westernking Financial Service acted as the sole placement agent in the transaction for a fee of $30,000 (6% of the gross proceeds).

The Company also entered into a Registration Rights Agreement with the Investor, pursuant to which the Company was obligated to file and have declared effective by the SEC a registration statement registering the resale of the Shares and ~~common~~ ~~stock~~Common Stock issuable upon the conversion of the Series A Preferred Stock and the exercise of the A Warrants and B Warrants. If the registration statement was not declared effective by the SEC by August 28, 2008, the Registration Rights Agreement provided for the Company to issue to the Investor as liquidated damages an additional 1,000 shares of Series A Preferred Stock for each day thereafter not declared effective (subject to a maximum of 250,000 shares). On October 17, 2008, the SEC declared effective the Company’s ~~registration~~ registration statement on Form S-1. On October 15, 2008, the Company issued 46,000 shares of common stock to the investor in consideration for the waiver of ~~liquidated~~ liquidated damages.

FThe Series A Preferred Stock has no voting or dividend rights, is entitled to a liquidation preference of $0.60 per share, and each share is convertible into one share of Company common stock at the option of the holder (which was adjustable to more shares if certain “defined EPS” performance thresholds were not met for the six months ended September 30, 2008 or the year ended December 31, 2008; however, the performance thresholds were met). In addition, the Investor had the right to participate in any subsequent funding by the Company on a pro-15rata basis at 100% of the offering price for a three month period following the closing. In addition, the conversion price of the Series A Preferred Stock and the exercise price of the warrants is to be reduced in the event of any stock splits or stock dividends or in the event that the Company sells, grants, or issues any shares, options, warrants, or any convertible instrument at a price below the $0.60 current conversion price of the Series A Preferred Stock or the current exercise prices of the warrants.

~~CHINA~~The Company recorded as a $196,500 deemed dividend and as a ~~KANGTAI~~$196,500 ~~CACTUS~~increase ~~BIO~~in additional paid-~~TECH~~in ~~INC~~capital, the beneficial conversion feature allocated to the convertible preferred stock only ($196,500) based on a relative allocation of the fair values of the convertible preferred stock ($625,000), the A warrants ($477,250) and the B warrants ($488,250) to the gross actual proceeds received ($500,000). ~~AND~~The ~~SUBSIDIARIES~~fair value of the warrants was estimated using the Black-Scholes option pricing model and the following assumptions: stock price of $0.75 per share, exercise price of $0.75 per share for the A warrants, exercise price of $1.00 per share for the B warrants, term of 3 years, expected volatility of 74%, and risk-free interest rate of 4%.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

The Series A Preferred Stock, has no voting or dividend rights, is entitled to a liquidation preference of $0.60 per share, and each share is convertible into one share of Company common stock at the option of the holder (which was adjustable to more shares if certain ”defined EPS” performance thresholds were not met for the six months ended September 30, 2008 or the year ended December 31, 2008; however, the performance thresholds were met). In addition, the Investor had the right to participate in any subsequent funding by the Company on a pro-rata basis at 100% of the offering price for a three month period following the closing. In addition, the conversion price of the Series A Preferred Stock and the exercise price of the warrants is to be reduced in the event of any stock splits or stock dividends or in the event that the Company sells, grants, or issues any shares, options, warrants, or any convertible instrument at a price below the $0.60 current conversion price of the Series A Preferred Stock or the current exercise prices of the warrants.

The Company recorded as a $196,500 deemed dividend and as a $196,500 increase in additional paid-in capital , the beneficial conversion feature allocated to the convertible preferred stock only ($196,500) based on a relative allocation of the fair values of the convertible preferred stock ($625,000), the A warrants ($477,250) and the B warrants ($488,250) to the gross actual proceeds received ($500,000). The fair value of the warrants was estimated using the Black-Scholes option pricing model and the following assumptions: stock price of $0.75 per share, exercise price of $0.75 per share for the A warrants, exercise price of $1.00 per share for the B warrants, term of 3 years, expected volatility of 74%, and risk-free interest rate of 4%.

On July 16, 2008, the Company sold the Investor, for an aggregate purchase price of $250,000, an additional 416,667 shares of Series A Preferred Stock, warrants to purchase up to 500,000 shares of Company common stock exercisable for a period of three years at an exercise price of $0.9375 per share, and warrants to purchase up to 600,000 shares of Company common stock exercisable for a period of three years at an exercise price of $1.25 per share. The Company recorded as a $126,250 deemed dividend and as a $126,250 increase in additional paid-in capital, the beneficial conversion feature allocated to the convertible preferred stock only ($126,250) based on a relative allocation of the fair values of the convertible preferred stock ($287,083) and the warrants ($281,580) to the gross actual proceeds received ($250,000). The fair value of the warrants was estimated using the Black-Scholes option pricing model and the following assumptions: stock price of $0.689 per share, exercise prices of $0.9375 and $1.25 per share, term of 3 years, expected volatility of 71.4%, and risk-free interest rate of 4%.

Below is a summary of the deemed dividends for the year ended December 31, 2008:

March 21, 2008	$	196,500
July 16, 2008		126,250
Total	$	322,750

On October 27, 2008, the Company issued 100,000 shares of common stock to the Investor for the conversion of 100,000 shares of Series A Preferred Stock. On September 10, 2009, the Company issued 416,667 shares of common stock to the Investor for the conversion of 416,667 shares of Series A Preferred Stock. On October 22, 2009, the Company issued 433,333 shares of common stock to the Investor for the conversion of 433,333 shares of Series A Preferred Stock. On November 23, 2009, the Company issued 250,000 shares of common stock to the Investor for the conversion of 250,000 shares of Series A Preferred Stock. There are 50,000 shares of Series A Preferred Stock remaining.

In November and December 2009, the aforementioned A warrant holder exercised 916,666 A warrants in a cashless exercise and received 598,006 shares of common stock.

F-16

~~CHINA~~On October 27, 2008, the Company issued 100,000 shares of ~~KANGTAI~~common ~~CACTUS~~stock ~~BIO-TECH~~to ~~INC~~the Investor for the conversion of 100,000 shares of Series A Preferred Stock. ~~AND~~On ~~SUBSIDIARIES~~September 10, 2009, the Company issued 416,667 shares of common stock to the Investor for the conversion of 416,667 shares of Series A Preferred Stock. On October 22, 2009, the Company issued 433,333 shares of common stock to the Investor for the conversion of 433,333 shares of Series A Preferred Stock. On November 23, 2009, the Company issued 250,000 shares of common stock to the Investor for the conversion of 250,000 shares of Series A Preferred Stock. There were 50,000 shares of Series A Preferred Stock outstanding at December 31, 2010 and December 31, 2009.

~~NOTES~~In November and December 2009, the Investor exercised 916,666 A TOwarrants ~~CONDENSED~~in ~~CONSOLIDATED~~a ~~FINANCIAL~~cashless ~~STATEMENTS~~exercise and received 598,006 shares of common stock.

~~MARCH~~In 31October 2009, the Investor exercised 333,334 A warrants at a price of $0.75 per share, or $250,000 total, and was issued 333,334 shares of common stock on January 18, 2010.

~~(UNAUDITED)~~In February 2010, the Investor exercised 475,000 B warrants at a price of $1.00 per share, or $475,000 total.

~~In October~~During ~~2009,~~April ~~the~~and ~~aforementioned~~May A2010, ~~warrant~~the ~~holder~~Investor exercised ~~333~~a total of 275,~~334~~000 AB warrants at a price of $01.7500 per share, or $~~250~~275,000 total~~, and was issued 333,334 shares on January 18, 2010~~.

In February 2010, the aforementioned B warrant holder exercised 475,000 B warrants at a price of $1.00 per share, or $475,000 total.

NOTE 13 – STOCK OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK; AND OTHER COMMON STOCK ISSUANCES

Options and Warrants

A summary of stock option and warrant activity for the years ended December 31, ~~2008~~2010, ~~and~~ 2009 and ~~for~~2008 ~~the three months ended March 31, 2010 as~~ follows:

	Stock Options			Warrants	~~Warrants~~
Outstanding at January 1, 2008	-	-		-		-
Granted and issued	400,000	~~400,000~~		3,850,000		~~3,850,000~~
Exercised	-	-		-		-
Forfeited/expired/cancelled	-	-		-		-
Outstanding at December 31, 2008	400,000	~~400,000~~		3,850,000		~~3,850,000~~
Granted and issued	-	-		-		-
Exercised	(107,059	~~(107,059~~)	)	(1,250,000	)	~~(1,250,000~~	)
Forfeited/expired/cancelled	(42,941	~~(42,941~~)	)	-		-
Outstanding at December 31, 2009	250,000	~~250,000~~		2,600,000		~~2,600,000~~
Granted and issued	250,000	-		-		-
Exercised	(363,503	~~(201,738~~)	)	(750,000	)	~~(475,000~~	)
Forfeited/expired/cancelled	(136,497	~~(48,262~~)	)	-		-
Outstanding at March 31, 2010 (Unaudited)		-				2,125,000
Outstanding at December 31, 2010	-			1,850,000

The 400,000 stock options granted in 2008 were all issued to the Company’s law firm (“Crone”) for services rendered.

On March 10, 2008, the Company granted 250,000 options to ~~the law firm~~ Crone, all exercisable at $1.00 per share to March 10, 2012, and expensed the $59,225 fair value of these options at March 10, 2008 (estimated using the Black-Scholes option pricing model and the following assumptions: stock price of $0.41 per share, exercise price of $1.00 per share, term of 4 years, expected volatility of 100%, and risk-free interest rate of 4%).

On December 31, 2008, the Company granted 150,000 options to ~~the law firm~~ Crone, all exercisable at $0.30 per share to December 31, 2012, and expensed the $31,410 fair value of these options at December 31, 2008 (estimated using the Black-Scholes option pricing model and the following assumptions: stock price of $0.29 per share, exercise price of $0.30 per share, term of 4 years, expected volatility of 107%, and risk-free interest rate of 2%).

In July 2009, pursuant to a cashless exercise amendment, 107,059 options were converted into 107,059 shares of common stock and the remaining 42,941 options were cancelled. The Company expensed the $32,118 exercise amount relating to the 107,059 shares.

On January 26, 2010, the Company issued 76,738 shares of its common stock to Crone Law Group in a cashless exercise of 125,000 stock options exercisable at a price of $1.00 per share.

F-17

~~CHINA~~In July 2009, pursuant to a cashless exercise amendment, ~~KANGTAI~~107,059 ~~CACTUS~~options ~~BIO-TECH~~were ~~INC~~converted by Crone into 107,059 shares of common stock and the remaining 42,941 options were cancelled. ~~AND~~The ~~SUBSIDIARIES~~Company expensed the $32,118 exercise amount relating to the 107,059 shares.

~~NOTES~~On January 26, 2010, the Company issued 76,738 shares of its TOcommon ~~CONDENSED~~stock ~~CONSOLIDATED~~to ~~FINANCIAL~~Crone ~~STATEMENTS~~in a cashless exercise of 125,000 stock options exercisable at a price of $1.00 per share and the remaining 48,262 options were cancelled.

~~MARCH~~On 31February 25, 2010, the Company issued 475,000 shares of its common stock to the Investor at a price of $1.00 per share pursuant to a cash exercise of B warrants.

~~(UNAUDITED)~~On March 3, 2010, the Company issued 125,000 shares of its common stock to Crone pursuant to a cash exercise of 125,000 stock options at a price of $1.00 per share.

~~On February~~In ~~25,~~April 2010, the Company ~~issued~~granted ~~475~~250,000 ~~shares~~options ofto ~~its~~Crone, all ~~common~~exercisable ~~stock~~at $0.60 per share to ~~T Squared~~March ~~Investments~~10, ~~LLC~~2012, aand Bexpensed ~~warrant~~the ~~holder~~$390,275 fair value of these options at April 1, 2010, included within General and administrative expenses during the three months ended June 30, 2010 (estimated using the Black-Scholes option pricing model and the following assumptions: stock price of $12.0010 per share ~~pursuant~~, toexercise anprice ~~exercise~~of $0.60 per share, term of B30 days, ~~warrants~~expected volatility of 100%, and risk-free interest rate of 2%).

On ~~March 3~~June 21, 2010, ~~the~~pursuant ~~Company~~to ~~issued~~a ~~125~~cashless exercise,~~000~~ ~~shares~~161,765 options ofexercisable ~~its~~at ~~common~~$0.60 ~~stock~~per toshare ~~Crone~~were ~~Law Group~~converted inby anCrone ~~exercise~~into 161,765 shares of ~~125,000~~common stock ~~options~~and at the ~~price~~remaining of88,235 ~~$1.00~~options ~~per share~~were cancelled.

~~There~~On ~~are~~April 20, 2010 and May 25, 2010, the Company issued a total noof 275,000 shares of its common stock ~~options~~to ~~outstanding~~the asInvestor pursuant to cash exercises of ~~March~~B ~~31,~~warrants ~~2010~~at a price of $1.00 per share.

~~Warrants~~ There are no stock options outstanding atas ~~March~~of December 31, 2010 ~~consist of:~~.

Date	Number		Number		Exercise		Expiration
Granted	Outstanding		Exercisable		Price		Date
March 21, 2008		1,025,000		1,025,000	$	1.0000	March 21, 2011
July 16, 2008		500,000		500,000	$	0.9375	July 16, 2011
July 16, 2008		600,000		600,000	$	1.2500	July 16, 2011
Total		2,125,000		2,125,000

Warrants outstanding at December 31, 2010 consist of:

Date	Number	Number		Exercise	Expiration
Granted	Outstanding	Exercisable		Price	Date

March 21, 2008	750,000	750,000	$	1.0000	March 21,
					2011
July 16, 2008	500,000	500,000	$	0.9375	July 16,
					2011
July 16, 2008	600,000	600,000	$	1.2500	July 16,
					2011
Total	1,850,000	1,850,000

Other Common Stock Issuances

On February 8, 2010, the Company issued 40,000 shares of its common stock to ~~First~~a ~~Trust~~consulting ~~China~~firm ~~Ltd.~~ pursuant to ~~the~~a consulting agreement ~~signed on~~ dated September 1, 2009 (see “Consulting Agreements” in Note 16).

~~NOTE~~On ~~14–~~April ~~RESTRICTED~~20, ~~NET~~2010, the Company issued 50,000 shares of its ~~ASSETS~~common stock to an individual for consulting services rendered. The Company recorded the $125,000 estimated fair value of the shares (based on the market closing price of $2.50 on April 20, 2010) as a general and administrative expense in the three months ended June 30, 2010.

~~Relevant PRC~~On ~~statutory~~October ~~laws and regulations permit payments of dividends by Harbin Hainan Kangda and Taishan Kangda only out of their retained earnings~~1, ~~if any~~2010, ~~as determined~~the inCompany ~~accordance~~issued ~~with PRC accounting standards and regulations. In addition~~13,000 ~~PRC~~shares ~~laws~~of ~~and regulations require that~~its ~~annual~~common ~~appropriations~~stock ofto ~~after-tax~~an ~~income~~investor ~~should~~relations befirm ~~set~~for ~~aside~~consulting ~~prior~~services torendered. ~~payments~~The ofCompany ~~dividends~~recorded asthe a$14,300 ~~reserve~~estimated ~~fund. As~~fair avalue ~~result~~ of ~~these~~the ~~PRC~~shares ~~laws~~(based ~~and regulations,~~on ~~Harbin Hainan Kangda and Taishan Kangda are restricted in their~~the ~~ability~~market toclosing ~~transfer~~price ~~a portion~~ of ~~their~~$1.10 ~~net~~on ~~assets~~October ~~in the form of dividends~~1, ~~loans~~ or2010) ~~advances,~~as ~~which~~a ~~restricted~~general ~~portion amounted to $10,468,309~~ and ~~$10,306,160~~administrative atexpense ~~March~~in ~~31,~~the ~~2010~~three ~~and~~months ended December 31, ~~2009, respectively~~2010.

F-18

On December 17, 2010, the Company issued 15,000 shares of its common stock to an investment firm for consulting services rendered pursuant to the Investment Agreement (see Note 16). The Company recorded the $13,050 estimated fair value of the shares (based on the market closing price of $0.87 on December 31, 2010) as a general and administrative expense in the three months ended December 31, 2010.

On December 17, 2010, the Company issued 1,000,000 shares of its common stock to an investment firm pursuant to the Investment Agreement (see Note 16). The Company received net proceeds from the investment firm of $742,678 ($784,678 gross based on a price of $0.785678 per share, less $42,000 fees and costs charged by the investment firm).

NOTE 14 - RESTRICTED NET ASSETS

Relevant PRC statutory laws and regulations permit payments of dividends by Harbin Hainan Kangda and Taishan Kangda only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, PRC laws and regulations require that annual appropriations of after-tax income should be set aside prior to payments of dividends as a reserve fund. As a result of these PRC laws and regulations, Harbin Hainan Kangda and Taishan Kangda are restricted in their ability to transfer a portion of their net assets in the form of dividends, loans or advances, which restricted portion, amounted to $11,736,178 and $10,306,160 at December 31, 2010 and 2009, respectively.

NOTE 15 - INCOME TAXES

The Company is subject to current income taxes on an entity basis on taxable income arising in or derived from the tax jurisdiction in which each entity is domiciled.

US China Kangtai was incorporated in the United States and is subject to United States income tax. No United States income taxes were provided in 2010 and 2009 since US China Kangtai had taxable losses in those periods.

At ~~March~~ December 31, 2010, US China Kangtai ~~has~~had an unrecognized deferred United States income tax liability relating to undistributed earnings of Harbin Hainan Kangda. These earnings are considered to be permanently invested in operations outside the United States. Generally, such earnings become subject to United States income tax upon the remittance of dividends and under certain other circumstances. Determination of the amount of the unrecognized deferred United States income tax liability with respect to such earnings is not practicable.

~~F-18~~Based on managements’ present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of approximately $350,000 ($297,500 at December 31, 2009) attributable to the future utilization of the approximately $1,000,000 net operating loss carry forward of US China Kangtai as of December 31, 2010 will be realized. Accordingly, the Company has maintained a 100% allowance against the deferred tax asset in the financial statements at December 31, 2010. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carry forward expires in varying amounts from year 2020 to year 2030.

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

Based on managements’ present assessment, the Company has not yet determined it to be more likely than not that a deferred tax assets of approximately $350,000 ($297,500 at December 31, 2009) attributable to the future utilization of the approximately $1,000,000 net operating loss carryforward of US China Kangtai as of March 31, 2010 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at March 31, 2010. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforward expires in varying amounts from year 2005 to year 2010.

Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

BVI China Kangtai was incorporated in the BVI and is not subject to tax on income or on capital gains.

Harbin Hainan Kangda and Taishan Kangda were incorporated in the PRC and are subject to PRC income tax which is computed according to the relevant laws and regulations in the PRC. Harbin Hainan Kangda located its factories in a special economic region in Harbin, the PRC. This economic region allows foreign owned enterprises a two-year income tax exemption beginning in the first year after they become profitable, being 2005 and 2006, and a 50% income tax reduction for the following three years, being 2007 to 2009. Harbin Hainan Kangda was approved as a wholly owned foreign enterprise in March 2005. The effective income tax rate was 15% for the years ended December 31, 2009 and 2008. The income tax rate is was increased to 25% beginning from January 1, 2010.

F-19

The provision for income taxes differs from the amount computed by applying the statutory United States federal income tax rate of 35% to income (loss) before income taxes. The sources of the difference follow:

		March 31,
		2010			2009
		2010				2009
Expected tax at 35%	$	5,196,843		$	715,241
		(Unaudited)				(Unaudited)
(Non-taxable income) nondeductible expense from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair value		(1,255,154	)		2,774,164
Expected tax at 35%		$	939,198			$	395,486
Tax effect of unutilized losses of US China Kangtai and BVI China Kangtai		289,618			63,797
Tax effect of unutilized losses of US China Kangtai and BVI China Kangtai			53,484				9,658
Tax effect of PRC income taxed at lower rate		(1,174,160	)		(1,989,781	)
Tax effect of PRC income taxed at lower rate			(131,326	)			(139,904	)
Actual provision for income taxes	$	3,057,147		$	1,563,421
Non-taxable income from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair value			(530,570	)			(91,954	)
Actual provision for income taxes		$	330,786			$	173,286

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Operating lease commitments

The Company ~~leases~~leased 10 farm sheds ~~and~~on ~~land~~April ~~for~~10, ~~growing~~2008. ~~cactus~~The ~~from third parties under~~lease ~~operating~~payment ~~leases.~~is ~~Rental~~RMB ~~expenses~~28,000 ~~for~~(approximately ~~all~~$4,243) ~~operating~~per ~~leases~~annum. ~~for~~The ~~the~~lease ~~three~~is ~~months~~to expire ~~ended~~on ~~March~~April 3110, ~~2010 and 2009 were approximately $1,500 and $2,000 respectively~~2013.

AtThe ~~March~~Company leased 1,487 mu (approximately 245 acres) land for 31growing cactus from third parties under operating leases on April 1, ~~2010~~2008. The lease payment is RMB 14,871 ~~future~~(approximately ~~minimum~~$2,253) ~~rental~~per ~~commitments~~annum ~~under~~from ~~all~~April ~~non-cancellable~~1, ~~operating~~2008 ~~leases~~to ~~are~~March ~~due~~31, as2018 ~~follows:~~and RMB 23,794 (approximately $3,605) from April 1, 2018 to March 31, 2038.

~~F-19~~Rental expenses for all operating leases for the years ended December 31, 2010 and 2009 were approximately $6,500 and $6,500 respectively.

~~CHINA KANGTAI~~At ~~CACTUS~~December ~~BIO~~31, 2010, future minimum rental commitments under all non-~~TECH~~cancellable ~~INC.~~operating ~~AND~~leases ~~SUBSIDIARIES~~are due as follows:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Year Ending
December 31,
2011	$	6,496
2012		6,496
2013		5,435
2014		2,253
2015		2,253
Thereafter		75,048
Total	$	97,981

MARCH 31, 2010

(UNAUDITED)

For the Year Ending
March 31,
2011	$	6,272
2012		6,272
2013		6,272
2014		6,272
2015		2,175
Thereafter		50,644
Total	$	77,907

Consulting Agreements

The Company entered into a six months investor relations consulting contract on July 1, 2009 (which was terminated by the Company in September 2010). ~~The~~Under the contract, the Company iswas ~~required~~obligated to pay the consultant a fee of $5,000 per month, consisting of $2,500 in cash and $2,500 in Company restricted common stock. The contract iswas to be automatically renewed for six months unless either of the two parties ~~gives~~gave 30 days written notice of termination. On October 1, 2010, the Company issued 13,000 shares of Company restricted common stock to this investor relations consulting firm. The ~~contract~~stock was isvalued at $1.10 per share based on the closing price on October 1, 2010. ~~still~~Consequently, ~~active~~in ~~currently~~addition to cash compensation, the Company accrued $14,300 consulting fees (included in general and administrative expenses) in the nine months ended September 30, 2010.

The Company entered into a one year consulting agreement with ~~First~~a consulting ~~Trust~~firm ~~China Ltd.~~ on September 1, 2009, (which expired September 30, 2010). ~~The~~Under the agreement, the Company iswas ~~required~~obligated to pay the consultant a monthly ~~cash~~ cash retainer of $2,000 paid quarterly, of which the first 3 months was due upon signing of the contract. In addition, the Company iswas ~~required~~obligated to issue a total of 80,000 shares of its common stock to the consultant semi-annually; the first 40,000 shares were issued February 9, 2010. As a result of the Company’s dissatisfaction with the services of the consulting firm, the Company has advised the consulting firm that it does not expect to issue the remaining 40,000 shares.

General and administrative expenses for the three months ended March 31, 2010 includes $92,800 consulting fee incurred relating to the issuing of 40,000 shares to the consultants, which was valued at market price of $2.32 per share.F-20

Effective September 16, 2010, the Company entered into a consulting agreement with another consulting firm. The agreement provides for monthly compensation to the consultant of $5,000. The term of the agreement is 5 months, but either party may terminate the agreement on 30 days written notice to the other party.

Consulting fees totaling $285,050 were included in general and administrative expenses for the year ended December 31, 2010. The fees consist of total cash payments of $52,950, a stock issuance of 40,000 shares valued at $92,800 based on the market price of $2.32 per share, a stock issuance of 50,000 shares valued at $125,000 based on the market price of $2.50 per share, and a stock issuance of 13,000 shares valued at $14,300 based on the market price of $1.10 per share.

Investment agreement

On July 9, 2010, the Company entered into an Investment Agreement (the “Investment Agreement”) with Kodiak Capital Group, LLC (“Kodiak”) pursuant to which the Company has agreed to issue and sell to the Investor, and Kodiak has agreed to purchase from the Company, up to that number of the Company’s common stock having an aggregate purchase price of $1,000,000 (the “Financing”). Pursuant to the Investment Agreement, the price per share will be determined once the Company submits a written notice (the “Put Notice”) to Kodiak stating the dollar amount in U.S. dollars the Company intends to sell to Kodiak and will be at a price equal to 83% of the volume-weighted average price of the Company’s common stock five (5) days immediately preceding the date of the Put Notice and five (5) days immediately following the date of the Put Notice. Under the Investment Agreement, the Company may not deliver the Put Notice until after the resale of the Shares has been registered with the Securities and Exchange Commission. Additionally, provided that the Investment Agreement does not terminate earlier, the Company has a three (3) month period, beginning on the trading day immediately following the effectiveness of the registration statement, during which it may deliver the Put Notice to the Investor (the “Open Period”).

As part of the consideration for the Financing, the Company has also agreed to pay Kodiak a document preparation fee of $15,000 and to issue Kodiak an additional 15,000 shares of newly-issued Company common stock at the closing of the Financing.

Under the Investment Agreement, Kodiak will only purchase shares when the Company meets the following conditions:

a registration statement has been declared effective and remains effective for the resale of the Shares until the closing of the Financing;
at all times during the period beginning on the date of the Put Notice and ending on the date of the closing of the Financing, the Company’s common stock has been listed on the OTC Bulletin Board and has not been suspended from trading thereon for a period of two (2) consecutive trading days during the Open Period;
the Company has not been notified of any pending or threatened proceeding or other action to delist or suspend the Company’s common stock;
the Company has complied with its obligations and is otherwise not in breach of or in default under the Investment Agreement, the Registration Rights Agreement or any other agreement executed in connection therewith;
no injunction has been issued and remains in force, and no action has been commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the Shares; and
the issuance of the Shares will not violate any shareholder approval requirements of the market or exchange on which the Company’s common stock are principally listed.

The Investment Agreement will terminate when any of the following events occur:

Kodiak has purchased an aggregate of $1 million of the Company’s common stock;
upon written notice from the Company to Kodiak.

The Company also entered into a Registration Rights Agreement with Kodiak on July 9, 2010. Pursuant to the Registration Rights Agreement, the Company was obligated to file a registration statement registering the resale of the Shares. The Company filed a registration statement on Form S-1 on July 30, 2010. The registration statement was declared effective on September 7, 2010.

F-21

On December 17, 2010, the Company issued 15,000 shares of its common stock to Kodiak for consulting services rendered pursuant to the Investment Agreement (see Note 13). The Company recorded the $13,050 estimated fair value of the shares (based on the market closing price of $0.87 on December 31, 2010) as a general and administrative expense in the three months ended December 31, 2010.

On December 17, 2010, the Company issued 1,000,000 shares of its common stock to Kodiak pursuant to the Investment Agreement (see Note 13). The Company received net proceeds from Kodiak of $742,678 ($784,678 gross based on a price of $0.785678 per share, less $42,000 fees and costs charged by Kodiak..

Concentrations and risks

Substantially all of the Company’s assets are located in China and 100% of the Company’s revenues have been derived from customers located in ~~China and~~ ~~Taiwan~~China.

Substantially all of Harbin Hainan Kangda and Taishan Kangda’s business operations are conducted in the PRC and governed by PRC laws and regulations. Because these laws and regulations are relatively new, the interpretation and enforcement of these laws and regulations involve uncertainties.

The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Under existing PRC foreign exchange regulations, payment of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where RMB is to be converted into foreign currency and remitted out of the PRC to pay capital expenses, such as the repayment of bank loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions.

FNOTE 17 -20 SEGMENT AND OTHER INFORMATION

~~CHINA~~The Company operates in one industry segment – the production ~~KANGTAI~~and ~~CACTUS~~sale ~~BIO-TECH~~of ~~INC~~cactus, cactus health food, and other cactus products. ~~AND~~Substantially all ~~SUBSIDIARIES~~of the Company’s identifiable assets at December 31, 2010 and 2009 were located in the PRC. Net sales for the periods presented were all derived from PRC customers. During the year ended December 31, 2010, four customers accounted for 14%, 9%, 9% and 8%, respectively, of net sales. During the year ended December 31, 2009, two customers accounted for 19% and 14%, respectively, of net sales.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

NOTE 17 – SEGMENT AND OTHER INFORMATION

The Company operates in one industry segment – the production and sale of cactus, cactus health food, and other cactus products. Substantially all of the Company’s identifiable assets at March 31, 2010 and December 31, 2009 were located in the PRC. Net sales for the periods presented were all derived from PRC customers. During the three months ended March 31, 2010, one customer accounted for 14% of net sales. During the three months ended March 31, 2009, one customer accounted for 12% of net sales.

Net sales consisted of:

		March 31,
		2010			2009
		2010				2009
Finished goods	$	33,430,412		$	23,791,283
		(Unaudited)				(Unaudited)
Cactus stock		2,599,138			2,746,073
Finished goods		$	3,909,263			$	2,725,120
Total	$	36,029,550		$	26,537,356
Cactus stock			1,609,771				604,832
Total		$	5,519,034			$	3,329,952

NOTE 18 - TERMINATION OF COMMON STOCK PURCHASE AGREEMENT (LIMITED PRIVATE PLACEMENT OFFERING WITH SEASIDE 88, LP) ENTERED INTO IN NOVEMBER 2009

On November 15, 2009, the Company entered into a Common Stock Purchase Agreement (the “Agreement”) with Seaside 88, LP (“ Seaside”), relating to ~~the~~ the offering and sale of up to 2,100,000 shares of Company common stock. Subject to to the limitations and qualifications set forth therein, the Agreement ~~requires the~~required the Company to issue and sell, and Seaside to purchase, up to 150,000 shares of common stock once every two weeks, subject to the satisfaction of customary closing conditions. At the initial closing and at each subsequent closing, on each ~~14th~~14 th day thereafter for twenty-six (26) weeks, the ~~offing~~offering price of the Common ~~common~~ stock ~~will~~ was to equal 87% of the volume weighted average trading price of the ~~common~~Common ~~stock~~Stock for the ten consecutive trading days immediately preceding each subsequent closing date. If, with respect to any subsequent closing, the volume weighted average trading price of the ~~common~~Common ~~stock~~Stock for the three trading days immediately prior to such closing iswas below $1.25 per share, then the particular subsequent closing ~~will~~was not to occur and the aggregate number of Shares to be purchased ~~shall~~was to be reduced by 150,000 shares of Common ~~common stock~~Stock, The Agreement ~~provides~~provided that the Company may, at its sole discretion, upon thirty (30) days’ prior written notice to Seaside, terminate the Agreement after the fifth subsequent closing. The Agreement ~~contains~~ contained representations and warranties and covenants for each party, which must be true and have been performed at each closing. The Agreement may behave ~~terminated~~been terminated by Seaside, by written notice to the Company, if the initial closing ~~has~~was not ~~been~~ consummated on or before March 31, 2010, provided, however, if the Company receives comments from the Securities and Exchange Commission on the registration statement covering the sale to Seaside, or the resale by Seaside, of the Shares, this date ~~shall~~was to be extended until April 30, 2010.

As of April 30, 2010, the registration statement to register the shares of common stock for resale has not been filed and, no shares of common stock have been issued to Seaside under the Agreement. At this point, Seaside has not filed notice under Section 5.1 of the Agreement, or commenced or threatened legal action against the Company for the $200,000 in liquidated damages that may be due Seaside under the Agreement. The Agreement provided that such liquidating damages would be due in the event the Company exercises its termination right and within six months of such terminations initiates another financing having committed funding dates scheduled at pre-determined intervals of between one week and two months.

F-21

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

On April 30, 2010, the Company entered into a termination agreement (the “Termination Agreement”) with Seaside (see Note 18) pursuant to which the parties agreed to mutually terminate the Common Stock Purchase Agreement, dated November 5, 2009, between the Company and Seaside (the “Purchase Agreement”) with no further obligations. The parties agreed to enter into the Termination Agreement because the Company believes the financing terms as contemplated by the Purchase Agreement is not in the best interest of the Company at the current time. The Company has not incurred any early termination penalties and there are no further obligations outstanding under the Purchase Agreement.

NOTE 19 - SUBSEQUENT EVENTS

On April 20, 2010, the Company issued 250,000 shares of its common stock to T Squared Investments LLC, a B warrant holder, at the price of $1.00 per share pursuant to an exercise of B warrants.

The Company has evaluated subsequent events through the filing date of this Form 10-K and has determined that there were no additional subsequent events to recognize or disclose in these financial statements.

F-22

~~REPORT~~On April 30, 2010, the Company entered into a termination OFagreement ~~INDEPENDENT~~(the ~~REGISTERED~~“Termination ~~PUBLIC~~Agreement”) ~~ACCOUNTING~~with ~~FIRM~~Seaside pursuant to which the parties agreed to mutually terminate the Common Stock Purchase Agreement relieving the Company of any obligations arising out of the agreement, including liquidated damages penalties concerning shares that were to be purchased from the Company by Seaside and registered by the Company with the Securities and Exchange Commission.

ToNOTE ~~the Board~~19 of- ~~Directors~~SUBSEQUENT ~~and Stockholders of China Kangtai Cactus Bio-Tech Inc.~~EVENTS

IOn ~~have audited~~January ~~the~~24, ~~accompanying~~2011, ~~consolidated balance sheets of China Kangtai Cactus Bio-Tech Inc. and subsidiaries (~~the “Company”) asissued ~~of December 31~~50,000 ~~2009~~shares ~~and 2008 and the related consolidated statements~~ of ~~income~~ ~~and comprehensive income,~~common ~~stockholders’~~stock ~~equity,~~to ~~and cash flows for~~ the ~~years~~Investor ~~then~~in ~~ended.~~exchange ~~These~~for ~~financial statements are~~ the ~~responsibility~~conversion of the ~~Company’s~~remaining ~~management. My responsibility~~50,000 isshares toof ~~express~~Series anA ~~opinion~~Preferred onStock ~~these financial statements based on my audits~~outstanding.

I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of China Kangtai Cactus Bio-Tech Inc. and subsidiaries as of December 31, 2009 and 2008 and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

/S/ Michael T. Studer CPA P.C. Michael T. Studer CPA P.C.

Freeport, New York

April 14, 2010

F-23

China Kangtai Cactus Bio-Tech Inc. and Subsidiaries

Consolidated Balance Sheets

As of December 31,

	2009		2008
ASSETS
Current Assets
Cash and cash equivalents	$	2,918,068	$	4,398,897
Accounts receivable, net of allowance for doubtful accounts of $1,006,597 and $979,700, respectively		2,283,257		3,869,985
Inventories		2,440,904		3,376,635
Prepaid expenses		1,265		1,005
Other receivables		3,992,562		-
Total Current Assets		11,636,056		11,646,522
Property, plant and equipment, net of accumulated depreciation of $2,112,093 and $1,649,662, respectively		5,750,876		6,236,914
Other Assets
Intangible assets, net of accumulated amortization of $1,054,531 and $920,040, respectively		316,300		454,445
Land use rights, net of accumulated amortization of $473,151 and $289,941, respectively		17,981,834		8,609,491
Total Assets	$	35,685,066	$	26,947,372
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	311,417	$	315,639
Note payable		885,115		887,475
Taxes payable		789,141		570,855
Other payable		5,042		-
Total Current Liabilities		1,990,715		1,773,969
Estimated liability for equity-based financial instruments with characteristics of liabilities:
Designated as Series A convertible Preferred Stock (50,000 shares issued and outstanding at December 31, 2009)		135,500		-
Warrants		4,922,860		-
Total		5,058,360		-
Total Liabilities		7,049,075		1,773,969
Commitments and Contingencies		-		-
Stockholders' Equity
Preferred stock, par value $.001 per share; authorized 200,000,000 shares; issued and outstand: 50,000 and 1,150,000 shares, respectively		-		1,150
Common stock, par value $.001 per share; authorized 200,000,000 shares, issued or issuable and outstanding: 20,024,024 and 17,885,625 shares, respectively		20,024		17,886
Additional paid-in capital		11,003,276		7,819,865
Retained earnings
Appropriated		3,881,804		2,682,345
Unappropriated		10,903,711		11,604,285
Accumulated other comprehensive income		2,827,176		3,047,872
Total stockholders' equity		28,635,991		25,173,403
Total Liabilities and Stockholders' Equity	$	35,685,066	$	26,947,372

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

F-24

China Kangtai Cactus Bio-Tech Inc. and Subsidiaries

Consolidated Statements of Income and Comprehensive Income

For The Years Ended December 31,

	2009			2008
Net Sales	$	26,537,356		$	20,300,583
Cost of Sales		(16,016,434	)		(12,307,303	)
Gross Profit		10,520,922			7,993,280
Operating Expenses
Selling expenses		249,083			214,285
Provision for reserve for allowances, returns and doubtful accounts		26,897			136,125
General and administrative expenses		464,697			543,929
Depreciation		77,323			77,015
Amortization of land use rights		38,165			73,761
Amortization of intangible assets		137,227			134,924
Total operating expenses		993,392			1,180,039
Income from Operations		9,527,530			6,813,241
Other Income (Expense)
Interest income		69			838
Imputed interest expense		(53,219	)		(52,326	)
Expense from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values		(7,926,182	)		-
Net gain (loss) on disposal of property, plant and equipment		495,348			(14,323	)
Total Other Income (Expenses)		(7,483,984	)		(65,811	)
Income before Income Tax		2,043,546			6,747,430
Income tax expense		(1,563,421	)		(1,065,930	)
Net Income		480,125			5,681,500
Deemed dividends relating to the beneficial conversion feature included in the sale of the Series A preferred stock and warrants		-			(322,750	)
Net Income Attributable to Common Stockholders	$	480,125		$	5,358,750
Net Income Per Common Share
Basic	$	0.03		$	0.30
Diluted	$	0.02		$	0.29
Weighted Average Number of Common Shares Used to Compute Earnings per Common Share:
Basic		18,304,775			17,767,461
Diluted		19,469,714			18,597,561
Comprehensive Income:
Net income	$	480,125		$	5,681,500
Foreign currency translation adjustment		(220,696	)		1,309,246
Comprehensive Income	$	259,429		$	6,990,746

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

F-25

China Kangtai Cactus Bio-Tech Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

For the Years Ended December 31, 2009 and 2008

											Additional			Unappropriated			Appropriated		Accumulated other
	Preferred Stock $0.001 par value						Common Stock $0.001 par value				paid-in			retained			retained		comprehensive
	Shares			Amount			Shares		Amount		capital			earnings			earnings		income			Total
Balance at December 31, 2007		-		$	-			17,739,625	$	17,740	$	6,607,848		$	7,082,943		$	1,844,937	$	1,738,626		$	17,292,094
Sale of Series A preferred stock		1,250,000			1,250			-		-		719,672			-			-					720,922
Deemed dividends		-			-			-		-		322,750			(322,750	)		-					-
Issuance of shares in consideration for the waiver of liquidated damages		-			-			46,000		46		26,634			-			-		-			26,680
Conversion of Series A preferred stock		(100,000	)		(100	)		100,000		100		-			-			-		-			-
Stock option expense		-			-			-		-		90,635						-					90,635
Imputed interest on note payable		-			-			-		-		52,326			-			-		-			52,326
Transfer to statutory and staff welfare reserves		-			-			-		-		-			(837,408	)		837,408		-			-
Net income for the year ended December 31, 2008															5,681,500								5,681,500
Currency translation adjustment		-			-			-		-		-			-			-		1,309,246			1,309,246
Balance at December 31, 2008 (as restated)		1,150,000			1,150			17,885,625		17,886		7,819,865			11,604,285			2,682,345		3,047,872			25,173,403
January 1, 2009 cummulative effect of change in accounting principle:
Reclassification of Series A Preferred Stock and A, B, C, and D Warrants from stockholder's equity to liablities, including revaluation at fair value of $18,760		(1,150,000	)		(1,150	)						(688,850	)		18,760								(671,240	)
Balance at January 1, 2009 after cumulative effect adjustment		-			-			17,885,625		17,886		7,131,015			11,623,045			2,682,345		3,047,872			24,502,163
Conversion of Series A preferred stock		-			-			1,100,000		1,100		1,948,067			-			-		-			1,949,167
Cashless exercise of A warrants		-			-			598,006		598		1,290,630			-			-		-			1,291,228
Cash exercise of A warrants		-			-			333,334		333		548,334			-			-		-			548,667
Exercise of stock option		-			-			107,059		107		32,011			-			-		-			32,118
Imputed interest on note payable		-			-			-		-		53,219			-			-		-			53,219
Transfer to statutory and staff welfare reserves		-			-			-		-		-			(1,199,459	)		1,199,459		-			-
Net income for the year ended December 31, 2009		-			-			-		-		-			480,125			-		-			480,125
Currency translation adjustment		-			-			-		-		-			-			-		(220,696	)		(220,696	)
Balance at December 31, 2009		-			-			20,024,024	$	20,024	$	11,003,276		$	10,903,711		$	3,881,804	$	2,827,176		$	28,635,991

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

F-26

China Kangtai Cactus Bio-Tech Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31,

	2009			2008
Cash Flows from Operating Activities
Net income	$	480,125		$	5,681,500
Adjustmens to reconcile net income to net cash provided by operating activities:
Expense from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values		7,926,182			-
Provision for reserve for allowances, returns and doubtful accounts		26,897			136,125
Net (gain) loss on disposal of property, plant and equipment		(495,348	)		14,323
Depreciation - cost of sales		392,999			408,351
Depreciation - operating expenses		77,322			77,015
Amortization of land use rights -cost of sales		146,200			-
Amortization of land use rights- operating expenses		38,165			73,761
Amortization of intangible assets		137,227			134,924
Issurance of shares in consideration for the waiver of liquidated damages		-			26,680
Stock option expense		32,118			90,635
Imputed interest		53,219			52,326
Changes in operating assets and liabilities:
Accounts receivable, net		1,532,934			30,059
Prepaid expenses		(260	)		19,232
Other receivables		(3,747,926	)		-
Inventories		935,731			2,717,320
Accounts payable and accrued liabilities		(4,222	)		(37,452	)
Taxes payable		218,286			251,706
Net cash provided by operating activities		7,749,649			9,676,505
Cash Flows from Investing Activities
Purchases of land use rights		(9,710,926	)		(7,186,778	)
Net proceeds from disposals of property, plant and equipment		495,348			2,546
Advances to related party		(244,636	)		-
Net cash (used for) investing activities		(9,460,214	)		(7,184,232	)
Cash Flows from Financing Activities
Proceeds from related party		5,042			-
Cash exercise of A warrants		250,000			-
Sale of Series A preferred stock-net		-			720,922
Net cash provided by financing activities		255,042			720,922
Effect of exchange rate changes on cash and cash equivalents		(25,306	)		675,801
Increase (decrease) in cash and cash equivalents		(1,480,829	)		3,888,996
Cash and cash equivalents, beginning of period		4,398,897			509,901
Cash and cash equivalents, end of period		2,918,068			4,398,897
Supplemental disclosures of cash flow information:
Interest paid	$	-		$	-
Income taxes paid	$	1,419,189		$	814,224

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

F-27

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS

China Kangtai Cactus Bio-Tech Inc. (“US China Kangtai”) was incorporated in Nevada on March 16, 2000 as InvestNet, Inc. (“InvestNet”).

In 2004, BVI China Kangtai acquired Harbin Hainan Kangda. In 2005, US China Kangtai acquired BVI China Kangtai.

US China Kangtai, BVI China Kangtai, Harbin Hainan Kangda and Taishan Kangda are hereafter collectively referred to as the “Company”.

The accompanying consolidated financial statements include the financial statements of US China Kangtai and its 100% owned subsidiaries, BVI China Kangtai, Harbin Hainan Kangda and Taishan Kangda. All significant inter-company accounts and transactions have been eliminated in consolidation.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States and are expressed in US dollars.

Use of estimates

F-28

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

Fair Value of Financial Instruments

Foreign Currency Translation

Harbin Hainan Kangda and Taishan Kangda assets and liabilities are translated into United States dollars at period-end exchange rates ($0.14630 and $0.14669 at December 31, 2009 and 2008, respectively). Harbin Hainan Kangda and Taishan Kangda revenues and expenses are translated into United States dollars at weighted average exchange rates for the periods ($0.14661 and $0.14415 for the years ended December 31, 2009 and 2008, respectively). Resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

Transaction gains or losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are included in the consolidated results of operations. There are no material foreign currency transaction gains or losses for 2009 and 2008.

Cash and Cash Equivalents

Cash and cash equivalents at December 31, 2009 and 2008 consist of cash on hand and demand deposit accounts with banks. The Company considers all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents.

Accounts receivable

Inventories

Other raw materials are stated at the lower of cost or market value, cost being determined on a first in, first out method.

Work in progress and finished goods are stated at the lower of cost or market value, cost being determined on a first in, first out method.

F-29

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

Property, plant and equipment

Intangible and Other Long-Lived Assets

Intangible and other long-lived assets are stated at cost, less accumulated amortization and impairments. Land use rights are being amortized on a straight-line basis over the remaining term of the related agreements, which range from 30 to 50 years. Other intangible assets consist of patents and licenses. Patents and licenses are being amortized over their expected useful economic life of 10 years.

Revenue Recognition

Advertising Costs

Advertising costs are expensed as incurred. Advertising expenses totaled $161,271 and $133,133 for the years ended December 31, 2009 and 2008, respectively.

Research and Development

Research and development costs related to both present and future products are expensed as incurred. Total expenditures on research and development charged to general and administrative expenses for the years ended December 31, 2009 and 2008 were $102,627 and $12,397, respectively.

Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) 718, “Compensation- Stock Compensation”.

F-30

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

In addition to requiring supplemental disclosures, FASB ASC 718, Compensation – Stock Compensation, addresses the accounting for share-based payment transactions in which a company receives goods or services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. FASB ASC 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.

References to the issuances of restricted stock refer to stock of a public company issued in private placement transactions to individuals who are eligible to sell all or some of their shares of restricted common stock pursuant to Rule 144, promulgated under the Securities Act of 1933 (“Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a stockholder who is not an affiliate and has satisfied a six-month holding period may sell all of his restricted stock without restriction, provided that the Company has current information publicly available. Rule 144 also permits, under certain circumstances, the sale of restricted stock, without any limitations, by a non-affiliate of the Company that has satisfied a one-year holding period.

Income Taxes

Net Income Per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period.

The following table provides a reconciliation of common shares used in the net income per basic share and net income per diluted share computations for the years ended December 31, 2009 and 2008:

	2009		2008
Weighted average shares outstanding – basic		18,304,775		17,767,461
Series A convertible preferred stock		910,000		830,100
Incremental common shares from stock options and warrants		254,939		-
Weighted average shares outstanding - diluted		19,469,714		18,597,561

The Company uses the treasury stock method to account for the dilutive effect of unexercised stock options and warrants in net income per diluted share. Antidilutive common shares related to stock options and warrants excluded from the computation of net income per diluted share were approximately 2,350,000 and 3,850,000 for the years ended December 31, 2009 and 2008, respectively.

F-31

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

Segment Information

The Company operates in only one segment, the sale of products made from cactus plants. The Company sells to two customer groups; health foods comprising cactus liquor and juice and sale of cactus powder to pharmaceutical companies for use in medical products.

Statement of Cash Flows

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

F-32

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

In April 2009, the FASB issued an accounting standard which provides guidance on (1) estimating the fair value of an asset or liability when the volume and level of activity for the asset or liability have significantly declined and (2) identifying transactions that are not orderly. The standard also amended certain disclosure provisions for fair value measurements and disclosures in ASC 820 to require, among other things, disclosures in interim periods of the inputs and valuation techniques used to measure fair value as well as disclosure of the hierarchy of the source of underlying fair value information on a disaggregated basis by specific major category of investment. The standard was effective prospectively beginning April 1, 2009. The adoption of this standard did not have a material impact on the Company’s results of operations or financial condition.

F-33

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

F-34

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 3 - INVENTORIES

Inventories consist of:

	December 31,
	2009			2008
Cactus stock	$	2,149,643		$	2,810,861
Other raw materials and work-in-process		28,158			49,826
Finished goods		311,761			515,948
Total		2,489,562			3,376,635
Less: allowance for market adjustments to inventories		(48,658	)		-
Net	$	2,440,904		$	3,376,635

NOTE 4 – OTHER RECEIVABLES

Disposal of property, plant and equipment

Other receivables at December 31, 2009 and 2008 consist of:

	December 31,
	2009		2008
Land Center of Qitaihe	$	3,116,843	$	-
QitaiheTianhe Pharmaceutical Co. Ltd		631,083		-
Total	$	3,747,926	$	-

On December 20, 2009, the Company sold certain equipment it had previously acquired to an unrelated third party in the amount of RMB 4,313,620 (approximately $631,000).

As a result of transactions described in the preceding two paragraphs, the Company recognized a net gain of RMB 3,378,675 ($495,348) on the “Disposal of property, plant and equipment,” which is included within “Other Income (Expense) in the Statement of Operations for the year ended December 31, 2009.

F-35

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

The balance due from Land Center of Qitaihe and proceeds receivable from sale of equipment are included in “Other receivables” totaling 25,618,801 RMB ($3,747,926) at December 31, 2009, of which the $631,083 receivable from the sale of equipment was collected in January 2010 and $3,116,843 receivable from the sale of the Qitaihe City Assets was collected in the first quarter 2010.

Due from related party

At December 31, 2009, other receivable includes due from related party, as follows:

	2009		2008
Due from Chengzhi Wang,
General Manager and a Director, interest free, due on demand	$	244,636	$	-

The Company received full repayment from Mr. Chengzhi Wang in January 2010.

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consist of:

	December 31,
	2009			2008
Buildings	$	2,920,766		$	2,928,548
Plant equipment and machinery		4,642,249			4,654,625
Motor vehicles		288,816			289,586
Furniture and office equipment		11,138			13,817
Total		7,862,969			7,886,576
Less accumulated depreciation		(2,112,093	)		(1,649,662	)
Net	$	5,750,876		$	6,236,914

Depreciation expense was $470,321and $485,366 for the years ended December 31, 2009 and 2008, respectively, of which $392,999 and $408,351, were included in cost of sales, respectively.

F-36

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 6 - LAND USE RIGHTS

Land use rights, net consist of:

	December 31,
	2009			2008
Harbin Hainan Kangda	$	17,584,244		$	8,026,397
Taishan Kangda		870,741			873,035
Total		18,454,985			8,899,432
Less accumulated amortization		(473,151	)		(289,941	)
Net	$	17,981,834		$	8,609,491

The purchase price for the Taishan Basha land use rights of 66,376,800 RMB ($9,710,926) was paid in full as of December 31, 2009. The land use rights were considered placed in service and amortization of the cost is to begin being charged to operations commencing after December 31, 2009, based upon an approval received from the PRC by the Company on January 5, 2010.

Amortization of land use rights was $184,365 and $73,761 for the years ended December 31, 2009 and 2008, respectively, of which $146,200 and $0, respectively, were included in cost of goods sold.

The expected amortization of the above land use rights for each of the five succeeding fiscal years ending December 31, and in the aggregate, are as follows:

Years:	Amount
2010	$	414,970
2011		414,970
2012		414,970
2013		414,970
2014		414,970
Thereafter		15,906,984
Total	$	17,981,834

F-37

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 7 - INTANGIBLE ASSETS

Intangible assets, net consist of:

	December 31,
	2009			2008
Patents and licenses	$	1,370,831		$	1,374,485
Less accumulated amortization		(1,054,531	)		(920,040	)
Net	$	316,300		$	454,445

Patent amortization expense was $137,227 and $134,924 for the years ended December 31, 2009 and 2008, respectively.

The expected amortization of the above intangible assets for each of the five succeeding fiscal years ending December 31, and in the aggregate, are as follows:

Years:	Amount
2010	$	137,227
2011		137,227
2012		41,846
2013		-
2014		-
Total	$	316,300

NOTE 8 - NOTE PAYABLE

Note payable consists of:

	December 31,
	2009		2008
Note payable to a financial institution, interest free, unsecured and due on demand.	$	885,115	$	887,475

The note payable (6,050,000 RMB) is due to a PRC provincial government financial institution which made the loan to the Company to promote the commercial cultivation of cactus. The loan was made to the Company on an interest-free and unsecured basis and is repayable on demand. Imputed interest is calculated at 6% per annum on the amount due. Total imputed interest recorded as additional paid-in capital amounted to $53,219 and $52,326 for the years ended December 31, 2009 and 2008, respectively.

F-38

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 9 – TAXES PAYABLE

Taxes payable consist of:

	December 31,
	2009		2008
Value added tax payable	$	74,419	$	132,745
Consumption tax		151,751		54,397
Business taxes		31,554		-
Miscellaneous taxes and fees		4,153		681
Various taxes subtotal		261,877		187,823
Corporation income tax payable		527,264		383,032
Total Taxes Payable	$	789,141	$	570,855

NOTE 10 – ESTIMATED LIABILITY FOR EQUITY-BASED FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF LIABIILTIES

Effective January 1, 2009, in accordance with EITF Issue No. 07-05, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock”, the Company reclassified the fair values at January 1, 2009 of the outstanding Series A Convertible Preferred Stock and the warrants comprising the March 21, 2008 and the July 16, 2008 sales of units (see Note 11) from stockholders’ equity to liabilities, as follows:

	Shares / Warrants		Fair Value
Series A Convertible Preferred Stock		1,150,000	$	333,500
A warrants		1,250,000		122,000
B warrants		1,500,000		120,150
C warrants		500,000		47,950
D warrants		600,000		47,640
Total warrants		3,850,000		337,740
Total Financial Instruments		5,000,000	$	671,240

F-39

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

At December 31, 2009, the fair values of the financial instruments consisted of:

	Shares / Warrants		Fair Value
Series A Convertible Preferred Stock		50,000	$	135,500
A warrants		-		-
B warrants		1,500,000		2,839,500
C warrants		500,000		992,500
D warrants		600,000		1,090,860
Total warrants		2,600,000		4,922,860
Total Financial Instruments		2,650,000	$	5,058,360

Below is a reconciliation of the change in the fair values of the financial instruments from January 1, 2009 through December 31, 2009.

	Shares / Warrants			Fair Value
Balance, January 1, 2009		5,000,000		$	671,240
Revaluation credited to operations		-			(262,725	)
Balance, March 31, 2009		5,000,000			408,515
Revaluation charged to operations		-			1,761,440
Balance, June 30, 2009		5,000,000			2,169,955
Revaluation charged to operations		-			2,738,135
Conversion of Series A Preferred Stock to Common Stock		(416,667	)		(666,667	)
Balance, September 30, 2009		4,583,333			4,241,423
Conversion of Series A Preferred Stock to Common Stock		(683,333	)		(1,282,500	)
Exercise of A warants		(1,250,000	)		(1,589,895	)
Revaluation charged to operations		-			3,689,332
Balance, December 31, 2009		2,650,000		$	5,058,360

NOTE 11 - SERIES A CONVERTIBLE PREFERRED STOCK

F-40

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

The Company also entered into a Registration Rights Agreement with the Investor, pursuant to which the Company was obligated to file and have declared effective by the SEC a registration statement registering the resale of the Shares and common stock issuable upon the conversion of the Series A Preferred Stock and the exercise of the A Warrants and B Warrants. If the registration statement was not declared effective by the SEC by August 28, 2008, the Registration Rights Agreement provided for the Company to issue to the Investor as liquidated damages an additional 1,000 shares of Series A Preferred Stock for each day thereafter not declared effective (subject to a maximum of 250,000 shares). On October 17, 2008, the SEC declared effective the Company’s registration statement on Form S-1. On October 15, 2008, the Company issued 46,000 shares of common stock to the investor in consideration for the waiver of liquidated damages.

Below is summary of the deemed dividends for the year ended December 31, 2008:

F-41

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

March 21, 2008	$	196,500
July 16, 2008		126,250
Total	$	322,750

In November and December 2009, the aforementioned A warrant holder exercised 916,666 A warrants in a cashless exercise and received 598,006 shares of common stock.

In October 2009, the aforementioned A warrant holder exercised 333,334 A warrants at a price of $0.75 per share, or $250,000 total, and was issued 333,334 shares on January 18, 2010.

NOTE 12 – STOCK OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

A summary of stock option and warrant activity for the years ended December 31, 2009 and 2008 as follows:

	Stock Options			Warrants
Outstanding at January 1, 2008		-			-
Granted and issued		400,000			3,850,000
Exercised		-			-
Forfeited/expired/cancelled		-			-
Outstanding at December 31, 2008		400,000			3,850,000
Granted and issued		-			-
Exercised		(107,059	)		(1,250,000	)
Forfeited/expired/cancelled		(42,941	)		-
Outstanding at December 31, 2009		250,000			2,600,000

Stock options outstanding at December 31, 2009 consist of:

Date

Number

Exercise

Expiration

Granted

Outstanding

Exercisable

Price

Date

March 10, 2008

250,000

1.00

March 10, 2012

Total

250,000

The 400,000 stock options granted in 2008 were all issued to the Company’s law firm for services rendered.

F-42

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

On March 10, 2008, the Company granted 250,000 options to the law firm, all exercisable at $1.00 per share to March 10, 2012, and expensed the $59,225 fair value of these options at March 10, 2008 (estimated using the Black-Scholes option pricing model and the following assumptions: stock price of $0.41 per share, exercise price of $1.00 per share, term of 4 years, expected volatility of 100%, and risk-free interest rate of 4%).

On December 31, 2008, the Company granted 150,000 options to the law firm, all exercisable at $0.30 per share to December 31, 2012, and expensed the $31,410 fair value of these options at December 31, 2008 (estimated using the Black-Scholes option pricing model and the following assumptions: stock price of $0.29 per share, exercise price of $0.30 per share, term of 4 years, expected volatility of 107%, and risk-free interest rate of 2%).

Warrants outstanding at December 31, 2009 consist of:

Date	Number		Number		Exercise		Expiration
Granted	Outstanding		Exercisable		Price		Date
March 21, 2008		1,500,000		1,500,000	$	1.0000	March 21, 2011
July 16, 2008		500,000		500,000	$	0.9375	July 16, 2011
July 16, 2008		600,000		600,000	$	1.2500	July 16, 2011
Total		2,600,000		2,600,000

NOTE 13 – RESTRICTED NET ASSETS

Relevant PRC statutory laws and regulations permit payments of dividends by Harbin Hainan Kangda and Taishan Kangda only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, PRC laws and regulations require that annual appropriations of after-tax income should be set aside prior to payments of dividends as a reserve fund. As a result of these PRC laws and regulations Harbin Hainan Kangda and Taishan Kangda are restricted in their ability to transfer a portion of their net assets in the form of dividends, loans or advances, which restricted portion amounted to $10,306,160 and $10,185,183 at December 31, 2009 and 2008, respectively.

NOTE 14 - INCOME TAXES

The Company is subject to current income taxes on an entity basis on taxable income arising in or derived from the tax jurisdiction in which each entity is domiciled.

US China Kangtai was incorporated in the United States and is subject to United States income tax. No United States income taxes were provided in 2009 and 2008 since US China Kangtai had taxable losses in those periods.

F-43

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

At December 31, 2009, US China Kangtai has an unrecognized deferred United States income tax liability relating to undistributed earnings of Harbin Hainan Kangda. These earnings are considered to be permanently invested in operations outside the United States. Generally, such earnings become subject to United States income tax upon the remittance of dividends and under certain other circumstances. Determination of the amount of the unrecognized deferred United States income tax liability with respect to such earnings is not practicable.

BVI China Kangtai was incorporated in the BVI and is not subject to tax on income or on capital gains.

	December 31,
	2009			2008
Expected tax at 35%	$	715,241		$	2,361,601
Non-deductible expense from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair value		2,774,164			-
Tax effect of unutilized losses of US China Kangtai and BVI China Kangtai		63,797			143,313
Tax effect of PRC income taxed at lower rate		(1,989,781	)		(1,438,984	)
Actual provision for income taxes	$	1,563,421		$	1,065,930

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Operating lease commitments

The Company leases farm sheds and land for growing cactus from third parties under operating leases. Rental expenses for all operating leases for the years ended December 31, 2009 and 2008 were $ 8,056 and $12,210 respectively.

At December 31, 2009, future minimum rental commitments under all non-cancellable operating leases are due as follows:

F-44

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

For the Year Ended
December 31,
2010	$	6,272
2011		6,272
2012		6,272
2013		6,272
2014		2,175
Thereafter		52,212
Total	$	79,475

Consulting Agreements

The Company entered into a six months investor relations consulting contract on July 1, 2009. The Company is required to pay the consultant a fee of $5,000 per month, consisting of $2,500 in cash and $2,500 in Company restricted common stock. The contract is to be automatically renewed for six months unless either of the two parties gives 30 days written notice of termination. At April 13, 2010, the Contract is still active.

The Company entered into a one year consulting agreement with First Trust China Ltd. on September 1, 2009. The Company is required to pay the consultant a monthly cash retainer of $2,000 paid quarterly, of which the first 3 months was due upon signing of the contract. In addition, the Company is required to issue 80,000 shares of its common stock to the consultant semi-annually, the first 40,000 shares (which were issued February 9, 2009) of which were to be issued within 3 months of signing the agreement.

General and administrative expenses for the year ended December 31, 2009 includes $16,831 incurred to the consultants.

Concentrations and risks

During 2009 and 2008, substantially all of the Company’s assets were located in China and 100% of the Company’s revenues were derived from customers located in China and Taiwan.

F-45

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 16 – SEGMENT AND OTHER INFORMATION

The Company operates in one industry segment – the production and sale of cactus, cactus health food, and other cactus products. Substantially all of the Company’s identifiable assets at December 31, 2009 and 2008 were located in the PRC. Net sales for the periods presented were all derived from PRC and Taiwan customers. During the years ended December 31, 2009 and 2008, two customers accounted for 18.6% and 14.3% of net sales, and 12.6% and 15.9% of net sales, respectively.

Net sales consisted of:

	December 31,
	2009		2008
Finished goods	$	23,791,283	$	16,500,200
Cactus stock		2,746,073		3,800,383
Total	$	26,537,356	$	20,300,583

NOTE 17- STATUS OF COMMON STOCK PURCHASE AGREEMENT (LIMITED PRIVATE PLACEMENT OFFERING WITH SEASIDE 88, LP) ENTERED INTO IN NOVEMBER 2009

On November 15, 2009, the Company entered into a Common Stock Purchase Agreement (the “Agreement”) with Seaside 88, LP (“ Seaside”), relating to the offering and sale of up to 2,100,000 shares of Company common stock. Subject to the limitations and qualifications set forth therein, the Agreement requires the Company to issue and sell, and Seaside to purchase, up to 150,000 shares of common stock once every two weeks, subject to the satisfaction of customary closing conditions. At the initial closing and at each subsequent closing, on each 14th day thereafter for twenty-six (26) weeks, the offing price of the common stock will equal 87% of the volume weighted average trading price of the common stock for the ten consecutive trading days immediately preceding each subsequent closing date. If, with respect to any subsequent closing, the volume weighted average trading price of the common stock for the three trading days immediately prior to such closing is below $1.25 per share, then the particular subsequent closing will not occur and the aggregate number of Shares to be purchased shall be reduced by 150,000 shares of common stock, The Agreement provides that the Company may, at its sole discretion, upon thirty (30) days’ prior written notice to Seaside, terminate the Agreement after the fifth subsequent closing. The Agreement contains representations and warranties and covenants for each party, which must be true and have been performed at each closing. The Agreement may be terminated by Seaside, by written notice to the Company, if the initial closing has not been consummated on or before March 31, 2010, provided, however, if the Company receives comments from the Securities and Exchange Commission on the registration statement covering the sale to Seaside, or the resale by Seaside, of the Shares, this date shall be extended until April 30, 2010.

At April 14, 2010, the registration statement to register the shares of common stock for resale has not been filed and, no shares of common stock have been issued to Seaside under the Agreement. At this point, Seaside has not filed notice under Section 5.1 of the Agreement, or commenced or threatened legal action against the Company for the $200,000 in liquidated damages that may be due Seaside under the Agreement. The Agreement provides that such liquidating damages would be due in the event the Company exercises its termination right and within six months of such terminations initiates another financing having committed funding dates scheduled at pre-determined intervals of between one week and two months. The Company, now not interested in pursuing the Agreement, is currently attempting to negotiate an amicable resolution of the matter with Seaside.

F-46

CHINA KANGTAI CACTUS BIO-TECH INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 18 - SUBSEQUENT EVENTS

On January 26, 2010, the Company issued 76,738 shares of its common stock to Crone Law Group in a cashless exercise of 125,000 stock options exercisable at a price of $1.00 per share.

On February 8, 2010, the Company issued 40,000 shares to First Trust China Ltd. pursuant to the consulting agreement signed on September 1, 2009 (see Note 15).

On February 25, 2010, the Company issued 475,000 shares of its common stock to T Squared Investments LLC, a B warrant holder, at the price of $1.00 per share pursuant to an exercise of B warrants.

On March 3, 2010, the Company issued 125,000 shares of its common stock to Crone Law Group in an exercise of 125,000 stock options at the price of $1.00 per share.

F-47

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

We estimate that expenses in connection with the distribution described in this registration statement (other than brokerage commissions, discounts or other expenses relating to the sale of the shares by the selling security holders) will be as set forth below. We will pay all of these expenses. The amounts shown below, with the exception of the Securities and Exchange Commission registration fee, are estimates.

SEC registration fee	$	$146.29	~~121.00~~
Accounting Fees and Expenses		5,000.00	~~5,000.00~~
Legal Fees and Expense		25,000.00	~~25,000.00~~
Printing Expenses		1,000.00	~~1,000.00~~
Transfer Agent Fees		500
Miscellaneous		-
Total	$	$31,646.29	~~31,121.00~~

INDEMNIFICATION OF DIRECTORS AND OFFICERS

RECENT SALES OF UNREGISTERED SECURITIES

The following securities were issued within the past three years and were not registered under the Securities Act of 1933.

On March 21, 2008, the Company entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with T Squared Investments LLC (“T Squared”) to sell in a private placement to T Squred for an aggregate purchase price of $500,000, (i) 833,333 shares of the Company’s newly designated Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) for $0.60 per share (the “Shares”), (ii) warrants to purchase up to 1,250,000 shares of Company common stock exercisable for a period of three years at an exercise price of $0.75 per share (the “A Warrants”) or an aggregate exercise price of $937,500 if all of the A Warrants were exercised, and (iii) warrants to purchase up to 1,500,000 shares of Company common stock exercisable for a period of three years at an exercise price of $1.00 per share (the “B Warrants”), or an aggregate exercise price of $1,500,000 if all the B Warrants were exercised. The Company issued the Shares, the A Warrants and B Warrants on the same day. Westernking Financial Service acted as the sole placement agent in the transaction for a fee of $30,000 (6% of the gross proceeds). As of the date of this registration statement 750,000 B Warrants remain outstanding.

II-2

The Company also entered into a Registration Rights Agreement with T Squared, pursuant to which the Company was obligated to file and have declared effective by the SEC a registration statement registering the resale of the shares and common stock issuable upon the conversion of the Series A Preferred Stock and the exercise of the A Warrants and B Warrants. If the registration statement was not declared effective by the SEC by August 28, 2008, the Registration Rights Agreement provided for the Company to issue to the Investor as liquidated damages an additional 1,000 shares of Series A Preferred Stock for each day thereafter not declared effective (subject to a maximum of 250,000 shares). On October 17, 2008, the SEC declared effective the Company’s registration statement on Form S-1. On October 15, 2008, the Company issued 46,000 shares of common stock to T Squared in consideration for the waiver of liquidated damages.

II-1

On July 16, 2008, the Company sold T Squared, for an aggregate purchase price of $250,000, an additional 416,667 shares of Series A Preferred Stock, warrants to purchase up to 500,000 shares of Company common stock exercisable for a period of three years at an exercise price of $0.9375 per share, and warrants to purchase up to 600,000 shares of Company common stock exercisable for a period of three years at an exercise price of $1.25 per share. As of the date of this registration statement 50,000 Series A preferred shares and the additional warrants remain outstanding.

On ~~December~~ 31March 10, 2008, the Company granted ~~150~~250,000 options to The Crone Law Group, the Company’s legal counsel, for services rendered, all exercisable at $01.3000 per share to ~~December 31~~March 10, 2012. All of these options were exercised and none remains outstanding.

On ~~March 10~~September 25, 2008, the Company ~~granted~~issued 250,000 options to The Crone Law Group, the Company’s legal counsel, for services rendered, all exercisable at $1.0060 per ~~share~~shares to ~~March~~September 1025, 2012. All of these options were exercised and none remains outstanding.

On ~~September~~ 25December 31, 2008, the Company ~~issued~~granted ~~250~~150,000 options to The Crone Law Group, the Company’s legal counsel, for services rendered, all exercisable at $0.6030 per ~~shares~~share to ~~September 25~~December 31, 2012. All of these options were exercised and none remains outstanding.

On August 28, 2009 the Company issued 10,000 shares to its business consultant pursuant to the consulting agreement dated July 1, 2009 for services rendered.

On February 8, 2010, the Company issued 40,000 shares to its business consultant pursuant to the consulting agreement signed on September 1, 2009 for services rendered.

On April 20, 2010 the Company issued 50,000 shares to its business consultant pursuant to the consulting agreement signed on April 2, 2010 for services rendered.

On October 1, 2010, the Company issued 13,000 shares of Company restricted common stock to an investor relations consulting firm pursuant to the terminated investor relations contract signed on July 1, 2009

All of the above offerings and sales were deemed to be exempt under Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of our company or executive officers of our company, and transfer was restricted by our company in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to our Securities and Exchange Commission filings.

Except as expressly set forth above, the individuals and entities to which we issued securities as indicated in this section of the registration statement are unaffiliated with us.

II-3

EXHIBITS

Exhibit No.		Description
Exhibit
3.1		Articles of Incorporation (incorporated by reference from Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on October 18, 2000).
No.	Description
3.2		Amended Articles of Incorporation (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 3, 2003).
3.1	Articles of Incorporation (incorporated by reference from Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on October 18, 2000).
3.3		Amended and Restated Articles of Incorporation (incorporated by reference to the Form 10KSB filed with the Securities and Exchange Commission April 17, 2006).
3.2	Amended Articles of Incorporation (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 3, 2003).
3.4		Bylaws (incorporated by reference from Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on October 18, 2000).
3.3	Amended and Restated Articles of Incorporation (incorporated by reference to the Form 10KSB filed with the Securities and Exchange Commission April 17, 2006).
5.1*		Opinion of the Crone Law Group (filed herewith)
3.4	Bylaws (incorporated by reference from Registration Statement on Form SB-2/A filed with the Securities and Exchange Commission on October 18, 2000).
10.1		Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Hunan Tianxiang Trading Company, Ltd (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).
10.2		Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Jinan Qitai Economic and Trading Center (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).
10.3		Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Lanzhou Xinhui Economic and Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).
10.4		Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Qingdao Furui Economic and Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).
10.5		Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Shanxi Anyang Food Distribution Company (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).
10.6		Processing Agreement dated January 8, 2006, between the Company and Shandong Tsingtao Beer Inc. Harbin subsidiary (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.7		Processing Agreement dated January 20, 2006, between the Company and Harbin Ice Lantern Noodle Factory (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.8		Processing Agreement dated March 30, 2005, between the Company and Harbin Diwang Pharmacy Co. Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.9		Processing Agreement dated July 10, 2005, between the Company and Harbin Bin County HuaLan Dairy Factory (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.10		Processing Agreement dated March 2, 2006, between the Company and Kangwei Health Foods Ltd. Of Mudanjiang City (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

II-2

3.5	Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock as filed with the Secretary of State of Nevada on March 21, 2008 (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).

3.6	First Amended and Restated Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock as filed with the Secretary of State of Nevada on July 16, 2008. (incorporated by reference to the Form 8-K filed on July 21, 2008).

5.1*	Opinion of Chiang Law Office, P.C.

10.1	Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Hunan Tianxiang Trading Company, Ltd (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).

10.2	Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Jinan Qitai Economic and Trading Center (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).

10.3	Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Lanzhou Xinhui Economic and Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).

10.4	Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Qingdao Furui Economic and Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).

10.5	Distribution Agreement Between China Kangtai Cactus Bio-tech, Inc and Shanxi Anyang Food Distribution Company (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on November 19, 2007).

10.6	Processing Agreement dated January 8, 2006, between the Company and Shandong Tsingtao Beer Inc. Harbin subsidiary (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.7	Processing Agreement dated January 20, 2006, between the Company and Harbin Ice Lantern Noodle Factory (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.8	Processing Agreement dated March 30, 2005, between the Company and Harbin Diwang Pharmacy Co. Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.9	Processing Agreement dated July 10, 2005, between the Company and Harbin Bin County HuaLan Dairy Factory (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.10	Processing Agreement dated March 2, 2006, between the Company and Kangwei Health Foods Ltd. Of Mudanjiang City (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.11	Distributions Agreement dated February 15, 2007, with Jilin Yanji Economic and Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.12	Distributions Agreement dated January 16, 2007, with Liaoning Shenneng Trading and Development Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

II-3

10.13	Distributions Agreement dated February 9, 2007, with Jianshuang Zhang - Hubei (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.14	Distributions Agreement, dated February 3, 2007, with Hunan Green Food Distribution Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.15	Distributions Agreement dated January 29, 2007, with Harbin Huadingwei Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.16	Distributions Agreement dated February 6, 2007, with Hangzhou Hesheng Economic and Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.17	Distributions Agreement dated January 16, 2007, with Guangdong Jinpei Lin (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.18	Distributions Agreement dated January 9, 2007, with Fujian Tianyi Economic and Trading Company Ltd (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.19	Distributions Agreement, Dated January 20, 2007, With Beijing Yaping Liu (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).

10.20	Cooperation Agreement between Harbin Hainan Kangda Cactus Hygienical Foods Co., Ltd and Party B: Harbin Meijia Bio-Tech Co., Ltd. dated October 8, 2007 (incorporated by reference to the Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2008).

10.21	Preferred Stock Purchase Agreement dated as of March 21, 2008 by and between the Company and T Squared Investments LLC (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).

10.22	Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock as filed with the Secretary of State of Nevada on March 21, 2008 (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).

10.23	Registration Rights Agreement dated as of March 21, 2008 by and between the Company and the Investors named therein (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).

10.24	Common Stock Purchase Warrant “A” (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).

10.25	Common Stock Purchase Warrant “B” (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).

10.26	Form of Preferred Stock Purchase Agreement dated as of July 16, 2008 by and between the Company and T Squared Investments LLC. (incorporated by reference to the Form 8-K filed on July 21, 2008)

10.27	First Amended and Restated Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock as filed with the Secretary of State of Nevada on July 16, 2008. (incorporated by reference to the Form 8-K filed on July 21, 2008)

10.28	Common Stock Purchase Warrant “A” (incorporated by reference to the Form 8-K filed on July 21, 2008)

10.29	Common Stock Purchase Warrant “B” (incorporated by reference to the Form 8-K filed on July 21, 2008)

10.30	Asset Purchase Agreement dated as of March 25, 2009, between Harbin Hainan Kangda Cactus Health Food Co., Ltd., a wholly owned subsidiary of China Kangtai Cactus Bio-Tech, Inc., and Qitaihe Kangwei Biotechnology Co., Ltd. (incorporated by reference to the Form 8-K filed on March 30, 2009)

II-4

10.11		Distributions Agreement dated February 15, 2007, with Jilin Yanji Economic and Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.31	Asset Purchase Agreement dated as of August 25, 2009 between Harbin Hainan Kangda and the Local Government of Baisha Town, Taishan City (incorporated by reference from Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 30, 2010).
10.12		Distributions Agreement dated January 16, 2007, with Liaoning Shenneng Trading and Development Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.32	English translation of the Patent Transfer Agreement dated as of January 2010 between Harbin Hainan Kangda Cactus Hygienical Foods Co., Ltd and Heilongjiang Yatai Bio Development and Research Institute (incorporated by reference from Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 30, 2010).
10.13		Distributions Agreement dated February 9, 2007, with Jianshuang Zhang - Hubei (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.33	English Translation of the Asset Purchase Agreement dated June 28, 2010 between Harbin Hainan Kangda Cacti Hygienical Foods Co., Ltd. and Dadi Tobacco Trade Center (incorporated by reference to the Form 8-K filed on July 2, 2010)
10.14		Distributions Agreement, dated February 3, 2007, with Hunan Green Food Distribution Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.34	Investment Agreement dated as of July 8, 2010 by and between the Company and Kodiak Capital Group, LLC. (incorporated by reference to the Form 8-K filed on July 13, 2010)
10.15		Distributions Agreement dated January 29, 2007, with Harbin Huadingwei Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.35	Registration Rights Agreement dated as of July 8, 2010 by and between the Company and Kodiak Capital Group, LLC. (incorporated by reference to the Form 8-K filed on July 13, 2010)
10.16		Distributions Agreement dated February 6, 2007, with Hangzhou Hesheng Economic and Trading Company, Ltd. (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.36	Contract of Employment dated June 3, 2010 by and between the Company and Chengzhi Wang (incorporated by reference from Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 30, 2010).
10.17		Distributions Agreement dated January 16, 2007, with Guangdong Jinpei Lin (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.37	Contract of Employment dated June 3, 2010 by and between the Company and Hong Bu (incorporated by reference from Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 30, 2010).
10.18		Distributions Agreement dated January 9, 2007, with Fujian Tianyi Economic and Trading Company Ltd (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.38	Investment Agreement dated as of April 18, 2011 by and between the Company and kodiak Capital Group LLC (incorporated by reference to the Form 8-K filed on April 19, 2011).
10.19		Distributions Agreement, Dated January 20, 2007, With Beijing Yaping Liu (incorporated by reference to the Form 10QSB filed with the Securities and Exchange Commission on May 16, 2007).
10.39	Registration Rights Agreement dated as of April 18, 2011 by and between the Company and Kodiak Capital Group LLC (incorporated by reference to the Form 8-K filed on April 19, 2011).
10.20		Cooperation Agreement between Harbin Hainan Kangda Cactus Hygienical Foods Co., Ltd and Party B: Harbin Meijia Bio-Tech Co., Ltd. dated October 8, 2007 (incorporated by reference to the Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2008).
21.1	List of Subsidiaries (incorporated by reference to the Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2008).
10.21		Preferred Stock Purchase Agreement dated as of March 21, 2008 by and between the Company and T Squared Investments LLC (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).
23.1*	Consent of Michael T. Studer CPA, P.C.
10.22		Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock as filed with the Secretary of State of Nevada on March 21, 2008 (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).
23.2	Consent of Chiang Law Office, P.C. (contained in Exhibit 5.1).
10.23		Registration Rights Agreement dated as of March 21, 2008 by and between the Company and the Investors named therein (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).
10.24		Common Stock Purchase Warrant “A” (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).

II-5

10.25		Common Stock Purchase Warrant “B” (incorporated by reference to the From 8-K filed with the Securities and Exchange Commission on March 27, 2008).
10.26		Form of Preferred Stock Purchase Agreement dated as of July 16, 2008 by and between the Company and T Squared Investments LLC. (incorporated by reference to the Form 8-K filed on July 21, 2008)
10.27		First Amended and Restated Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock as filed with the Secretary of State of Nevada on July 16, 2008. (incorporated by reference to the Form 8-K filed on July 21, 2008)
10.28		Common Stock Purchase Warrant “A” (incorporated by reference to the Form 8-K filed on July 21, 2008)
10.29		Common Stock Purchase Warrant “B” (incorporated by reference to the Form 8-K filed on July 21, 2008)
10.30		Asset Purchase Agreement dated as of March 25, 2009, between Harbin Hainan Kangda Cactus Health Food Co., Ltd., a wholly owned subsidiary of China Kangtai Cactus Bio-Tech, Inc., and Qitaihe Kangwei Biotechnology Co., Ltd. (incorporated by reference to the Form 8-K filed on March 30, 2009)
10.31*		Asset Purchase Agreement dated as of August 25, 2009 between Harbin Hainan Kangda and the Local Government of Baisha Town, Taishan City. (filed herewith)
10.32*		English translation of the Patent Transfer Agreement dated as of January 2010 between Harbin Hainan Kangda Cactus Hygienical Foods Co., Ltd and Heilongjiang Yatai Bio Development and Research Institute. (filed herewith)
10.33		English Translation of the Asset Purchase Agreement dated June 28, 2010 between Harbin Hainan Kangda Cacti Hygienical Foods Co., Ltd. and Dadi Tobacco Trade Center (incorporated by reference to the Form 8-K filed on July 2, 2010)
10.34		Investment Agreement dated as of July 8, 2010 by and between the Company and Kodiak Capital Group, LLC. (incorporated by reference to the Form 8-K filed on July 13, 2010)
10.35		Registration Rights Agreement dated as of July 8, 2010 by and between the Company and Kodiak Capital Group, LLC. (incorporated by reference to the Form 8-K filed on July 13, 2010)
10.36*		Contract of Employment dated June 3, 2010 by and between the Company and Chengzhi Wang (filed herewith)
10.37*		Contract of Employment dated June 3, 2010 by and between the Company and Hong Bu (filed herewith)
21.1		List of Subsidiaries (incorporated by reference to the Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2008).
23.1*		Consent of Michael T. Studer CPA, P.C. (filed herewith)
23.2		Consent of the Crone Law Group (contained in Exhibit 5.1).
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended and adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (incorporated by reference to the Form 10-K filed with the Securities and Exchange Commission on April 15, 2010)

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31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended and adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (incorporated by reference to the Form 10-K filed with the Securities and Exchange Commission on April 15, 2010)
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (incorporated by reference to the Form 10-K filed with the Securities and Exchange Commission on April 15, 2010)
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (incorporated by reference to the Form 10-K filed with the Securities and Exchange Commission on April 15, 2010)

*Filed Herewith

UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§ 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

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(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(1) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter);

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(2) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(3) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(4) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it met all the requirements of filing on this Registration Statement and authorized this Registration Statement to be signed on its behalf by the undersigned, in Harbin, Heilongjiang Province, the People’s Republic of China, on ~~July~~April 3028, ~~2010~~ 2011.

	China Kangtai Cactus Bio-Tech Inc.

	By:	/s/ Jinjiang Wang
		Jinjiang Wang
		Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jinjiang Wang as true and lawful attorney-in-fact and agent with full power of substitution and resubstitution and for him/her and in his/her name, place and stead, in any and all capacities to sign any and all amendments (including pre-effective and post-effective amendments) to this Registration Statement, as well as any new registration statement filed to register additional securities pursuant to Rule 462(b) under the Securities Act, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated.

SIGNATURE	TITLE	~~TITLE~~DATE	~~DATE~~
/s/ Jinjiang Wang	Chairman and Chief Executive Office	~~Chairman~~April ~~and~~28, ~~Chief Executive Office~~2011	~~July 30, 2010~~
Jinjiang Wang	(Principal Executive Officer)	~~(Principal Executive Officer)~~
/s/ Hong Bu	Chief Financing Officer and Director	~~Chief~~April ~~Financing~~28, ~~Officer~~2011	~~July 30, 2010~~
Hong Bu	(Principal Financial Officer and	~~(Principal Financial Officer and Principal Accounting Officer)~~
/s/Chengzhi Wang		General Manager and Director	July 30, 2010
	Principal Accounting Officer)
Chengzhi Wang
/s/ Chengzhi Wang	General Manager and Director	April 28, 2011
/s/Jiping Wang		Director	July 30, 2010
Chengzhi Wang
Jiping Wang
/s/Jiping Wang	Director	April 28, 2011
/s/Song Yang		Director	July 30, 2010
Jiping Wang
Song Yang
/s/Song Yang	Director	April 28, 2011
Song Yang

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Filing Compare · China Kangtai Cactus Bio-tech, Inc.